By Charles McAndrew
Board Member, Fairfax County Taxpayers Alliance
Mr. Edward Long, Fairfax County Executive, presented an initial FY 2018 budget to the Board of Supervisors at the Government Center on Tuesday, February 14. See Mr. Long’s charts here. All Supervisors were present, as were a few of School Board members. Here is a summary of his presentation and some comments offered by the Supervisors:
REAL ESTATE TAXES: The current rate of the Real Estate tax will remain at $1.13 per $100 of assessed value. The average real estate tax bill will increase approximately $40 for the homeowner. Here is an additional fact: the value of ONE CENT on the Real Estate tax rate is $23.75 million in FY 2018.
COUNTY BUDGET: There will be an overall increase for both County disbursements and School transfers of 2.41% which includes $51.69 million (2.70%) increase in the School Operating Transfer. FY 2018 General Fund Revenues will increase $88.20 million, or 2.2% over the FY 2017 Adopted Budget Plan. FY 2018 General Fund Disbursements will increase $90.7 million or 2.3% over the FY 2017 Adopted Budget Plan ($27.2 million over the FY 2017 Revised Budget Plan). A total of $4.10 BILLION is the budgeted amount for the General Fund Disbursements, which includes the FCPS portion. Mr. Long stated that: “County needs are greater than our resources.” He said the county needs additional funding sources. He also stated, “it marks the 10th straight year annual budget has included reductions.” My records show the County has raised the budget EVERY YEAR for decades 2 or 3 times the rate of inflation!
FAIRFAX COUNTY PUBLIC SCHOOLS (FCPS): The total budget is projected to be $2.8 BILLION. The Advertised budget provides an increase of $51.69 million or 2.70% over the FY 2017 for the County’s transfer to the School Operating Fund. The FCPS represents 52.8% of General Funds Disbursements and up from 52.7% in FY 2017. A gap of approximately $61 million remains between the Advertised transfer and the Schools’ request. Of the total projected revenue increase of $88.2 million, $50.95 million is allocated to FCPS. The Schools transfer is by far the largest expense of the entire Fairfax County budget.
EMPLOYEE BENEFITS: FY 2018 budget proposals funds performance, merit, and longevity increases for all merit employees with average 2% for non-uniformed General County employees and an average increase of 2.25% for uniformed Public Safety employees. It also includes some pay adjustments resulting from market reviews. Mr. Long stated that he was not able to fund the Market Rate Adjustment (MRA) of 1.65% or $19.8 million which he considers this a significant unfunded priority. There were also several other lesser amounts of funding that remain as an unfunded priority. Employee Pay for General County employees increases will be $23.51 million with average increases of 2%. Employee Benefits will increase $9.07 million. Retirement funding based on valuation and experience study results and an increase in amortization from 97% to 98% per funding adopted as part of the FY 2016 budget and on track to amortize 100% of unfunded liability by FY 2020. Health insurance assumes a 7% premium adjustment in January 2018. Supervisor Pat Herrity stated that there needs to be a pension reform as the county cannot sustain such a generous retirement system.
METRO FUNDING: There was considerable discussion from the County Board members about Metrorail costs. The WMATA General Manager’s FY 2018 budget contains significant increases in both the operating and capital spending. The county shows a total of $141.4 million for Operating Budget and $40.0 million for Capital spending totaling $181.4 million. This total figure does NOT agree with the figures given at the Northern Virginia Transportation Commission (NVTC) meeting on January 25. The figures given at that meeting totaled $138.6 million for FY 2018 for the operating subsidy and $101 million for the Capital budget for FY 2018 for a grand total of $239.6 million for the Fairfax County to fund. So there is definitely a discrepancy! Supervisor John Foust pointed out that state aid will fund WMATA increases for the years 2017-18 but not thereafter. Mr. Long stated that for FY 2019 and future years WMATA will require significant increases in County contributions which are NOT SUSTAINABLE WITHIN EXISTING REVENUE SOURCES! Supervisor Pat Herrity argued for fundamental reform of WMATA funding with emphasis on revising the tri-jurisdiction WMATA Compact and lowering labor costs. Supervisor Jeff McKay, who is also the Chairman of NVTC, pointed out his organization and others are looking at potential budget solutions. Supervisor John Cook emphasized the need for economic growth as a key part of the answer to current and future budget shortfalls.
RESIDENTIAL MARKET: The average price of homes sold in CY 16 was essentially flat. January 2017 assessed values grew at less than 50% of the January 2016 rate of 1.64%. The number of homes sales rose 6.1% from 14,850 homes in CY2015 to 15,755 in CY2016.
NON-RESIDENTIAL REAL ESTATE (OFFICE VACANCIES, etc): There is 20 million sq. ft. of vacancies which is considered very high, out of 116.4 million sq. ft. according to the Economic Development Authority. They also stated that 73% of the county’s office space is obsolete! Office vacancy as of mid-year 2016 was 16.5%, up from 16.2% as of year-end 2015 which is the highest level since 1991 when it was 16.8%. Office real estate values are down after increasing last year. Currently, over 2.4 million sq. ft. of offices are under construction, due mainly to the Metrorail’s new SILVER LINE spurring new construction of both retail and residential. Commercial/Industrial vacancy is now at 19.12% which is higher than last year’s rate of 18.89%. FY 1990 had the highest rate of 26.76%. If more of these properties could be occupied, this would somewhat relieve the increases in the residential real estate tax rate.
PUBLIC SAFETY: A consultant study recommended a total of $22.9 million and 96 positions for the police and sheriff departments. The study also recommended staffing for the new South County Police Station for a total of 70 new uniformed positions. It is expected to fund an additional 50 uniformed positions over the next three fiscal years. Total costs of these positions at the South County Police Station will be approximately $1 million. Across the street from the main County Government Center will be the NEW Operations/Maintenance at Public Safety Headquarters. This new facility will be 274,000 square foot facility scheduled to be opened in the Spring of 2017. This building will serve as the new headquarters for the Police and Fire Rescue Departments.
RESERVES: In order to continue with their TRIPLE rated bond ratings, 10% of FY 2018 Disbursements increases will be held in reserve. Total reserve funding has increased from 5% in FY 2014 to over 7% in FY 2018. Based on General Fund contributions and bond refunding savings, total reserves as of the FY 2018 Advertised Budget Plan are estimated at 7.16% (still short of the 1-% goal).
The schedule of district town hall meetings to review the FY 2018 Advertised Budget is available here.