Budget woes on the way

A financial retreat Tuesday to give Prince William supervisors a heads-up for fiscal 2011 budget issues might be summed in a sentence: Cuts are on the way.

"We've got another horrendous budget" to plan in the coming months, said Chairman Corey Stewart, R-At-Large, at one point in the hours-long meeting at Old Manassas Courthouse.

The good news is short. Real estate in the county is starting to appreciate, and the 10- and 5-percent drops in values seen the past couple years seem to have come to a halt, said Chris Martino, finance director. The appreciation is only about 1 percent, however.

"We think it's going to be very slow and gradual," Martino said of the upswing in values. "We will need to see a few more years to get back to where we were."

The bad news: Federal indicators point to a weak national economy, with continued high unemployment and slow retail sales. State general revenue collections have declined "an unprecedented 11 consecutive months in fiscal year 2009," according to written summaries from Martino. That means less money coming from Richmond.

"That doesn't portend good things to come," Martino said. "In fact, we'll be hit with state budget cuts, I'm sure."

And the major revenue raisers on the local level -- housing starts and retail sales -- don't bode any better for the next year or two.

"Foreclosures are still a very significant factor in our housing market," Martino said. "Even thought the residential has improved, we've seen significant vacancy rates in commercial."

Moreover, people are holding off buying new vehicles and the county's original estimate for this sales tax source no longer holds true.

"We're now expecting revenues to come in about $5.7 million less than what we predicted this fiscal year," Martino said. "Folks aren't buying cars."

Still on the national horizon is an expected wave of foreclosures from upcoming mortgage rate adjustments, set for 2010 and 2011, that will skyrocket the payments of homeowners on houses that, in many cases, are valued tens of thousands of dollars less than their sales prices. It's not known how this rate reset will affect Prince William County, or whether federal incentive packages will help in either the short- or long-term.

With all that in mind, county staffers have worked a plan to budget by risk factor. Staff created a 20-point scale to rate each of the 153 county programs by need, the highest numbers going to those considered life saving and the lowest to those that are merely conveniences. The point was to prioritize funding.

Long lines at the library, for example, might be inconvenient for residents. But a mentally ill criminal wandering the streets might be deadly. Inmate security at the Adult Detention Center, therefore, merited a score of 20 points, while funding for the library was prioritized much lower.

One other budget consideration: Mandated contributions to the state's retirement system could be millions more than expected.

"This is a major wild card," said Melissa Peacor, assistant county executive, on the inability of county budget planners to sidestep whatever fiscal demands come from this arena.

Supervisors also heard run-downs of the various tax-rate scenarios, with amounts ranging between $1.22 and $1.33, as well as various options to generate additional revenues such as increasing the solid waste fee.

Tuesday's meeting was only to set the stage for budget planning. Staff will not present an actual budget for supervisors to consider until February.

Staff writer Cheryl Chumley can be reached at 703-670-1907.