County braces for more budget challenges

Budget cuts in Richmond have put Prince William County in the position of cutting $1.8 million for fiscal 2011 in what was already a tight financial time.

“We didn’t know the [dollar] number,” said Supervisor Martin Nohe, R-Coles, of the state’s cuts to localities. “We just knew it was a possibility.”

The $1.8 million represents the amount the county expects the state to demand by way of its reversion program, a budget action first implemented in fiscal 2009 that allows the General Assembly to request and receive blocks of money from localities to cover budget shortfalls. Prince William, which had already identified $1.5 million in savings, is not the only jurisdiction that will make this payment. The state has a $60 million gap to fill over the next two years.

The downside of this fiscal plan is that the $1.8 million comes in addition to the line-item and departmental cuts to specific local agencies the state has incorporated into its budget. The upside, though, is that the county gets to choose where to cut that $1.8 million.

“The $1.8 million is painful,” he said, “but I think doing it this way … allowing localities to determine which departments and agencies could take the cut … it actually puts the local government in control, and that’s a good thing. The General Assembly doing it this way is really a recognition of the the fact that different counties have different needs.”

County staff is performing a risk analysis, Nohe said, to try and find the best sources of cuts – the ones that won’t negatively impact critical needs, like safety and security.

More good news: This latest state fiscal 2011 maneuver shouldn’t place additional stress on county departments already facing sizeable funding decreases, like the library, which could lose 25 percent of its budget, Nohe said.

The Library Board has recommended reducing hours at all its facilities, to include Sunday closures.

“I find that completely unacceptable, and the board is not going to go with that recommendation,” said Chairman Corey Stewart, R-At-Large.

Another option is to close the libraries at Lake Ridge and Independent Hill, which could trim $458,000 in annual operating costs from the budget, Stewart said.

And a third option, favored by both Nohe and Supervisor Wally Covington, R-Brentsville, is to examine ways of finding the money in the budget so that – best case scenario -- all libraries stay open for all hours of operation. That money could come from reserves; it could also come by way of a tax rate that’s set at a level that allows for full library funding.

“We don’t know what the tax rate is yet,” Nohe said. “We also do have some flexibility built into the budget … that could bridge some of this.”

Too much budget bridging and reserve dipping is a concern in itself, however. Hefty debt combined with a tiny reserve fund – and add to that a dwindled national economy marked by housing foreclosures and an overall reduction in consumer purchasing power – can lead to a lower bond rating. And Prince William, with its current $800 million of debt, could little afford the higher interest rates that would result, said Stewart.

“A lot of localities are losing their AAA bond rating because of the economic downturn. We have not,” he said. “We’ve kept our five-year budget in balance. We’ve made a lot of cuts … and done a lot to reduce spending, and the bond rating companies have seen that as a very positive thing.”

Relying too much on the housing market to generate local tax revenues is a risk, however, Stewart said, and one reason why the county has opened the doors to easier commercial development the past couple years.

“That is exactly why I have been so focused over the last couple years on economic development,” he said, “and on expanding the commercial tax base. We created the Economic Development Task Force, streamlined the business inspection and permitting process, and made it easier to build commercial and upscale businesses in the county. Some people weren’t too happy about that.”

But the county’s future looks to include more of the same, he said, and in so doing, revenues won’t be so reliant on homeowners – and in jeopardy from foreclosures.
“We need to have more commercial development, we need more office space, we need more retail,” Stewart said.

Staff writer Cheryl Chumley can be reached at 703-530-3903.