Jobs and housing

Local governments caught in economic quagmire?

Unemployment in the state jumped to 4.2 percent in June, the highest rate in more than four years, according to the Virginia Employment Commission.

Students seeking summer work, combined with new graduates flooding the labor market, helped fuel the jump over May’s 3.8 percent rate, the VEC reported. The number of jobless workers rose by 18,800 in June to 174,900. The June seasonally unadjusted unemployment rate was up 1.1 percent over the June 2007 unadjusted jobless rate of 3.1 percent.

The unemployment rates in all 10 metropolitan regions across the state were consistently higher than the June 2007 rates. Arlington County, with 2.6 percent unemployment, had the lowest rate in the state. Martinsville, with an 11.4 percent rate, was the highest, and the only jurisdiction with double-digit unemployment.

Even with the highest unemployment rate in four years, more people were working in Virginia than ever before. Nonagricultural employment expanded by 26,900 to an all-time record high of 3,817,000, surpassing the previous record set one year earlier in June 2007.

VEC’s unemployment news preceded by one day Gov. Tim Kaine’s announcement that Virginia had received its third straight “Best State for Business” ranking from Forbes.com. The Commonwealth scored well in the categories for regulatory environment; past job and income growth; quality of life; educational attainment of the labor force; and projected population growth.

Virginia’s rank for growth prospects (i.e., projected job, income and gross state product growth as well as business openings/closings and venture capital investments), however, was 26th among the 50 states. Last year’s ranking for this category was 8th.

The mix of good and bad economic news should be considered a warning sign for local governments. Payroll tax revenues comprise more than 55 percent of the state’s general fund resources. A slowdown in job or personal income growth and/or an increase in the unemployment rate reduces the likelihood of making the official revenue forecast in FY09. And that spells trouble.

Housing slump shows no signs of abating

George Mason University’s Center for Regional Analysis released two studies on Virginia’s economy.

Residential real estate taxes comprise roughly 40 percent of the total tax revenue for those Virginia localities in the Washington Metropolitan Region. According to the studies, if the change in housing prices from May 2007 to May 2008 remain constant, assessed values in the inner suburbs could drop 13 percent and by 24 percent in the outer suburbs. The authors point out that the average sales price of a single-family detached home dropped from June 2007 to June 2008 in Arlington, Alexandria, Fairfax County, Loudoun, Prince William and Stafford by 10 percent, 7 percent, 16 percent, 16 percent, 26 percent and 15 percent, respectively.

Mortgage foreclosure rates in April 2008 help explain the troubling housing economics in Northern Virginia. While Arlington and Alexandria had mortgage foreclosure rates of less than 100 per 10,000 units, Fauquier’s and Fairfax’s rates were more than 100 and for Spotsylvania and Stafford the rate per 10,000 units was more than 200. Loudoun’s rate exceeded 300 and Prince William’s rate topped the region at more than 700 per 10,000 units.

Local governments are beginning to struggle with the implications of stagnant or even declining real estate growth due to unsold houses remaining on the market for longer periods of time and the corresponding drop in housing prices. The unhappy fact is that more foreclosures lie ahead for several months or longer, according to the regional analysis center at the university.

Increasing demands for services and the increasing costs to deliver them, coupled with reduced state funding and declining assessments, could leave local officials feeling squeezed. contents

Countdown to VML Annual Conference

In case you haven’t registered for the VML annual conference, it’s not too late! And it’s not too late to get a hotel room though the VML block of rooms at the Norfolk Marriott and Sheraton Waterside. The deadline for making room reservations is Sept. 5.

Why come to the conference Oct. 19-21? Here are just a few reasons you don’t want to miss this year’s event:

• Educational sessions
• Sunday tour of Grandy Village
• Keynote addresses
• Presentation of Moseley Architects Go Green Virginia Awards and Green Government Challenge Certificates
• Workshops and roundtables
• Networking opportunities
• Special events
• Exhibition Hall filled with vendors
• Opening reception
• National Black Caucus of Local Elected Officials breakfast
• Virginia Local Government Management Association luncheon
• Host City Night at Half Moone Cruise and Celebration Center
• Annual prayer breakfast
• Women in Local Government luncheon
• Closing banquet with presentation of VML Achievement Awards and entertainment

View the conference agenda and download registration form here. contents

Board of Education begins SOQ review process

The Board of Education has started its biennial process of assessing and proposing updates to the state Standards of Quality, which are the minimum standards school divisions are required to meet. Much of the state funding for K-12 education relates to meeting the state share of the costs of the SOQ, which prescribe staffing standards.

Under the state constitution, the SOQ are set by the Board of Education, and are subject to change only by the General Assembly.

The SOQ committee of the Board of Education is undertaking the initial review of the SOQ, with the full board scheduled to review the committee’s recommendations in September. Public hearings on proposed changes will be held in October; the board is scheduled to give approval to proposed changes in November.
At its first meeting on July 17, the SOQ committee was reminded that the Board of Education has previously supported seven changes to the staffing standards under the SOQ that have never been funded. The proposals were to increase staffing standards or pupil/teacher ratios for elementary principals, assistant principals, reading specialists, speech-language pathologists, mathematics specialists, data coordinators, and teachers for the blind or vision-impaired.

These proposed staffing changes would cost the state about $192 million a year. The minimum price tag to localities should be about $157 million, but because the costs of the SOQ are so underestimated, that figure undoubtedly is higher. At the same time, however, many school divisions already meet or exceed these proposed standards, because local governments have been paying the full freight. In those cases, were the SOQ to be increased, the state would finally start contributing toward paying some of the costs associated with the higher standards for these seven positions.

Discussion at the July 17 committee meeting focused on whether the board should continue to support the 7 standards or whether it should pick only a limited number, due to the grim state revenue picture. The committee appears to be leaning toward continuing to endorse the 7 additional standards, but picking out a smaller number as priorities. contents

Climate commission work groups tackle options for change

With four technical work groups in place, and a report due in mid-December, the Governor’s Commission on Climate Change is tackling a staggering list of issues this summer.

The list includes a variety of topics related to global warming. Some of the topics deal with the protection of critical public infrastructure in low-lying coastal areas that would be affected by rising sea levels, including water and sewage treatment plants. Others deal with issues such as: coping with changes in rainfall patterns that could make existing stormwater systems inadequate; exploring the storage of carbon emissions in the ground or under the ocean; linking transportation and land use strategies to reduce carbon emissions from automobiles.

Implementation of any statewide plan could require local government actions affecting municipal operations and public policy, including comprehensive planning, zoning regulations, stormwater management, tree preservation and planting, and methane gas recovery at landfills – to name just a few.

The four work groups, which met in July and earlier this week, are addressing topics related to:

• electricity generation;
• adapting to climate change, including storing carbon emissions in natural systems;
• construction of energy-efficient buildings; and
• transportation / land-use.

Former Virginia Secretary of Transportation Rob Martinez, a member of the transportation/land use work group chaired by former Lt. Gov. Don Beyer, cautioned against “dictating how people travel and how they live.” Other members of the work group suggested that taking a number of practical actions could have a collective effect. These might include ideas such as converting some car parking spaces to bicycle parking; enhancing passenger rail opportunities; promoting denser land uses; supporting telework, flexible work hours and four-day work weeks; preserving and planting trees; and having the government buy back old “clunker” automobiles that pollute more than newer models.

The four work groups will meet on Aug. 27. The full commission is scheduled to meet on Sept. 10 and again on Nov. 13 in Richmond.

The commission, established by Gov. Timothy M. Kaine in December, will submit a plan that identifies ways to reduce greenhouse gas emissions. The Virginia Energy Plan set a goal to reduce these emissions by 30 percent by 2025. The energy plan, released in September, also calls for increased energy independence by reducing the rate of growth in energy use by 40 percent, and increasing in-state energy production by 20 percent. For more information, go to www.deq.state.va.us/info/climatechange.html. contents

< Index | ^ Top