Benefit costs hampering creation of local budgets

Real estate assessed values remain weak

The issues confronting next fiscal year are becoming better defined as local governments evaluate their revenue sources and school superintendents ready their budget requests for local school boards.

In the Richmond region, several localities are reporting another year of slumping property values. Henrico County’s real estate assessments declined by 1.13 percent. Coupled with last year’s drop of 7.8 percent in real estate value, Henrico residential and commercial properties have depreciated nearly 9 percent in just two years. The county, however, is faring better than some of its neighbors. Chesterfield County announced last week a 3.3 percent drop in real estate value, and Hanover County’s assessments came in at 4 percent lower than last year.

In Southside Virginia, Danville’s city manager expects to see spending cutbacks in the next fiscal year. The city currently projects a $5.8 million shortfall related to economic factors, reduced state aid for mandated services, dramatic health insurance costs, and greater demands for assistance from the city’s school system.

The city is particularly concerned with state efforts to reduce local taxing authority (i.e., BPOL and Machinery and Tools), the shift of “line of duty” costs for public safety personnel from the state to the locality, and the reduction of the state contribution to the Comprehensive Services Act for At-Risk Youth and Families.

In the superintendents’ budget proposals, there are recurring themes of higher health insurance costs; significant, unplanned increases in employer contributions for teacher retirement; vanishing federal stimulus dollars; and further reductions of state support.

In Staunton, health costs alone are projected to increase 25.2 percent or about $638,000. The school system also faces a $500,000 increase in retirement fund contributions mandated by the state.

The Stafford County school superintendent told the school board that the system could face about $21 million in “mandatory increases” for employee pay and benefits in FY12. The increases are being driven by expiring federal stimulus dollars, a projected Virginia Retirement System rate increase of roughly 3 percent, and a projected 10 percent increase in health costs. Additional sales tax revenue and federal Education Jobs Funds will not pay for the “mandatory increases.” The board of supervisors recently indicated that it does not plan to increase local funding for the school system.

In Bedford County, school officials plan to ask the board of supervisors for more local funds to address a projected $5.8 million budget shortfall. The school division could see a cut of up to $2.7 million in state money starting in FY12. Federal revenue could also drop by $1.7 million. And, proposed state actions on retirement could increase the school division’s contributions by $1.4 million.

The Danville school division anticipates decreased state revenues of between 3 to 7 percent; increased VRS costs; increased health insurance costs; and the loss of funding from the Teacher Education Jobs Fund. For this fiscal year, the school system left 37 positions unfilled to help balance the budget.

Henrico schools project an $8.56 million budget gap next fiscal year. Among the options under consideration are cutting 36.5 positions through attrition, restructuring the retirement program, and extending the number of years laptops are kept at the elementary schools. The budget gap is made up of a combination of revenue shortfalls and spending increases, primarily for VRS contributions, health care, and the addition of another grade level at a new high school.

In Richmond, the school superintendent’s budget proposal for next year would absorb deep cuts in state aid with two furlough days for employees and the elimination of 13 positions. The proposal also assumes higher costs for VRS payments and health care, and is nearly $25 million less than the school division’s total budget from FY09.

Washington County schools are also confronting another tough budget. The school superintendent says the school board does not have the means to balance next year’s budget without help from the board of supervisors. The biggest unanticipated increase is more than $1 million in contributions to VRS. Health insurance costs are also expected to rise by more than $800,000, and energy costs could go up by nearly $400,000. The board approved an increase of 2 cents per $100 valuation last year to help the school system.

To further compound the task facing localities, Attorney General Ken Cuccinelli released a legal opinion last week declaring it is illegal for public schools to require students enrolled in Advanced Placement courses to pay the AP course fee. He wrote that “it is my opinion that a local school board cannot impose a mandatory fee on students taking advanced placement courses for the required taking of the Advanced Placement Examination.” “Because the AP Examination is the required end-of-course examination, it cannot reasonably be viewed as a service or program for which a fee may be levied.” contents

Telephone right-of-way fee to increase 9.2% in FY12

The fee that the Virginia Department of Transportation collects from telephone companies for maintenance of rights of way will increase by 9.2 percent in FY12. Cities, towns and counties that maintain rights of way are allowed to charge the same rate set by VDOT.

VDOT notified all service providers and affected localities on Jan. 2 that the fee will be increased to $0.83 per access line (up from $0.76) starting July 1, 2011.

The telephone company collects the use fee per access line by adding it to the user’s monthly bill where it must be stated as a separate line item. VDOT recalculates the fee annually based on information about the number of access lines and the footage of new installation as of Sept. 30 the previous fiscal year.

To learn more about the ROW use fee program go to http://www.virginiadot.org/business/row-usefee.asp. Local governments that wish to establish a fee must do so by local ordinance.

Staff contact: Joe Lerch, jlerch@vml.org. contents

Comments sought on rural transportation consultation process

Non-metropolitan local government officials have until March 25 to review and comment on the state’s updated draft Rural Transportation Consultation Processes document.

Once every five years state departments of transportation across the country are required by the federal government to formally review and solicit comments on the effectiveness of the statewide rural transportation consultation process and any proposed changes for improving it.

The document presenting the recommended rural consultation processes is available for review and comment at http://bit.ly/f8FOJp. The 2006 Virginia transportation rural consultation processes document also is available for reference and/or comparison purposes at http://bit.ly/h8Q9sl.

The draft document is designed to ensure that VDOT and the Department of Rail and Public Transportation (DRPT) consult with non-metropolitan local officials in planning and programming state highway, transit and passenger rail improvements in long-range transportation plans and short-range transportation programs. Proposed revisions include, but are not limited to discussion on:

• Transportation oversight boards and agencies, including the Commonwealth Transportation Board, VDOT and DRPT;
• Development of the Six Year Improvement Program (SYIP), including specific roles for rural transportation officials in developing urban, secondary, and/or specialized VDOT programs;
• The DRPT coordination with the SYIP, including DRPT’s coordinated human service mobility plans and Online Grant Administration system; and
• The Rural Transportation Planning Program, and the development of Regional Long Range Plans, including Transit Development Plans, in Planning District Commissions with rural areas.

Provide written comments on the proposed rural transportation consultation process so that they are received no later than March 25 at the e-mail address: statewideplan@VDOT.Virginia.gov; or for delivery by standard mail, at:

State Transportation Planning Administrator, VDOT TMPD, ATTN RE: Rural Transportation Consultation Processes, 1401 E. Broad St., Richmond, VA 23219.

Direct questions to Darrel S. Johnson at 804-371-8868 or Darrel.Johnson@VDOT.Virginia.gov.  An updated document on the Rural Transportation Consultation Processes should be available in March or April. contents

IN CONGRESS

Public safety broadband network bill introduced

The National League of Cities reports that Sen. Jay Rockefeller of West Virginia has introduced a bill that calls for development of a framework for the deployment of a nationwide, interoperable wireless broadband network for public safety. It also calls for the reallocation of 10 megahertz of spectrum, also known as the “D-block,” for public safety purposes.

NLC supports the legislation, which is called the “Public Safety Spectrum and Wireless Innovation Act (S. 28). The issue has been debated for several years and similar bills have been introduced in the past. According to NLC, the White House has signaled its support for the reallocation of the “D-block” to public safety as part of a larger plan to create a nationwide communications network.

The bill has been referred to the Senate Committee on Commerce, Science, and Transportation. Virginia Sen. Mark Warner serves on the committee. contents

ETECTERA

Transportation, land-use webinar Feb. 8

Local officials can sign up now for a Feb. 8 webinar on best practice examples of how regions are linking transportation and land use and how local elected officials can play a role in developing the regions they represent.

The webinar will run from noon until 2 p.m. It is sponsored by the National League of Cities and the National Association of Regional Councils. There is no cost for participating in the webinar, but attendance may be limited.

To sign up, go to http://bit.ly/fOxek4. Upon registering, a confirmation e-mail will be sent with additional information about joining the webinar. contents

Global economic competitiveness academy set

The National League of Cities is sponsoring a new leadership academy on global economic competitiveness as it relates to cities and towns. It will be held in Seattle April 20-21.

Co-hosted by the Trade Development Alliance of Greater Seattle, the academy is designed to provide local leaders with:

• Knowledge and skills to understand the global economy in the context of local realities;
• Practical strategies to translate these new skills into action in the community;
• Peer-learning and promising practices sessions; and
• Facilitated discussion and networking with Chinese businesses seeking U.S. investment opportunities

The two-day event will bring together teams of local elected officials, staff and key stakeholders with experts from all levels of government and from the academic and business sectors.

As a part of the academy, NLC is joining with the U.S. Departments of Commerce and Treasury to host a delegation of Chinese mayors, senior business executives, and economic officials to provide an opportunity for policy dialogue on issues of local economic growth and development. U.S. local officials will also have the opportunity, in a session facilitated by the Department of Commerce, to directly engage foreign businesses seeking U.S. investment opportunities.

Space is limited, and applications for the academy must be received by Feb. 18 for consideration. Local and regional teams are strongly encouraged to apply. Competitively-selected applicants will receive complementary registration for the event. Those selected are responsible for their own travel and room/board costs. Attending participants are eligible for credit from NLC’s Leadership Training Institute.

The application is available on the NLC website. For more information or questions, please call or email Christiana McFarland at NLC at 202/626-3036, mcfarland@nlc.org. contents

TIF webinars to be offered throughout year

Stone & Youngberg, a VML sustaining member, and the Council of Development Finance Agencies (CDFA) are presenting a series of six webinars that will focus on current opportunities and issues in the world of Tax Increment Finance (TIF).

The first TIF Webinar will be held on Thursday (Feb. 3) at 1 p.m. The series is free and participants can register at the website below. The series will include the following programs:

• Feb. 3 at 1 p.m. – “When the TIF project goes bad”
• March 31 at 1 p.m. – “How to use TIF in a struggling economy”
• May 11 at 2:15 p.m. – “Offensive TIFs & tax districts” (Live from CDFA Annual Summit in Boston)
• July 28 at 1 p.m. – “How to Avoid the Subprime TIF”
• Sept. 29 at 1 p.m. – “The California TIF Experience”
• Dec. 8 at 1 p.m. – “The White Elephant Mall”

To register to participate in any of the webinars, go to: http://bit.ly/eJWTnw. contents

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