VML letter to legislators details budget principles

The league delivered a letter on Monday to the chairmen of the House Appropriations, House Finance and Senate Finance Committees, as well as to every member of the General Assembly.

The letter includes six budget principles that VML asked the General Assembly to follow in considering budget amendments for FY10, as well as for the 2010-2012 biennial budget.

VML’s legislative staff is counting on every member local government to: send a similar e-mail, fax or letter to its delegation in the General Assembly, as well as to the chairmen of the money committees; or to call members of their delegations, or pass a resolution in order to emphasize that the General Assembly should not adopt a budget that simply passes on costs to local governments.  Please send VML a copy or your correspondence or resolutions.

VML will send a similar letter to Gov. Bob McDonnell and urge local governments to write the governor as well.

Here are the e-mail addresses of the chairmen of the money committees:

House Finance Committee Chairman Harry R. Purkey, DelBPurkey@house.virginia.gov; House Appropriations Committee Chairman Lacey E. Putney, DelLPutney@house.virginia.gov; and Senate Finance Committee Chairman Charles J. Colgan, district29@senate.virginia.gov. contents

Projected budget shortfalls cause alarm

In January, city agencies and departments ready their budget submissions for city manager review, finance officials prepare the first local revenue projections, and school superintendents begin final “number crunching” for the school boards. It’s the time in the local budget development process that the “big picture” begins to take shape. It is a picture that few local governments are eager to view.

Here is the latest in a series of snapshots showing some of what is going on across the Commonwealth.

In Henry County and Martinsville the Martinsville Bulletin reported on the impact of the proposed state budget cutbacks on law enforcement. For the county, the sheriff said his office could lose 22 percent of its funding, or more than $1.2 million, if Gov. Tim Kaine’s budget is approved. Some 27 officers could lose their positions. The city manager expects to lose $200,000 of state financial aid for local law enforcement in this fiscal year and another $200,000 in FY11 and again in FY12. The city manager did not rule out making cuts to the police department’s $3 million budget to account for the state’s action.

Early revenue projections by city officials show Williamsburg will likely face a $1 million budget shortfall in FY11. For this fiscal year, the most recent estimates show a $500,000 revenue shortfall in the $32 million budgeted. The budget outlook for FY11 assumes no layoffs, but there may be some targeted reductions in force, possibly in the city’s Public Works Department or economic development office. Other strategies to contend with the budget shortfall include shifting health care costs to city employees, freezing unfilled positions, closing a pubic swimming pool, and reducing tourism promotion. Revenue increases may also be under consideration. A 50¢ increase in the personal property tax rate of $3.50 for each $100 valuation would bring in an extra $360,000 per year.

In Page County, public school officials may lose a total of $2.3 million or 6.0 percent of the schools’ current budget next fiscal year. Roughly half of the division’s funding comes from the state. The school superintendent concedes that reductions in state aid could mean cuts in personnel. The superintendent will present his budget to the county school board in February.

Culpeper County Board of Supervisors and School Board expect to receive a report detailing ways to save money by consolidating what they consider duplicated services. Items under review include procurement, vehicle maintenance, human resources, finance, and information technology. The school division expects to receive $1.3 million less in local funding in FY11 because of weak real estate and personal property tax collections. School officials also expect less money from the state. According to the school board chairman, “we are now operating 10 schools in an eight-school budget.” The school superintendent expects budget cuts in the instruction part of the budget.

City officials told the Chesapeake City Council that the city anticipates a $23 million gap next year because of declining revenues and rising costs. Department heads have been asked to slice 10.0 percent from their budgets in FY11. In October, the city laid of 23 employees, mostly front-line workers with salaries ranging from $20,000 to $40,000. The council also adopted a $3-per-month fee for residents to pay for increasing trash disposal rates and a new recycling program. Council has instructed staff to prepare a budget with no increases in tax rates and no new fees. With 75 percent of the general fund dedicated for salaries and benefits, the city will have to decide which programs are essential and which programs can be scaled back. Draft reduction scenarios will be presented to the public and to council in early February.

In the City of Richmond, Mayor Dwight Jones declared an economic crisis, announcing a $30 million budget shortfall for the next fiscal year and the possibility of layoffs, agency consolidations and service cuts. The shortfall is largely the product of slow-growth in local revenues, sharp declines in revenue from the state, and steep increases in retirement and health-care costs. The shortfall is tantamount to the annual amounts needed to operate the sheriff’s office and the jail. The figure does NOT include any shortfall that may affect the city’s school system. The mayor has informed city council that he would like to submit his proposed FY11 budget in April rather than in March, as required by city ordinance, to take into account final actions taken on the state budget. Council members have suggested to the mayor to look into the possibility of privatizing the city’s fleet management as well as consolidation of services with the school system and other independent agencies such as the Housing Authority and the Richmond Behavioral Health Authority.

Property values are falling more than previously predicted in Virginia Beach. The value of residential and commercial properties could drop an average of more than 6.5 percent. The previous forecast was a 5.0 percent decline. The city was already facing an $84.4 million shortfall between the city and schools. The new assessment projection could bump up the shortfall by another $7.5 million. The final report on assessments will be submitted in late February. Last year’s total assessments fell 2.3 percent. Before last year, the city had seen dramatic increases in property values, with average spikes as high as 22 percent.

The Hanover County School Board received the superintendent’s budget proposal last week. The current school budget is $213 million, and the proposed budget in FY11 is $198 million. The superintendent proposed over $18.0 million in cuts in a wide range of areas, including: $8.7 million in personnel (instructional and non-instructional), $6.3 million in equipment and operating expenditures, and $3.5 million in delaying capital expenditures and in extending the replacement schedule for buses, computers and textbooks. The superintendent’s budget does not propose passing the higher health-care and retirement costs to school employees.

In Fairfax County, the school superintendent has proposed an unprecedented budget which calls for scaling back full-day kindergarten, eliminating elementary band and strings music programs and foreign language-immersion programs, cutting nearly 600 positions, eliminating winter cheerleading, indoor track and all freshman sports, curtailing transportation to academic centers for gifted students, dropping extended school days and year-round school calendars, closing one alternative school, and charging new fees (e.g., $75 for every Advanced Placement and International Baccalaureate test and $100 for every high school sport). The school system’s financial woes are related to enrollment growth and rising costs for retirement benefits, utilities and health insurance. The school board has until February 4 to amend the superintendent’s proposal and forward its funding request to the board of supervisors. The county itself is facing a $316 million budget shortfall next year.

Chesterfield County schools face $40 million to $50 million in budget cuts, and school officials have proposed cuts that include laying off hundreds of teachers, implementing furloughs and eliminating all county financial support for athletics. The previous shortfall estimate was revised to take into account Gov. Kaine’s proposed budget. The school district made $32 million in cuts for FY10 and used $19 million in federal stimulus money to keep about 300 employees.

In Lynchburg, the school division faces a likely shortfall of more than $3.7 million (and possibly as great as $5.5 million) in state funding next fiscal year. The schools already face a likely shortfall of $1.7 million in FY10. One school board member predicted that the schools would have to cut personnel before the school year ends in June. contents

McDonnell signs orders creating jobs, government reform commissions

Gov. Robert McDonnell has signed two executive orders creating commissions on economic development and government reform.

Executive Order One creates the Governor’s Economic Development and Job Creation Commission. The commission, which is scheduled to give its initial recommendation by Oct. 16, will be organized into six subcommittees: Business Recruitment and Retention; Economically Challenged Regions and Localities; Energy Research, Exploration and Production; Small Business; Tourism and Film Marketing; and Real Estate and Construction.

The commission will be headed by Lt. Gov. Bill Bolling, who was named the chief job creation officer in the same executive order, and will include various secretaries from McDonnell’s cabinet, as well as up to 50 citizens. The commission will have the responsibilities of identifying impediments to job creation, review how other states and countries attract jobs, review the role of the state in job creation, recommend changes to the tax and regulatory climate, evaluate current workforce programs and identify industries for recruitment to the state.

Executive Order Two establishes the Governor’s Commission on Government Reform and Restructuring. The commission is charged with reviewing state government to: Identify efficiencies, including streamlining agencies; explore innovative ways to deliver state services; seek out means to more effectively and efficiently deliver core state functions, including privatization; and examine ways to be more transparent and accountable.

The commission will include up to 20 citizen members; it is scheduled to give preliminary reports by July 16 and final reports by Dec. 1. contents

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