SPRINGTIME IN CITY and county governments is signaled, not by the blossoming of flowers, but by revenue projections, budget proposals and tax rate hearings. In February, local governments throughout Northern Virginia unveiled 2021 fiscal year budgets based on an expanding economy, growing revenue, and prospects for long-term growth. But the coronavirus and the emergency response to the outbreak have brought those economic prospects to a screeching halt.
"The proposed budgets for each locality have been adjusted to defer or reduce new spending and to address the impact on struggling businesses and residents."
Fairfax County Executive Bryan Hill noted that the actual impact of COVID-19 on county revenue is extremely difficult to predict at this time. Declines are expected in numerous categories – Sales Tax; Transient Occupancy Tax; Business, Professional and Occupational Licenses Tax; building and inspection fees; and interest on investments. Staff in Arlington and Alexandria are predicting these declines to result in revenue shortfalls of over $56 million for FY 2021.
As a result, the proposed budgets for each locality have been adjusted to defer or reduce new spending and to address the impact on struggling businesses and residents. See below for a summary of each of the revised budget proposals.
ARLINGTON COUNTY
The Arlington County revised budget maintains only the current levels of service, removes all salary increases, places many projects on hold, uses funds from the Stabilization Reserve, and removes almost every originally proposed addition. The real estate tax rate will not increase over the 2020 rate of $1.013 per $100 of assessed value ($1.026 including stormwater).
The revised budget also responds to the pandemic. It provides funding to meet projected demand in direct life/safety services to residents, such as housing grants and permanent supportive housing, and identifies $2.7 million for emergency needs, such as food assistance. An additional $7.5 million is set aside for potential assistance to small businesses and nonprofits, service delivery recovery, employee support, and possible additional shortfalls in revenue.
FAIRFAX COUNTY
Fairfax County’s proposed budget defers most of the recommended spending adjustments from the original budget proposal. The new plan eliminates the proposed three-cent real estate tax rate increase, which would have funded Board of Supervisors priorities like early education, the environment and affordable housing. The proposed 4% Admissions Tax included in the original proposal is also eliminated along with county employee pay raises, expanded library hours and a number of new staff positions.
The funding increases that remain are directly related to the county’s pandemic response and include additional positions with the county’s Health Department and a $9.84 million appropriated reserve for additional needs related to the pandemic. All spending adjustments included in the revised proposal are offset by savings in fringe benefits and reserve contributions. Projected revenues are held flat in the updated plan.
CITY OF ALEXANDRIA
Responding to an estimated $100 million budget gap created by the economic impact of the COVID-19 pandemic, City Manager Mark Jinks proposed a budget representing a 1.6% decrease from the current-year operating budget. The revised budget cancels the previous proposal to raise the 2020 real estate tax rate by two cents to fund city and schools capital projects.
To close the budget gap, the new proposal cancels program enhancements, reduces the scope of capital improvement projects, and delays the beginning of the Waterfront Park, the Minnie Howard High School facility project and the Flood Mitigation Plan. The budget also uses city emergency funds.
You can find more information on each county’s website.
Josh Veverka is the NVAR government affairs director.