A Penny For Your Thoughts

Fairfax County has accomplished something the Virginia General Assembly can’t seem to do – we agreed on a budget! The Board of Supervisors marked up the proposed budget on Monday, and will adopt the budget officially on April 26. The adopted budget for Fiscal Year 2005 includes a three cent decrease in the real estate tax rate, reducing the current $1.16 per hundred dollar valuation rate to $1.13 per hundred.

During the past three years, the Board of Supervisors has reduced the rate a full ten cents in order to provide some relief from escalating real estate assessments. As a result, the typical household will pay $357.51 less in real estate taxes in FY 2005 than they would have without tax relief in the past three years. The reduction in the tax rate also reflects a commitment made by the Board of Supervisors to adjust the tax rate if given additional revenue streams by the General Assembly. While Virginia counties did not get the legislative authority to diversify revenue streams like cities and towns are able to do, Fairfax County did get authority to raise the transient occupancy (hotel) tax from two percent to four percent. This increase is anticipated to yield about $5 million additional per year, and gave the Board the flexibility to reduce the tax rate a little further than originally projected.

Each penny on the real estate tax is worth about $14.5 million, so the Board needed to identify $43.5 million to offset the reduction. The Board examined the proposed budget carefully to identify cuts. Also, we were aided by an improving local economy which anticipates revenue increases. As a result of stronger job growth and improved consumer confidence, growth in sales tax receipts is anticipated. An ambulance fee and new participant fees for athletic field usage also are part of the budget package.

The annual school transfer increased to $1.45 billion for operations and debt service. This is an increase of $87.2 million from last year, and represents 53 percent of the total general fund. The Board also committed to establishment of a special reserve fund for replacement of school buses and school computers. Fairfax County will work with the School System to develop criteria for the reserves and a strategy for funding future annual contributions. In a series of ancillary motions, Budget Chairman Sharon Bulova (D-Braddock) also moved to direct the county and school staffs to identify savings and management efficiencies that can be realized through further consolidation of county and school services, especially in the human services area. As an incentive, she said, a portion of the savings realized would be reinvested in the school system.

The budget mark up package received a unanimous 10 – 0 Board vote, the first unanimous budget vote since 1995! The fiscal year begins on July 1, 2004.