May 2-8, 2024

Springtime is budget time for most local jurisdictions in Virginia. The annual exercise usually includes community meetings and public hearings so that elected officials can hear directly from their constituents about the local services most important to them. Virginia’s unique, and antique tax structure restricts localities’ sources of revenue, so property taxes provide the majority of funds that localities use to fund public education and numerous local services – public safety, human services, parks, libraries, Metro, Fairfax Connector bus, and much more. Unlike federal and state governments, localities in Virginia do not access income for their revenues, so local budgets must rely on the real estate tax and a laundry list of other fees and taxes.

For comparison, the real estate tax in Fairfax County provides 66 percent of the budget; sales taxes, license taxes, and utility fees account for 11 percent, and the unloved personal property (car) tax brings in 14 percent. Revenue from Virginia and the federal government makes up only three percent of the $5 Billion county budget. For every dollar Fairfax County taxpayers send to Richmond, the return is about 25 cents, a sensitive subject when local and state officials discuss budgets. State funding for public education has not changed since 2008, so there is a 16-year-gap that needs to be rectified. A Joint Legislative and Audit and Review Committee (JLARC) report about school funding, commissioned by the General Assembly, was released in 2023 and confirmed that, in Fairfax County alone, the Commonwealth is shorting the county by $1,900 per student. For the county’s 185,000 students, the state “owes” the county more than $350 million per year. (In a later calculation, the school system indicated the debt could be more than $500 million if all educational services provided to Fairfax students were included.) If the Commonwealth stepped up to fund their commitments, county taxpayers could see as much as an 11-cent reduction in the tax rate, but the proposed state budget falls far short.

Local budgets are proposed by county executives and managers who spend months developing proposals which are considered, amended, and adopted by elected governing bodies. Eagerly awaited usually is the proposed tax rate. Will it be increased or decreased? The Commonwealth requires localities to advertise a proposed tax rate in advance of public hearings; the final adopted rate can be lower than the proposed rate but cannot be higher. Most jurisdictions advertise a rate that allows for some flexibility for decision-making, especially if the public hearings identify issues that may need new or extra funding. Flexibility is a wise aspect of governance, as it gives elected officials an opportunity to weigh the pros and cons of the budget and make better, balanced decisions. Adopting an annual budget is the primary responsibility of local officials and reflects the priorities of the community. That’s the way it should work.

In a small rural county, after the county administrator presented the budget proposal and a recommended tax rate, a newly-elected supervisor made a surprise motion to reduce the proposed tax rate increases by half, which passed by a vote of 3 to 2. Faced with the premature action by the board, the county administrator had no choice but to make drastic cuts to rebalance the proposed budget. The other supervisors realized, too late, that they now had no flexibility to make decisions about the budget. They had boxed themselves in with an early and rash decision, before any discussion with the community and each other. A rookie mistake, perhaps, but also a good lesson about the importance of governance over political expediency and social media clicks.