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Loudoun County may be facing a $100M budget shortfall

Courtesy Photo/HarveyBuilders.com
With a burgeoning schools budget, a growing population and the pressure to pay county employees higher wages, the county is projecting a budget shortfall of a hefty $100 million for 2019, a gap County Administrator Tim Hemstreet warned the Board of Supervisors’ finance committee Tuesday night the county would likely not be able to close without an increase in the real estate tax rate.

From a revenue perspective, Hemstreet said the county was consistent with where they were this time last year, but that the county would have much higher expenditures for 2019.

He said one of the most significant numbers affecting the fiscal 2019 budget was projections coming from a request for an increase in local tax funding from Loudoun County Public Schools (LCPS).

Hemstreet offered the board two scenarios. At the county’s current tax rate of $1.125 per $100 in assessed value, he predicted it would create a budget shortfall of $94.8 million. If the board chose to lower the tax rate to an equalized rate of $1.110, he said it would create a budget shortfall of $106.9 million.

The equalized rate is that which keeps taxes level for the average Loudoun County homeowner.

But a decision over what kind of guidance the board should give the county administrator sparked another partisan divide, particularly between the chairwoman and vice chairman of the Board of Supervisors. The committee failed to reach an agreement on what kind of guidance to provide the county administrator.

Last year, Hemstreet initially prepared the fiscal 2018 budget at $1.135 per $100 in assessed value based on the board’s guidance. However, supervisors changed course and voted along party lines to reduce the previous tax rate of $1.145 by two cents to $1.125.

“The message that I have for the committee tonight is that while we often are able to close the gap significantly between now and when the budget is brought in early February, and then discussed by the board in the month of March, this number is probably large enough that we are not going to be able to completely close the gap at either of the two tax rates and accomplish all the things that are represented on this sheet,” Hemstreet said.

So far, LCPS has indicated it may need an additional $100.5 million in new revenue expenditures related to increased enrollment, new schools, wage step increases, compensation, health care and more.

Hemstreet said LCPS’ additional needs coupled with the findings of the county’s recent classification and compensation study -- which found that Loudoun has not kept pace with nearby jurisdictions in pay for county employees -- put the most pressure on this year’s budget.

The county administrator said he wanted to prioritize increasing county employees’ pay and benefits this year, but cautioned that doing so would put a strain on additional needs and services he could include in the budget.

Finance committee members agreed that they wanted to prioritize raising the pay for county employees and focus less this year on the school system.

But despite a warning of the county’s growing county needs, the committee’s Republican members said they still wanted to keep the tax rate at $1.125.

Vice Chairman Ralph Buona (R-Ashburn) said asking Hemstreet to prepare the budget at the current tax rate of $1.125 would give him more options and flexibility.

“Really there’s three options. The first option is the current tax rate, which would be a tax increase because we’re projecting the equalized rate to be a penny and a half lower. The second option is to provide options to the board to take it to the equalized rate,” Buona said. “And really the third one is, Mr. Hemstreet will advertise above that, I guarantee it. So, the board has room to go even higher if we so choose to do it, so we got three different options with this motion, so I think this motion gives us a lot of flexibility.”

Buona noted the numbers were still tentative and said that members were talking only about recommendations to Hemstreet on how to prepare the county’s 2019 budget.

He offered a motion to have the full board direct Hemstreet to prepare the 2019 budget at the current tax rate and provide options that would reduce the tax rate to the estimated equalized real property tax rate.

But the motion failed on a party-line vote, with Buona and Supervisor Tony Buffington (R-Blue Ridge) voting in favor of the motion, and Chairwoman Phyllis Randall (D-At Large) and Supervisor Koran Saines (D-Sterling) opposed.

Randall said although she agreed with Buona’s argument, based off of the board’s track record of voting for a tax rate below the county administrator’s recommendation, she could not support providing him with a guidance at the current rate.

“If we stay with this tax rate, we would actually be … short-falling the county side by $94.8 million with the real personal property tax rate of $1.125. If we want the equalized tax rate, we’d be short-falling by $106 million,” Randall said. “So, if we even want to start talking about taking care of the employees we cannot start with a motion that actually will short-fall the government on the government side by that much money, let alone, talking about what we do on the school side."

Randall said the committee should instead recommend the full board direct Hemstreet to prepare the county’s fiscal 2019 proposed budget at the rate of $1.135, and to provide options that would reduce the real property tax rate to $1.125 per $100 of assessed value.

According to an LCPS memo, the schools will need the $100 million to meet enrollment growth, build new schools, install compensation increases, meet Virginia Retirement System contributions and cover higher health-care costs. The money would also be used to expand full-day kindergarten to 85 percent of eligible children. The school system is expecting additional state funding of $5.7 million in 2019 for increased enrollment.

But Randall’s motion also failed on a party-line vote, with only Saines and the chairwoman supporting the motion.

“That’s a two-and a half-cent raise in the tax rate. I don’t think we should throw in the towel on fiscal responsibility,” said Supervisor Tony Buffington (R-Blue Ridge), who offered the motion during last year’s budget cycle to lower the tax rate by two cents. “I’d rather set an expectation, especially to the schools’ side, that they need to come in with a reasonable request -- as reasonable as possible."

The final measure passed by the committee included no guidance whatsoever for the full board.


Contact the writer at .(JavaScript must be enabled to view this email address) or on Twitter at @SydneyKashiwagi.

Comments


Pictured above the home of the Military/Industrial complex nope. The school system castle, pure overhead!


Those complainers about the data centers can thank them for keeping the tax rate below 2 dollars.  They are the only tax positive revenue in the county.  And to the comment on stop with the building of huge schools?  So would you rather have trailors parked outside or just overcrowded?  Obivoisly the schools are built before the developments are finished and they are already to capacity.  Only way to stop this is to reign in the school budget.  Over 70 cents of each dollar goes to the schools.  Every year the sky is falling and the kids are going to be the ones who lose out.  That’s what they have been saying to us for last 38 years.


Dontpaveloudoun, my whole campaign for SGP data was about higher quality teachers. Currently, there are no onjective evaluations of teachers. Would you support measuring teacher quality after they are hired? Our teachers are paid much more than nearly any teacher outside of the urban DC area.


The Supervisors must embrace a “smart spending” process, instead of overspending. Just because the school board says it needs more money doesn’t mean they should get it. The huge amount of funding that goes to the schools should be spent on more , and more qualified, teachers; study materials (the math books are 10 years out of date but the budget surplus was used for computer upgrades?), building huge schools with all that wasted space is foolhardy: its not the quality of the building that turns out good, prepared students, its the quality of their teachers and study materials.
Just because there is projected growth doesn’t mean we have to allow it to happen and facilitate it by building residences, transportation and schools to invite these people, we should stop development and make the county unfriendly to increasing businesses like data centers and the high tech industry and big box stores. Instead we should be introducing traffic calming measures, keeping roads unpaved to retain the rural character of the community, hire more teachers and buy books and study materials instead of building more schools and having idiotic arguments about the efficacy of grass versus turf ball playing fields. That is money wasted; OUR tax payer money wasted.  Increasing taxable rural buildings and increasing the tax rate should be a non-starter.


The Board works like crazy to try to hold taxes in line, which are now the highest in the state. There are two problems: Growth - new houses and kids - costs millions upon million. Answer: Stop the growth! Second: LCPA gets 70% of the tax money and is notorious for big-spending and for keeping even the School Board in the dark. Answer: Make the LCPS report directly to the BoS.


One only needs to look at the $100K stone retaining under construction at the entrance of the new Academies of Loudoun on Sycolin Road to see the waste in our school system.  There is not even much of an incline … just for looks.


It makes ZERO difference if our Loudoun elected officials have a (R) or (D) after their name.  They are all addicted to spending! 

I actually had to call to finally get the center medians mowed on Loudoun County Parkway because they were so tall you could not see oncoming traffic in some areas, yet we can afford to provide all day child care for parents with kindergartners (I am a father of three and know well it is public subsidized day care, not education)?!

Furthermore, agree with SGP.  He is always on point regarding the problems with the bloat within LCPS!  Our public education system is becoming laughable.


Love Loudoun - Operating and Maintenance is expected to increase by $52m.  Other use of funds is to increase by $20m.  These are increases in the budget above what was to be spent in 2017.  That’s just 2 line items with major increases that I’m sure someone can go through and trim the increases.  The point being that rather than spend another $250k, perhaps look to where savings can be made.


After living in this county for 25 years I do not ever recall the county Admin ever discussing a spending cut. It is always a tax increase. LCPS had a surplus of 35 million last year. Where is the call for decreased county spending.


“I have NO issue with an increase in the tax rate for education and emergency services. However it is the rest of the garbage that the County wastes money on that sickens me.  This includes a raise for the Board which can’t seem to control the spending.”

1) the BOS increase amounts to about $250,000 a year.
2) “rest of the garbage” includes: parks, libraries, mental health, road construction.  yeah, that helps make your argument. :(


The BoS has been giving LCPS annual increases at double their enrollment growth rates for 5-6 years and LCPS still needs another $100M more.  There are so many things LCPS wastes money on.  If they are so far in the hole, why did they build the Academies of Loudoun.  Why expand Full Day Daycare if they are short.  Why do half the stupid things LCPS does?

But, despite LCPS fiscal stupidity, the BoS is the enabler.  In the end, the BoS calls the fiscal shots and they keep sweeping more and more money to a school system that doesn’t need that much.

And building new houses so the County grows 1,000 people a month doesn’t help either.


Once the real increase in state funding comes in, if you simply give LCPS $50M more than it got last year (which itself was inflated), this countywide deficit essentially goes away.  That why 80% of this is solely due to the inflated LCPS budget.


I hope that everyone realizes this a the Board of Supervisors and a projected shortfall across the COUNTY and not the LCPS School Board and LCPS budget. Some comments are on point for the BOS others seem to need redirection to LCPS and the SB.


Decisions have consequences! Failing to properly steward tax dollars by LCPS leaves citizens with a heightened degree of suspicion over what is needed and BOS continued acceptance of higher density residential projects which obviously pressure tax rates higher leaves taxpayers frustrated as well. There are MANY examples to support both listed issues above and yet we find ourselves again (every year) with the same “how much should we raise taxes question” instead of how much we can lower taxes because we have improved our decision and are seriously addressing the top ten identified problem of the county and the ongoing challenge to properly AND EFFICIENTLY educate our children.
Bob O__ Esq. (8 year former school board member)


I have NO issue with an increase in the tax rate for education and emergency services. However it is the rest of the garbage that the County wastes money on that sickens me.  This includes a raise for the Board which can’t seem to control the spending.


mmmmaybe we should not have spent money on an OUTSIDE contractor to design schoolbus routes that don’t work. mmmaybe developers should do road improvements/infrastructure etc BEFORE they are allowed to build. don’t have the answers..just sayin’


Let’s start with some facts.

1. LCPS says it “needs” $100M+ more than in FY18. Yet, the actual enrollment was significantly below projections for FY18. So not only will there be extra leftover funding in FY18 but the FY19 baseline should be lower as well.

2. Last year, LCPS funding was $35M more than what it needed. They used that leftover funding to buy some goodies and returned $10M’s to the county. Clearly they don’t need what they receive, much less the even higher asking number. We shall see how much is left this past year when the FY17 audit report comes back soon.

3. Many LCPS teachers are getting 5% raises with no objective evaluation. Step 1 and step 30 teachers already earn more than equivalent teachers in Fairfax. People it costs more to live in Fairfax so why are we throwing even more money this way?

Bottom line is while enrollment growth is slowing, LCPS increased funding requests are accelerating! They think they can just give your tax $ out to their spouses and friends and you won’t speak up. County workers need raises.  They probably need $50M more, not anything close to $100M. Until we at least get LCPS employees to be accountable (see all the scandals), step increases only.


It isn’t a $100 million budget shortfall if you cut spending across the entire $2.5B budget by 4.00%. Or split the difference 50/50. 2% increase in taxes and a 2% reduction in spending.


Maybe we should not be spending money on full day kindergarten for kids that don’t benefit from it.

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