The Loudoun County Board of Supervisors on Tuesday adopted a fiscal 2021 budget that reduces the tax rate one cent.
The effect of the new budget on county homeowners remains uncertain given COVID-19's impact on the local economy.
The county plans to freeze $100 million as a result of COVID-19.
The budget, which goes into effect in July, totals approximately $3 billion in appropriations for the county government and school system, including a real property tax rate of $1.035 per $100 in assessed value, which is one cent lower than the current tax rate and higher than what was previously thought of to be the equalized tax rate.
The $1.035 rate was expected to raise the average homeowner's bill 2 percent, but county officials said given the pandemic's impact on the local economy, it's unclear what the precise impact of the rate will be on county tax bills.
In 2020, the average homeowner's tax bill in Loudoun County was $5,162. Prior to the coronavirus outbreak, under the proposed tax rate of $1.035, bills were to increase by 2 percent to an average of $5,272. Tax bills are calculated by factoring in home assessments and the tax rate.
Catoctin Supervisor Caleb Kershner (R) cast the lone vote opposing budget at the $1.035 rate.
“Our citizens are going to — quite frankly — feel the pain of this, and I don't think raising the rate rather than keeping it at what we know to be the equalized rate is the right thing to do at this particular time," Kershner said. “One of our citizens right now —they’re in Loudoun County — they're going without work, they are burning through their savings, some of them are living paycheck to paycheck, and now they have no paycheck, and I don't necessarily think that adopting this particular rate with the assessments that we currently have is in their best interest.”
Dulles Supervisor Matthew Letourneau (R) said the reality is that some people will not be able to pay their taxes as early as June.
Letourneau said a message he has told his constituents is that the government is still open and that “we have employees that are working every day and we have to be able to pay them.”
With departments such as family services, emergency and law enforcement services still operating, Letourneau said it’s the county government’s responsibility to “cover those expenses as much as we can.”
The board and county staff shared concerns looking at the current and future budget. Staff estimates a revenue shortfall of approximately $96 million.
County Administrator Tim Hemstreet said he has directed staff to limit expenditures in the remaining months of fiscal 2020 by instituting a hiring freeze for vacant positions and directing departments to limit all non-essential operating and maintenance expenditures for the rest of the fiscal year. The 2020 fiscal year ends June 30.
In response, the board unanimously approved recommendations to reserve $100 million — $40 million for county expenditures and $60 million for school division expenditures — until the county’s economic future is clearer. Including the $100 million in the fiscal 2021 general fund expenditures protects any revenue shortfalls, according to county staff.
If the revenues materialize to support those expenditures, the board will have fully funded the school division’s budget request of $952 million.
For the county expenditures, the freeze includes most new expenditures, including the 3.5% merit increase for eligible county employees and step increases for public safety employees; operating and maintenance adjustments; and new departmental resource requests for capital facility openings and departmental priorities.
More than 130 new full-time positions were expected to be approved to "maintain or enhance current service levels, open new facilities and support other priorities,” according to county staff. These include 14 new positions related to the county courthouse expansion, eight positions for the new Ashburn Senior Center set to open in spring 2021 and seven for the new animal shelter expected to open in Leesburg in the fall.
Additionally, the freeze includes more than $475,000 for five positions in Mental Health, Substance Abuse & Developmental Services, $197,798 to support the state-funded public defender’s office.
The proposed reserved county expenditures would not impact the already implemented new classification and compensation system. Cost of implementing the new pay plan is $25.4 million — $11 million of which is in the current year's budget.
County staff said when the board releases funding from the reserve it will be done proportionally with the county and school division.
For example, if $30 million was released from the reserve by the board, $12 million would be released for county expenditures and $18 million for school division expenditures.
Last month, Chairwoman Phyllis Randall (D-At Large) said employees have been paid $0.86 on the dollar compared to regional counterparts. She said many county workers have been accepting higher paying jobs elsewhere because Loudoun has consistently lowered the tax rate.
Randall on Tuesday said, “We realize that people are having a hard time, we realize that there are people out of work and our first goal, as I said before was to keep our employees in their positions and pay their current salary, with the comp and class in place because we didn't want our employees losing their jobs and that's what we're doing here today.”
The board also approved the amended fiscal 2021-2026 CIP, which includes both county and school projects at $2.9 billion for the six-year planning period.
The category with the largest expenditure percentage is transportation projects at 40 percent. Some of the new transportation undertakings in the CIP include widening a portion of eastbound Route 7 between Loudoun County Parkway and Route 28 and an intersection improvement on Shellhorn Road.
Other new projects in the CIP include two board-directed initiatives: the Broad Run Farms Waterline Extension and planning for a linear parks and trails system.
The budget includes $15 million in local gas tax funding for the county's contribution to the Washington Metropolitan Area Transit Authority and for the operational and capital payments for the anticipated start of Metrorail’s Silver Line revenue service in Loudoun during fiscal 2021.
In adopting the budget, the board also temporarily paused new capital projects that include debt financing until conditions improve for the county to enter the municipal debt market.
County staff will report to the finance committee on a monthly basis with updated forecasts of the fiscal 2020 budget and 2021 projections.