The Clarke County Board of Supervisors took a step closer to a 3.2% increase in County real estate rates on Tuesday evening. But the final decision on whether or not to implement the tax hike seems far from certain. The proposed 2-cent tax rate increase would bring Clarke County’s real estate rate to $0.64 per one hundred dollars of assessed value.
At last night’s budget work session three Supervisors expressed reservations about a tax hike given the generally weak economy as well uncertainties associated with the General Assembly’s still unresolved budget and its revenue impacts for Clarke County.
“Our revenues from the Commonwealth still aren’t in concrete, correct?” asked Supervisor Barbara Byrd. “That means the figures that were voting on aren’t solid and things could change.”
Part of the concern expressed by Byrd revolves around how the General Assembly will ultimately chose to implement tax changes designed to correct the underfunded Virginia Retirement System (VRS). The General Assembly’s yet-undecided-approach, along with other possible last minute changes to education funding, could necessitate a second look at Clarke County’s budget approach once the final revenue contributions are established.
Joint Administrative Services director Tom Judge said that the County’s approach so far has been to plan for the potential state budget changes in a way that allows the Supervisors the flexibility to implement any necessary corresponding changes into Clarke’s local budget.
Judge said that other nearby jurisdictions have taken a similar approach which is driven by the need to establish local tax rates, employee salaries and other budget priorities.
Byrd also questioned the impact of the tax increase on a hypothetical family earning $30K and living in a $250K home and the effect of the proposed two percent salary increase on the same family’s earnings if employed by the County.
Judge responded that the 2-cent real estate tax increase would mean a $50 annual increase in real estate taxes on a $250K home. The salary increase would amount to $600, although an additional $50 would be removed thanks to the proposed VRS “switcheroo” tax adjustment as Judge called it.
The proposed 3.2% tax increase is part of the Supervisor’s effort to plug a $607K deficit in this year’s proposed County budget. But while the deficit represents a large chunk of missing revenue, part of the amount may be easier to cover than it would seem at first glance.
Supervisor John Staelin (Millwood) said that because fifty-percent of the roughly $430K tax revenue increase will be collected in fiscal year 2012, the new funds can still be used to offset the carryover from this year’s deficit. Staelin also added that normal end-of-year carryover contributions from Clarke County Public Schools and other County departments often can be user to reduce the deficit figure in a subsequent fiscal year.
But Supervisors David Weiss (Buckmarsh) and Bev McKay (White Post) appeared to be in agreement with Byrd that a tax increase is not the right thing for the County at this time.
“If the majority of both Boards [School Board and Supervisors] believe that a two-percent pay increase is appropriate then I guess that’s fine,” Weiss said. “But perhaps we should be looking for equivalent reductions in other operating funds to offset the pay increase. I’m simply suggesting that that might be another way of looking at this.”
Weiss said that he appreciated the impacts that further cuts would cause but that prioritization of County spending would make the pay raise more defensible from his point of view.
“I still have core reservations about a pay raise that I’ve mentioned before,” Weiss said. “I don’t feel like I’m out-there somewhere on this or that I’m waving a ‘no-tax’ banner. My core concern is that this tax increase will be seen as an increase to fund a raise.”
Supervisor McKay echoed Weiss saying that he felt like more cost cutting was needed.
“This is a hard economy in which to discuss a tax raise,” McKay said. “I’m sympathetic that county employees haven’t had a raise, but this is a tough economy and I have mixed emotions. Somewhere there have to be more cuts that we can make.”
McKay cited his understanding that Clarke Schools had extra buses that were being leased to Frederick County.
“I thought that last year we were leasing our school buses to Frederick County?” McKay asked. “Why do we have extra buses?” Neither staff nor the one Clarke County School Board member present for the discussion could verify McKay’s question with certainty related to a leasing agreement with another county.
Supervisor Byrd added “How many people are there in the private sector that have gotten raises in the last four years?”
Supervisor Staelin attempted to counter some of the sentiment against a pay raise.
“It’s been four years since our employees have had a raise,” Staelin said. “After the VRS adjustment the raise will only be 1.4% and I think that a raise is due for County and School employees.”
Supervisor Chairman Michael Hobert (Berryville), who along with Staelin serves on the County finance committee responsible for developing the budget proposal, said that because much of the budget cost increases are being mandated by decisions in Richmond and are therefore out of the County’s control, any additional cuts would likely come in the form of staff reductions.
“We tried to address the County’s real needs where they exist and made cuts where we had to,” Hobert said of the budget development process. “The result is a deficit budget that will have to be covered from our fund balances if the economy doesn’t improve. We’re trying to address the County’s needs in as a responsible manner as we can.”
Although the Supervisors did agree to advertise the April 11 budget public hearing with a 2-cent rate increase, several Supervisors appeared to agree to the proposed rate knowing that they retain the authority to approve a lower tax rate increase, or no tax increase at all.
“I don’t know if I can support this budget,” said Barbara Byrd “especially if we don’t have all of the final revenue numbers from Richmond.
View Clarke County’s proposed FY13 budget here: Clarke County Proposed FY13 Budget