By Brian Cain
In their final budget work session, the Louisa County Board of Supervisors contemplated several options to overcome a $4.3 million net operational deficit.
“It’s a balancing act,” said Chairman Willie Harper, Mineral district, “and we hope to come up with something that’s fair to all.”
Christian Goodwin, finance director, said that the county has the same options as normal households have when it comes to dealing with a deficit and balancing a budget: cut expenses, dip into savings, increase income, secure a loan or utilize a combination of all of the above.
And after considering four proposals stemming from finance committee discussions, the board chose on Monday night to present the public with a combination of budget-balancing solutions.
Harper said the board is moving forward with a proposal that includes moving towards equalizing real estate taxes, debt funding an infrastructure improvement project and utilizing fund balances to rein in the deficit.
“It provides us with different ways to make up the shortfall,” Harper said.
The proposal includes a three-cent real estate tax rate increase to combat a steady decrease in property values and a $2.8 million loss in revenues since 2009.
The county lost approximately $1 million in real estate tax revenues from FY2012 to FY2013.
Goodwin said that even with the proposed tax rate change, the average homeowner’s tax bill would be less than last year.
An equalized real estate tax rate is the rate the locality would need to set to generate the same amount of revenue from the previous fiscal year, remaining revenue neutral despite changing assessed values.
Richard Gasper, county assessor, said that the median home assessment fell six percent from last year and that a four- to five-cent increase would be necessary to truly equalize real estate taxes.
Goodwin said the county would use fund balances to cover the county’s shortfall, which includes funding Louisa County Public School’s $2.7 million operational budget deficit.
The school division’s $49.4 million budget is funded from federal, state and county monies.
According to Goodwin, the county’s expense for the school division in FY 2013 is approximately $28 million.
Local officials say much of the school’s deficit, like the county’s, is the result of millions in unfunded mandates from the federal and state level.
After finally settling on a budget, the state overhauled the Virginia Retirement System, adding a $2.2 million tab on Louisa County and the school division.
Louisa County Public Schools are also in the beginning stages of rebuilding the high school and Thomas Jefferson Elementary School, which were damaged during the earthquake and subsequently closed.
The estimated cost to rebuild the two schools is $60 million. After insurance payouts, the Federal Emergency Management Agency will pay 75 percent of the costs, the state will pay 16 percent, leaving the county to pay the remaining nine percent.
Goodwin said that the school rebuilding costs were not included in the $3.6 million FY 2013 Capital Improvement Plan because the projects will not be completed by the end of the fiscal year.
He said that county administrators are proposing to debt fund the school rebuilding costs which would be repaid with insurance payouts and federal and state grants, pending board approval.
The school division is still in negotiations with its insurance company.
Goodwin said the county’s budget deficit is largely a result of outside forces.
“Despite the board’s conservative, effective fiscal management, unavoidable mandated costs are making a balanced budget difficult to reach,” he said.
He added that the economy and resulting fall in home values have exacerbated the problem.
The draft budget includes a 26.6-percent reduction of $139,346 in the administration department, a 6.5-percent reduction of $70,542 in the community development department along with other reductions.
Despite those maneuvers, the county’s proposed budget includes a $138,000 increase in county operating expenditures from the FY2012 budget.
Harper said one of the biggest issues facing the board in implementing the budget will be getting buy-in from county agencies and departments.
“We need to find a way of working with agencies and departments to make things work,” Harper said. “Somehow we have to come up with a way to do more with less.”
The county has tentatively scheduled two public hearings for the budget. The first is scheduled for May 21 and the second is scheduled for June 4, with the county expecting to appropriate the budget on June 18.