Vithoulkas proposes $1.1B budget
No layoffs recommended, but meals tax encouraged as new revenue source
UPDATED: 9:02 P.M. – Henrico County Manager John Vithoulkas tonight proposed to the Board of Supervisors a $1.1 operating and capital budget for Fiscal Year 2013-14 – a 9 percent reduction from the current budget.
Vithoulkas's proposal would not lay off any employees or raise the county's real estate tax, but it does suggest a public referendum on a 4-cent meals tax, which could raise an estimated $18 million annually – money that would be dedicated for education costs.
For the fourth time in the past five years, the budget also does not provide pay raises for county employees.
Vithoulkas painted a bleak picture at times during his presentation, warning the board that Henrico faces an $18.5-million budget shortfall in FY13-14 and fixed cost increases of another $33 million or more the following year, with $21 million of the latter amount attributable to education. Henrico also expects to inherit more than $500 million in budgetary liabilities from the Virginia Retirement System in the near future, as a result of underfunding by the General Assembly and its subsequent decision to pass those liabilities to localities.
"My job as your county manager is to sound a warning when difficulty lies ahead," he said.
Vithoulkas told the board that he never considered recommending a real estate tax increase to offset rising costs and declining revenues. The county's rate of 87 cents per $100 of assessed value is the lowest among Virginia's 13 largest localities and gives Henrico a key advantage in attracting new development projects, he said.
"This is our history. This is a cornerstone of our economic development success, and it is something that cannot be ignored," he said of the rate.
The real estate tax has been reduced six times in the past 35 years but never increased during that time. Vithoulkas suggested that increasing it now also could make the county too dependent upon one source of revenue, whereas implementing a meals tax would provide a new source.
County officials have estimated that 40 percent of the money collected by a meals tax would come from non-Henrico residents. But opponents of the idea already have begun expressing opposition to the idea, claiming that it would harm Henrico restaurants and other food service businesses.
During a presentation Monday night in Varina, Vithoulkas countered that argument by pointing to the fact that food sales in the City of Richmond are outpacing those in Henrico – despite a 6-cent meals tax in the city.
To combat declining revenues – resulting from lower real estate values and reduced state funding – Henrico has taken a number of steps in recent years, Vithoulkas said. It saved $29 million by refinancing all of its $389 million in debt, eliminated 646 vacant positions since FY09-10 and instituted a department-by-department review of all expenditures. In total, pending approval of the FY13-14 budget, the county will have eliminated more than $115 million in spending during the past four years, he said.
But those cuts are not enough to meet rising demands, Vithoulkas said. So his proposed budget proposes some additional cuts and fee increases. Among them:
• reducing the maximum allowable award to participants in the Real Estate Advantage Program (REAP) to $1,500 (from $3,000);
• eliminating the Recreation and Parks "Summer Blast" program (saving $300,000);
• increasing the building inspection permit fee to help make the program more self-sustaining (currently, fees pay only 54 percent of its expenses, but the fee increase would bump that percentage up to 71);
• increasing the water and sewer user fee by 5 percent.
The proposed capital budget (used for infrastructure projects) of $6.85 million would be Henrico's smallest such budget in more than 50 years but is necessary in order to help stabilize its cash reserve fund, Vithoulkas said. That fund has declined from a peak of $252.55 million in FY09 to about $190 million this year and is projected to drop to $174.71 million by FY14-15.
In a written report to the board, Vithoulkas warned that the FY14-15 budget will be even more difficult.
"Without new revenues, we must consider the impact of other cost reductions and related services," he wrote. "With more than 76 percent of total General Fund costs meeting Schools and Public Safety requirements, the bulk of all other expenditures are in maintenance, utilities and other costs that have very little flexibility. After $115 million in cost reductions already made, the county has few options outside of service reductions and staff layoffs."
And even layoffs would not create a significant cost savings, he wrote. Laying off 125 teachers, for example, would save only about $6 million – less than a third of the expected $21 million shortfall the school system will face in FY14-15
The Board of Supervisors will conduct a weeklong review of the proposed budget and meet with the directors of every county department next week, before considering adoption of the budget in April.
For the third consecutive year, the Canterbury Recreation Association in Short Pump donated the most meals to the fourth-annual "Dunk Hunger" campaign, which raises money and food donations for FeedMore's Central Virginia Food Bank. Swim teams and community pools throughout the region combined to raise the equivalent of 77,404 meals this year, with the Canterbury group earning the Gold Medal, with 17,454 meals contributed.
CRA will earn a winners’ bash Aug. 24 from 3 to 5 p.m. at its pool on Pump Road.
“Our pool has adopted Dunk Hunger into its culture with fun ways to raise food and funds," said Canterbury’s Dunk Hunger chairman Jack McSorley, a Freeman High School junior. > Read more.
The last Rock ‘n’ Roll Summer outdoor concert at West Broad Village, scheduled Saturday, Aug. 22 from 7 p.m. to 10 p.m. in Short Pump, will feature a salute to the upcoming UCI Road World Cycling Championships, coming to the Richmond region next month. As an all-girl band entertains the public with an AC/DC and Foreigner tribute, representatives from West Broad Village will accept donations of children’s new and lightly used bicycles for redistribution to youngsters at the Virginia Homes for Boys and Girls. > Read more.
Bifocals at CAT’s first show for CAT’s 52nd season is Thanks Mitch by Pat Walker. Thanks Mitch will play at CAT Theatre on Monday, Nov. 9 at 8 p.m. and on Friday, Nov. 13 at 2 p.m. The production will also tour the Richmond area.
Mitch and his wife, Verna, are at their niece’s wedding when Mitch has had all the celebrating he can take. Verna settles him and his crossword puzzle book into an easy chair in the room next to the reception and promises to check on him later. Then one wedding guest after another comes into the room agonizing over a personal problem. Mitch keeps doing his crossword puzzle and somehow ends up saving the day. > Read more.
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