Budget proposal includes pay raise

Henrico County Manager John Vithoulkas
UPDATED: MAR. 11, 10:17 P.M. – Henrico County has tightened its belt during the past four years, trimming $115 million in expenses, cutting nearly 10 percent of its workforce through attrition and the elimination of vacant budgeted positions while asking each of its agencies to scale back on spending but not on services. Many of those cuts were suggested by county employees, who recommended them when county officials sought their input.

So, it made sense to County Manager John Vithoulkas to reinvest some of that savings into the workforce that produced it to begin with.

Vithoulkas tonight presented to the county’s Board of Supervisors his $1.097-billion operating budget proposal, which calls for the first raise for eligible full-time county employees in three years. The unique salary hike would would provide a 3 percent raise to full-time general government and school system employees with more than three years of service as of Jan. 1, 2015 and a 2.4 percent raise (the equivalent of a one-step increase on the county’s pay scale) to those with 1 to 3 years of service.

Full-time employees with less than one year of service, part-time employees, temporary workers and special assignment employees would not be eligible for the raise. The pay increase would be split between the second half of Fiscal Year 2014-15 and the first half of FY 2015-16. It would take effect Dec. 13 and cost the county $7.9 million in the new budget. The general government ($2.4 million) and school system ($5.5 million) are reallocating funds within the framework of the budget to allow the raises without any additional cost to the county.

“We have engaged our employees. . . who know at the front line how we can save a dollar,” Vithoulkas told the Citizen Monday. “We have employees who have allowed us to make those reductions. As county manager, I could not be more proud.”

The budget would keep the county's real estate tax rate at 87 cents per $100 of assessed value.

The proposed general fund budget (courtesy Henrico County)
Re-establishing structure
The largest portion of the budget – the general fund, which provides operating money for general government agencies and schools – would increase by $20.2 million to $767.4 million, as part of Vithoulkas's proposal. But the entire general government portion actually would decrease by about $300,000 from the current year budget, while the school system's portion would increase by about $20.5 million. It's the only time in county history, Vithoulkas said, in which the entire general fund increase has been allocated to schools.

That increase would consist of $9 million in new revenue from the county's meals tax, which will take effect June 1; $6.5 million in anticipated new state funding; $553,000 in other local revenue contributions; and $4.5 million in money transferred from the county's Virginia Retirement System reserve to help fund teacher pensions, as required by the state.

The general fund budget assumes new expenses of $55.9 million but anticipates a total of only $40.8 million in new revenue. The $4.5 million VRS transfer and $10.6 million in total cuts to Henrico governmental agencies would make up the difference.

Vithoulkas emphasized to supervisors that the budget was designed in large part to re-establish the fundamental structure of past budgets while also ensuring that every increase made in this year's budget can be sustained in the 2015-16 budget.

The stagnant economy during the past four years forced the county to dip into reserve funds and use money from various sources to fund recurring costs. This budget, Vithoulkas said, was designed in large part with the goal of eliminating such one-time, stop-gap funding for good.

“We’re trying to make sustained cuts,” Henrico Budget Director Brandon Hinton told the Citizen. “We’re always looking ahead.”

In order to save an estimated $1 million, the county will offer an incentive-based voluntary retirement plan for employees who are eligible for retirement under the Virginia Retirement System. Additional savings may be realized by the elimination of some positions vacated by those who accept the buyout, Hinton said.

The proposed capital budget (courtesy Henrico County)

Board will review meals tax projects
The budget includes an anticipated $18 million in revenue expected to be generated by the county’s meals tax, which will take effect June 1. But while all revenue generated by the meals tax will be dedicated to the school system, the budget proposes that only the $9 million intended for operating expenses be provided to the School Board.

The other $9 million (or potentially more) would be placed into a reserve fund, and school officials would bring capital projects forward to the Board of Supervisors one at a time once actual costs for each have been established, Vithoulkas said. The goal: to ensure that every dollar spent with meals tax money on capital projects is done so in a manner befitting the tax's outlined goals.

All money collected from the tax in June – the last month of the current fiscal year – will be directed to capital projects, Vithoulkas said. Future division of funds between the school system’s operating and capital budgets will be decided on a year-to-year basis.

The overall proposed capital budget – which involves infrastructure projects that require more than one year of funding – totals $103 million – and includes debt financing of $39.1 million for the first phase of the county's replacement of its radio communications system. That system is expected to cost more than $60 million; the county set aside $4 million in cash toward the total in each of the past two budgets and will continue to do so this year.

The general fund budget would provide 10 additional police officer positions, as part of the second year in a five-year plan to add a total of 50 new officers to the agency. And the proposed capital budget would set aside $3 million for the construction or purchase of a new police station that will serve the central portion of the county. Henrico received an unsolicited proposal from a company that has offered to construct and then lease or sell such a facility to the county, and county officials opened the process to other bids. They could recommend one bid to the Board of Supervisors later this spring.

A bond referendum that could fund other large infrastructure projects – such as a new high school in Sandston – remains a pipe dream at this point, Vithoulkas told the Citizen. The county does not have the capacity to assume the type of new debt that would be required to fund pay off such large projects, he said.

“I don’t see any daylight,” he said. “We’ve got to have the debt capacity, and we don’t have any that I see. Right now, it’s just not a viable conversation.”

The Board of Supervisors will hold a week-long budget review with the heads of each county agency next week, then hold public hearings on the budget April 8 and 22 and adopt a final budget April 22.
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EngAGE in Henrico County will present the benefits of downsizing and decluttering at two programs in Henrico: Oct. 24 – 1 p.m. to 2:30 p.m. at Tuckahoe Library; and Oct. 26 – 10 a.m. to 11:30 a.m. at Varina Library. The Richmond Chapter of the National Association of Productivity & Organizing Professionals will provide tips on simplifying your environment as we age in place. To RSVP, call 501-5065 or email .(JavaScript must be enabled to view this email address). Full text

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