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FY 2018 Budget Meeting by Ed Long - Feb 14

FY 2018 Budget Meeting by Ed Long - Feb 14

-- FCTA's Charles McAndrew, February 14, 2017

Tim Hannigan, Rob Whitfield, and I attended an initial budget presentation by Mr. Edward Long, County Executive, before the Board of Supervisors at the Government Center this morning. All of the Board of Supervisors were present and a few of the School Board Members were also present. Here is a summary of this meeting:

The current rate of the Real Estate tax will remain at $1.13 per $100 of assessed value (but the assessed value will go up). The average real estate tax bill will increase approximately $40 for the homeowner. Here is an additional fact: the value of ONE CENT on the Real Estate tax rate is $23.75 million in FY 2018.

There will be an overall increase for both County disbursements and School transfers of 2.41%, which includes $51.69 (2.70%) increase in the School Operating Transfer. FY 2018 General Fund Revenues will increase $88.20 million, or 2.2% over the FY2017 Adopted Budget Plan. FY 2018 General Fund Disbursements will increase $90.7 million or 2.3% over the FY 2017 Adopted Budget Plan ($27.2 million over the FY2017 Revised Budget Plan). A total of $4.10 BILLION is the budgeted amount for the General Fund Disbursements, of which includes the FCPS portion. Mr. Long stated that: "County needs are greater than our resources." He also stated, "it marks the 10th straight year the annual budget has included reductions." (My records show that the County raises the budget EVERY YEAR for decades 2 or 3 times the rate of inflation!)

The total budget is projected to be $2.8 BILLION. The Advertised budget provides an increase of $51.69 million or 2.70% over FY 2017 for the County's transfer to the School Operating Fund. The FCPS represents 52.8% of General Funds Disbursements and up from 52.7% in FY 2017. A gap of approximately $61 million remains between the Advertised transfer and the School's request. Of the total projected revenue increase of $88.2 million, $50.95 million is allocated to FCPS. The School transfer is by far the largest expense of the entire Fairfax County budget.

FY 2018 budget proposals funds performance, merit and longevity increases for all merit employees with average 2% for non-uniformed General County employees and an average increase of 2.25% for uniformed Public Safety employees. It also includes some pay adjustments resulting from market reviews. Mr. Long stated that he was not able to fund the Market Rate Adjustment (MRA) of 1.65% or $19.8 million which he considers this a significant unfunded priority. There were also several other lesser amounts of funding that remains as an unfunded priority.

Employee Pay for General County employees increases will be $23.51 million, with average increases of 2%. Employee Benefits will increase $9.07 million. Retirement funding based on valuation and experience study results and an increase in amortization from 97% to 98% per funding adopted as part of the FY 2016 budget and on track to amortize 100% of unfunded liability by FY 2020. Health insurance assumes a 7% premium adjustment in January 2018. Mr. Herrity stated that there needs to be a pension reform as the county cannot continue with such a generous retirement system.

There was considerable discussion from the County Board members about Metrorail costs. WMATA General Manager's FY 2018 budget contains significant increases in both the operating and capital spending. The county shows a total of $141.4 million for Operating Budget and $40.0 million for the Capital spending, totaling $181.4 million. This total figure does NOT agree with the figures given at the NVTC meeting.

The figures given at that meeting totaled $138.6 million for FY 2018 for the operating subsidy and $101 million for the Capital budget for FY 2018, for a grand total of $239.6 million for the Fairfax County to fund. So there is definitely a discrepancy! Some of our FCTA board members have not been able to find these costs in the Fairfax County budget! Mr. Long stated that FY 2019 and future years will require significant increases in County contributions, as County operations are not sustainable with existing revenue sources!

The average price of homes sold in CY2016 was essentially flat. January 2017 assessed values grew at less than 50% of the January 2016 rate of 1.64%. The number of homes sales rose 6.1% from 14,850 homes in CY2015 to 15,755 in CY2016.

There is 20 million sq. ft. of vacancies which is considered very high, out of 116.4 million sq. ft. according to the Economic Development Authority. They also stated that 73% of the county's office space is obsolete! Office vacancy as of mid-year 2016 was 16.5%, up from 16.2% as of year-end 2015, the highest level since 1991 when it was 16.8%. Office real estate values are down after increasing last year. Currently, over 2.4 million sq. ft. of offices under construction due mainly to the Metrorail's new Silver Line spurring new construction -- both retail and residential. Commercial/Industrial vacancy is now at 19.12%, which is higher than last year's rate of 18.89%. (FY 1990 had the highest rate of 26.76%.) If more of these properties could be occupied, this would somewhat relieve the increases in the residential real estate tax rate.

A consultant study recommended a total of $22.9 million and 96 positions for the police and sheriff departments. The study also recommended staffing for the new South County Police Station for a total of 70 new uniformed positions. It is expected to fund an additional 50 uniformed positions over the next three fiscal years. Total costs of these positions at the South County Police Station will be approximately $1 million. Across the street from the main County Government Center will be the NEW Operations/Maintenance at Public Safety Headquarters. This new facility will be 274,000 sq. ft. facility scheduled to be opened in the Spring of 2017. The building will serve as the new headquarters for the Police and Fire Rescue Departments.

In order to continue with their TRIPLE rated bond ratings, 10% of FY 2018 Disbursements increases will be held in reserve. Total reserve funding has increased from 5% in FY 2014 to over 7% in FY 2018. Based on General Fund contributions and bond refunding savings, total reserves as of the FY 2018 Advertised Budget Plan are estimated at 7.16%.

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