By Wesley P. Hester
Media General News Service

With an already precarious financial situation compounded by a sharp decrease in assessed property values, Powhatan County leaders are faced with raising the county’s tax rate just to get by.

The county is projecting a budget shortfall of $8.1 million in the next fiscal year, with its school system standing to bear the brunt of the pain with a $5.5 million funding gap, mostly because of proposed state cuts.

Powhatan, which assesses its real estate every two years, saw a nearly 12 percent decline in property assessments for 2010. At the current real estate tax rate of 71 cents per $100 of assessed value, that’s a $3.1 million revenue loss.

To offset that, county supervisors will consider raising the tax rate at least 9 cents, to a revenue-neutral 80 cents.

“We’ve just about got to do that, because we’ve got to pay the same bills we’ve been paying,“ said Board of Supervisors Chairman Robert R. Cosby, who noted that most residents wouldn’t see an increase in their tax bills because of lower assessments.

In Chesterfield County, the School Board has requested that the supervisors raise the tax rate by 4 cents, still 1 cent shy of the revenue-neutral level. In Richmond, Mayor Dwight C. Jones said he does not plan to propose an increase.

Officials in Henrico and Hanover counties have not officially discussed a tax-rate adjustment.

Asked if he thought the Powhatan Board of Supervisors would need to go higher than 9 cents, Cosby said he hopes it won’t come to that. “If we don’t get cut any worse by the state countywide—schools included—we’re going to weather the storm and do it without [another] tax increase,“ he said.

But Cosby warned that things could change, and probably not for the better.

“Right now, I don’t think any locality knows what the real impact is going to be,“ he said, noting Gov. Bob McDonnell’s desire not to raise taxes at the state level.

“We’re all building off of Governor Kaine’s proposal, but that’s history.“ Timothy M. Kaine, who left office last month, had suggested a tax increase in his budget.

Even with an 80-cent tax rate, Powhatan’s overall deficit still would be $5 million, representing about 7 percent of the current $73.3 operating budget.

For schools, the impact is even greater, with the $3.6 million shortfall being 8 percent of the system’s $44.5 million budget—the result of $2.3 million less from the state, $700,000 less from the county, and the remainder in federal cuts and additional expenses.

“We’re looking at everything—programs, positions, everything,“ said School Superintendent Margaret S. Meara. “It’s a lot of money, and it’s not going to be without pain.“

With the governmental gap at $1.4 million assuming a tax-rate increase, the staff has proposed recommendations that could narrow the shortfall to $569,000.

“We have already been holding vacancies and will continue to do so,“ said County Administrator Carolyn Bishop, noting that other expenditures would have to be cut.

Cosby noted that if the county were to try to cover the government and schools shortfall, the board would have to raise the tax rate by 22 cents.

“We’re going to try and do it other ways,“ he said.