Dear Editor,

The last few years, elected officials have patched together budgets hoping new revenues will materialize to solve their long-term problems. Powhatan has cobbled together budgets using one-time revenue sources (i.e. fund balance, interest, stimulus money), holding positions open when vacancies occur and raising the property tax rate. Developing budgets in this manner causes long-term problems.

The advertised FY12 budget uses almost $1.5 million in one-time revenue to bridge the budget gap. One-time money is money that is not expected to recur in the future. Any one-time money used to cover a recurring expense, meaning an expense that will reoccur in the future, causes a future deficit.  If all of the $1.5 million is used to cover recurring expenses, then the FY13 budget begins with a funding gap of $1.5 million. This funding chasm is exacerbated by the State funding the schools with $575,000 in one-time money. So, the FY13 budget deficit could start at $2 million.

The county also is reassessing real estate values this year. If the assessments decrease, as they did last assessment, the only way to recoup the lost tax revenue is to increase the tax rate or cut spending. Chesterfield estimates that its revenues will not return to 2009 levels until 2015, and Chesterfield relies less on property taxes for its revenue than Powhatan. There is no reason to believe assessments will increase greatly. If assessments decrease, then cuts will be needed or the property tax rate must increase as last year. I call last year’s property tax rate increase a tax increase whether or not it is “revenue neutral.”

I point out in 20 years or five election cycles, supervisors have never increased taxes in an election year and have always increased the property tax rate the year after an election. This is the 6th consecutive election year with no tax increase. What will next year hold?

Two other factors influence the budget. The amount of federal and state revenues flowing to localities has decreased. Powhatan has seen a decrease in such funding of over $5 million since FY10, not including stimulus money. Powhatan’s debt service also has increased. The 2009 Davenport Report estimated a $0.025 impact on the levy to pay for the added debt service caused by construction of Flat Rock Elementary and the Huguenot public safety building.

Considering these factors, the FY13 budget could have a starting deficit of up to $2 million and that could grow with increased debt service payments and reduced state and federal funding.The only ways to cover these budgetary shortfalls are increasing taxes, cutting expenses or a combination of both. People need to understand the effects short-terms fixes have on future budgets. The electorate should be forewarned that this year includes no tax increase and no major decrease in county services, but next year may see increased taxes and changes in county services.

Jason Moore
District 2 Supervisor