Martinsville Bulletin, Inc.
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Martinsville, Virginia 24115
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| Officials look to balance budgets without hiking taxes |
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Thursday, March 20, 2008
By DEBBIE HALL - Bulletin Staff Writer
Facing about 4 percent losses in state funds for next year, both Henry County and Martinsville officials are looking at options to balance their budgets and avoid tax increases in fiscal 2009.
County officials are not recommending tax hikes to help fund the 2009 budget, according to Deputy County Administrator Tim Hall.
“That has not even been discussed among staff, and I don’t anticipate it would be this year,” he said.
Currently, the real estate tax is 54 cents per $100 of assessed value, he said. That means the tax bill on a home assessed at $100,000 would be $540.
Hall expects the county will lose $400,000 in state revenue, which he said probably is comparable to the 4.2 percent cut the city faces. On top of that, “the projected revenue growth” for the 2009 budget is “virtually nil,” Hall said.
The county’s current budget of $114 million was crafted last year with the expectation of minimal growth.
Hall said the county normally experiences growth through increased sales, real estate and/or machinery and tools taxes associated with growth in other sectors of the community, such as housing, business and others.
With fewer people making purchases, building houses and the like, “this year, we have no growth,” he said. As a result, balancing the budget is not an easy task.
“When there is no growth, the question becomes, ‘What can we cut?’ ... At this point, everything is on the table,” said Hall of budget requests from outside agencies.
As in years past, Hall and County Administrator Benny Summerlin, along with central accountants, have met with each department head to review proposals “line by line,” Hall said.
He added proposed adjustments were penciled in during the meetings.
For instance, if the purchasing department proposed spending $5,000 for office supplies but spent only $2,500 in the previous year, that line item might be reduced, Hall said.
Unfortunately, there are some things that cannot be reduced — or even accurately predicted.
For example, county officials calculated an $80,000 increase to hopefully pay for fuel (gas) used by the sheriff’s office, Hall said. Because there is no way to accurately predict the future cost of fuel, officials annualized the two highest months of the current budget year and then added 15 percent.
In the final leg of budget preparation, county accountants are examining each department’s budget to determine the total amount of expenditures in the county, Hall said. That could be completed by the end of the week and then compared with anticipated revenues.
“We will have to work down” from there, and subtract or reduce items until a balanced budget is reached, Hall said.
The board of supervisors is expected to receive the 2009 budget proposal in early April. It takes effect July 1.
In Martinsville, a tax or fee hike “would be a last resort,” said City Manager Clarence Monday. “The goal is not to have an increase, but it’s too early to tell.”
In the city’s current $87 million budget, the real estate tax rate was $1.08 per $100 of assessed value, Monday said. At that rate, a home assessed at $100,000 incurs a tax bill of $1,080.
For the fiscal 2009 budget, the city learned earlier this week it will face a 4.2 percent drop in state aid.
“I feel that will be at least a quarter million dollars,” Monday said, but he does not yet know which funds are being cut. He added that he was not even sure whether the state used the city’s 2007 or 2008 budget as a base when making the cuts.
“Next week, they are supposed to send a list of the funds that will be cut,” Monday said, and “we need to know that amount before we can continue working on our budget.”
Although city officials had braced for up to a 5 percent decrease, “we’re still expected to provide the same level of service” to city residents, Monday said. With “minimal, if any growth” projected in the city, the funds must come from somewhere.
Depending on the outcome of a trial run to strike a balanced budget, Monday said other alternatives, such as spending cuts and or “capturing” other revenues, will be considered.
“We always want to look at any revenues” the city may be able to tap such as grants and also to make sure the revenue forecasts are accurate, Monday said.
“We don’t want to underestimate them. We want to build into the budget the amount we take in each year,” he said.
For example, “if we think we’ll take in $6 million in revenues” but make it $5.7 million in the budget, the revenue forecast would be skewed. So revenue projections are the “first place we want to look if have a deficit to make sure we’ve accurately captured the revenue,” Monday said.
If additional revenues are not found, “then we would look at anything we could do without in the city” to cut expenses, Monday said.
“Rate and fee increases would be a resort,” he added.
The budget remains in the early stages of development, Monday said, and right now, “it’s really too early to tell what our expenses are.”
Monday said the budget likely will be presented to city council members in mid-April for approval in late May or early June. The new fiscal year begins July 1. |
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