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Fund return is criticized
Localities give up state money despite surplus
Sunday, September 2, 2012
By MICKEY POWELL - Bulletin Staff Writer
Henry County and Martinsville are being forced to give back more than $2.5 million over five years to a state that is seeing annual budget surpluses.
Martinsville City Council adopted a resolution last week asking the General Assembly and Gov. Bob McDonnell to put an end to so-called “local aid to the commonwealth” — state funds that localities are allocated each year but basically are expected to return to the state.
The Virginia Municipal League (VML) is encouraging cities and counties to adopt such resolutions.
While the Henry County Board of Supervisors has not yet considered one, county officials say they, too, are opposed to returning state funds.
In the past three years, the state has had budget surpluses totaling about $1.4 billion. Yet the state has reduced its funding for services it considers important, including some that are mandated, according to the VML.
For instance, state public school funding is $400 per student less now than it was in fiscal 2009, the VML’s website shows.
State funding for services such as public safety, health and human services and local constitutional officers totaled $800 million less in the past fiscal year than it did in fiscal 2009. Funding is almost $500 million less in the current fiscal year than it was three years ago, the VML reported.
Having to give money back amid budget surpluses is “a bitter pill to swallow for localities around the state,” said Martinsville Interim City Manager Leon Towarnicki.
In the past fiscal year, localities statewide returned about $60 million to Richmond and by the end of the current budget year, returns over five years will total about $270 million for state coffers, the VML’s website shows.
From fiscal 2009 through the current budget year, Henry County will give back more than $1.5 million and Martinsville will return more than $1 million, figures provided by county and city finance department officials show.
Annual amounts returned have been six figures, as much as $347,390 for the county and $205,954 for the city.
Those amounts are a lot of money that could be put toward worthwhile projects, Towarnicki and county Finance Director Darrell Jones agreed.
“It’s unfair,” city Finance Director Linda Conover said of the returns. “The only reason they (the state) have this money is because ... they’re taking it away from localities” to make themselves “smell like a rose” to taxpayers.
“‘What’s mine is mine’ and ‘what’s yours is mine’ has become their mentality,” Jones said.
Localities can choose to either take direct cuts in particular types of state aid or send the state a check for amounts which the state Department of Planning and Budget determines appropriate, according to the VML.
Reductions come from “essential services,” including law enforcement, jail administration, foster care and child protective services, social services and elections, the council’s resolution shows.
A cover letter that will accompany the city’s resolution tells McDonnell that city officials recognize that state revenues dropped during the recession and so “the financial belt had to be tightened.”
“But while the state has enjoyed budget surpluses in each of the last three fiscal years,” the letter states, localities “have coped with weak real estate revenues that have forced spending reductions and cutbacks in services.”
“After three consecutive years of state budget surpluses,” Towarnicki wrote in a council report, “it is time for the state to quit forcing local governments to shoulder so many of its responsibilities.”
Officials also voiced concern about “unfunded mandates” — programs that the state requires localities to provide but allocates no funding for them.
Jeff Caldwell, McDonnell’s press secretary, said the state annually is cutting how much localities must return, and he thinks the returns will be phased out “as the economy improves and we can look forward with more optimism.”
But for now, “we don’t know for sure where the economy is going,” hence the need for localities to continue returning some of their funds, he said.
He would not be more specific when pressed several times on why the state needs funds from localities when it has budget surpluses.
The Virginia Association of Counties (VACo) will send McDonnell a letter on behalf of all of its members, asking that the state stop requiring localities to return funds, said Deputy Executive Director Dean Lynch.
VACo has not asked counties to send their own resolutions to the governor, but it would not stand in the way if any want to do so, Lynch said.
Henry County Board of Supervisors Chairman Jim Adams said he thinks any effort by counties to get local aid to the commonwealth lifted “would have more firepower” if counties band together through VACo.
It could not be determined how many localities so far have adopted resolutions at its request.