FY 2012 Budget Video Text

HOST: Budgets are important parts of all our lives. Whether working on an individual budget, a family budget or a budget for a government entity, there are times when needs and priorities must be juggled to maintain a balance. In Fairfax County, the formation of the annual budget is a year long process.

NARRATOR: Fairfax County is a large, diverse, complex county of over 1 million residents. According to the U.S. Census Bureau in July 2009, Fairfax County is the 37th largest county in the nation and if it were a city. The county government is made up of an elected Board of Supervisors consisting of 9 members elected by district and a Chairman elected at large. The Board appoints the County Executive who is the administrative head of the county government and is responsible for running all of the affairs of the county. One challenge to making a budget that affects local governments in Virginia is the Dillion Rule

ED LONG: The Dillon rule is unique to a few states in the United States. The Dillon rule basically says that if you are not expressly granted authority to do something, you can’t do it. So for example, beyond our real estate categories 90% of our other revenue sources are either capped or limited by the state. So if the county decided that they wanted to increase court fees, we couldn’t do that without having to go back to the general assembly. And trying to go back to the general assembly to get anything done is a very long and arduous process, and usually not very successful

HOST: Local county government services and programs cost money. The county must pay the people that provide these services and provide buildings, equipment, and supplies to conduct business. Local governments are responsible for annually deciding what to spend for services and how to raise funds to cover these expenses.

TONY GRIFFIN: The County’s budget is an annual exercise; it’s dictated by state law that we do a budget on an annual basis. And it’s not just our spending guide it’s also our way of identifying what our priorities are. It’s not dissimilar to someone having a household budget, putting a roof over one’s head, food on the table, usually are the top two priorities. The County‘s budget is not dissimilar in that public safety, and schools and human services, particularly for the disadvantaged in our population are our priorities and our budget will reflect that.

NARRATOR: The fiscal year begins on July 1 and runs through June 30. The budget process is an ongoing cyclical process that looks at both the current and the future fiscal years simultaneously.

In preparation for the upcoming fiscal year, each department estimates its costs of services and submits its annual budget plan to the Department of Management and Budget for review and analysis. The County Executive’s office reviews these requests, estimates revenues and recommends a balanced budget proposal to the Board of Supervisors for consideration. The County Executive presents the budget proposal to the Board on the last Tuesday in February each year. The Board deliberates this proposal and schedules district budget meetings and the official public hearings to hear from the public on the proposal. The Board typically amends the proposal with its own changes and modifications based on public input and marks-up the budget to reflect its priorities for the upcoming year. The Board then adopts the budget on the last Tuesday in April.

HOST: A budget is not a mere catalog of numbers but rather a statement of priorities that reflect a vision of our collective future. The decisions made today – or failed to be made – play a crucial role in the community we live in today and the type of community our children, grandchildren and newcomers to Fairfax County will inherit. The fund that most directly affects all residents is the General Fund. All other funds are critical to the successful operation of the County, but the General Fund represents the part of the budget that supports all general purpose functions of government. The focus of our review of the budget will feature the General Fund, specifically, where the money comes from and where it goes.

NARRATOR: This is a breakdown of the FY 2011 sources of funding to support County services. The total General Fund revenues are projected to be $3.3 billion. The largest source of revenue is Real Estate Taxes which make up over 62% of the General Fund revenue. Approximately 75% of this revenue source comes from residential property. As a result, the County is significantly impacted by the volatility in the housing market. In the past several years the value of residential and commercial real estate has decreased more than 20% from peak values.

NARRATOR: The next largest revenue category is Personal Property taxes which make up over 15% of the General Fund revenue. These taxes are paid on personal and business vehicles, as well as, business property such as computers, furniture, and fixtures. In FY 2010 Personal Property Tax revenue fell over 4% due to a decline in new vehicle purchases and a high rate of used vehicle depreciation. No significant increase is anticipated in this category in FY 2011 or 2012.

Other local taxes, including Sales Tax, and the Vehicle License Registration fee, make up 15 % of the General Fund revenue. Sales tax has fallen for 2 consecutive years but is expected to stabilize in FY 2011.

A much smaller portion of the General Revenue fund, 3.6%, is from the Commonwealth of Virginia and the Federal Government with the majority being reimbursement of County expenditures for human services. Due to state budget shortfalls since FY 2009, Virginia has significantly reduced funding to localities, including Fairfax County.

HOST: That’s where the money comes from. Now let’s take a look at where the money goes.

NARRATOR: The greatest share of the General Fund is transferred to the Fairfax County Public School system. More than 53% of the County’s budget annually is dedicated to support day to day operations as well as finance and renovate school buildings.

SHARON BULOVA: The Fairfax County Public Schools are required or mandated under the constitution of Virginia to manage to run their own schools, the school system, and so the Board of Supervisors does not have line item authority over the schools, over the school board, so they are required to adopt their own budget, but the Fairfax County Board of Supervisors provides a transfer, a lump sum that goes to the schools and that actually makes up a majority of the school funding.

KATHY SMITH: We get $1.6 billion of our budget from the county, that’s about 73% of our budget. You know, the state when they do their Local Composite Index funding, Fairfax County only gets about 20% of our funding from the state so we’re very grateful for the support we get from our community and from the Board of Supervisors for our budget.

NARRATOR: Public Safety accounts for 12.4% of the General Fund budget. The three largest components of the public safety budget are Fire and Rescue, Police, and the Sheriff’s Department. 11% of the General Fund budget goes to health and welfare to provide the safety net, to protect the vulnerable, help people and communities realize and strengthen their capacity for self-sufficiency, and ensure good outcomes through prevention and early intervention.The remaining quarter of the General Fund budget funds other vital programs including transportation like Metro and VRE, public works, libraries, and the court system.

HOST: As we begin the FY 2012 budget process, it is important to take the present economic climate into consideration.

NARRATOR: Since the overwhelming majority of General Fund revenue comes from real estate taxes, personal property taxes and local taxes (92%), downturns in the housing market and the local economy due to the recession have adversely impacted the County’s main revenue sources. However, some of the revenue declines have been offset by the Board’s recent decisions to increase the real estate tax rate over the past two years to keep the average taxpayer’s bill consistent with the FY 2009 bill.

Equalization revenue is the annual increase or decrease in collected revenue resulting from adjustments to the assessment of existing property due to market fluctuations. Historically, changes in residential equalization are very cyclical in nature with periods of growth followed by periods of decline. Currently, the County is in the midst of the downturn in this cycle. Since FY 2008, residential values have declined over 20%.

Like the residential or homeowners market, equalization for nonresidential or commercial property also follows a cyclical pattern. The 18.29% decline in nonresidential equalization in FY 2011 was a record. In just 2 years nonresidential values have declined nearly 25%.

SHARON BULOVA: This has been a very challenging period of time, and the economic downturn in this country has affected Fairfax County, and the major source of revenue that we receive to provide local services comes from real estate taxes. So, the tax on your home or the tax on your business, also the tax on your vehicle and we have been definitely impacted by the downturn and less revenue.

HOST: The United States officially went into a recession in 2007. The recession was characterized as the worst economic downturn since the Great Depression and Fairfax County suffered its two greatest budget challenges in FY 2010 and FY 2011 with initial projected shortfalls of $648 million and $490 million respectively. In the past two fiscal years to match spending to available resources, the County has kept operating expenses at FY 2009 levels with no increases to the schools transfer, employee compensation, Information Technology funding, capital funding, and Metro/Connector funding. All agency spending has been reduced by $182 million and nearly 600 positions have been cut.

HOST: The forecast for FY 2012 is consistent with the last couple of years although we may be seeing some slight improvement. The total General Fund Revenue is projected to be $3.3 billion, or approximately the same as FY 2011, due to a continued stagnant housing market and a decline in the commercial real estate market. No increase in revenue combined with increases for goods and services due to inflation, population growth and other factors, adds up to the County facing a multi-million dollar projected shortfall.

TONY GRIFFIN: The challenges we have in fiscal year 2012 are very similar to the challenges that we had in fiscal years 10 and 11, in that our expenditures as we know them and as we‘re familiar exceed the amount of revenue that we’re projected to bring in and so in essence to get to that balance that I spoke to before in terms of having a balanced budget, we need to make adjustments either to the revenue or to the expenditures.

HOST: One of the key components to the budget process for FY 2010 and FY 2011 were community dialogs that the county facilitated in order to inform residents about the budget and find out what they thought about the process.

SHARON BULOVA: During the past several years we’ve engaged in a new community engagement and outreach process called “Community Dialogs” and they have been held throughout the county. We have engaged many many residents that are interested in the whole spectrum of services that we provide as a county. The payoff has been tremendous because people have been helpful in coming up with suggestions and engaging in discussions about priorities, what are the most important things that they want to make sure are protected and where are places where they see that we can make reductions or make changes, and it has been extremely helpful.

KATHY SMITH: It’s important for the community to get involved. The community needs to provide advice and guidance to the Board of Supervisors and to the School Board because we want to make sure that we reflect the values of the community as we provide the school system.

HOST: The FY 2012 budget process is already underway. With the commitment of dedicated Board members, hard-working staff and the input of concerned residents, the process will be rewarding and beneficial to the county and the community. There are many ways to get involved including visiting the Department of Management and Budget’s web page where you can take a budget survey, provide feedback on the budget, see a schedule of upcoming budget community activities, and get any other information you need.

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