Our Financial Outlook, Transportation and Capital Challenges and Opportunities - 2012 Board Retreat

The Fairfax County Board of Supervisors held a retreat on Monday and Tuesday, Feb. 6-7. The two-day meeting, at the Workhouse Arts Center in Lorton, was an opportunity for the Board to consider its priorities and set a course of action for a sustainable future.

It was announced that no votes would be taken during the retreat, and some issues may be discussed again at future venues.

Supervisors Gross and Cook both requested additional time set aside for free form discussion, rather than topic-specific discussion. Chairman Bulova agreed that an open discussion would be beneficial and indicated she would keep the presentations moving along.

Day 2 - Session 1 of 3: Our Financial Outlook, Transportation and Capital Challenges and Opportunities

SlideShare View the presentation "Our Financial Outlook and Capital Challenges".

SlideShare View the presentation "Transportation Funding".

This joint presentation by Chief Financial Officer Susan Datta, Director of Transportation Tom Biesiadny, and County Executive Tony Griffin addressed the County’s budget and transportation challenges and opportunities.

Chief Financial Officer Susan Datta

  • This presentation establishes a baseline for the budget.
  • Residential and commercial make up 60% of tax base.
  • Average annual growth rates vary from year to year, but we forecast a 3% based on the average growth from FY 1992 to FY 2012.
    • From FY 2000 to FY 2007, revenue grew 74%, an average annual increase of 7%.
    • From FY 2008 to FY 2012, revenue grew 3.4%, an average annual increase of 0.7%.
      • Of this increase, 132% came from real estate taxes.
    • We are not back to where we were in 2007 in terms over overall growth.
      • The value of real estate in FY 2012 is still 11.6% below that of FY 2007.
  • Looking ahead.
    • We look at various factors to base our projections.
      • The County economy (measured by Gross County Product) is expected to rise, on average, 3% from 2011-2015.
        • Average annual growth from 2000-2015 was 4%.
        • Northern Virginia is expected to gain 16,000 jobs per year from 2011-2015.
          • Average annual change from 1990-2010 was 36,000.
        • Federal spending in the Washington Metro area is expected to remain relatively flat from 2011-2015.
    • Residential tax base.
      • Number of homes sold in 2011 fell to 12,077 or 13% compared to the 13,894 sold in 2010.
      • Average price of homes sold in 2011 rose 3.3% from $457,174 to $472,241.
      • Mortgage interest rates are projected to remain under 5% through 2013 and then rise slowly to 6.4% by 2017.
    • Nonresidential.
      • Office vacancy rates continue to go down.
      • There is a total of 113.4 million square feet of space in the County.
      • Lease activity is at a record high.
        • Through the third quarter of 2011, 9.2 million square feet of space has been leased.
  • Where does that leave us?
    • Revenues are expected increase approximately 3%.
    • We would also plan for 3% disbursements, which will result in $100 million annually.
      • The challenge is that $100 million will not go very far to meet the existing requirements and Board priorities.
    • As examples, annual expenditure growth for both County and Schools would cost:
      • $60 million for a 2% cost of living increase for employees.
      • An additional $70 million to restore the remainder of compensation increases.
      • $40 million for a 2% increase in Fairfax County Public Schools enrollment.
  • Two questions related to capital program.
    • Affordability – we have to pay for the debt service.
    • Ratios – we need to look at where our capital program puts us on those ratios.
      • The County is not close to the 3% limit of debt.
      • Getting close to 10% debt service ratio limit.
  • Annual bond sales.
    • $233 million annually projected.
    • Schools projected to receive 67% or $155 million.
    • Metro – 10%.
    • Transportation – 9%.
  • Three additional capital requirements.
    • Mid-County mental health care center (Woodburn).
      • Total project estimate ($80-90 million).
    • Public safety headquarters.
      • Total project estimate ($149 million).
    • Tysons road improvements.
      • Total project estimate ($45 million annually).
  • Other capital on the horizon
    • Dulles Rail shortfall - $200 million.
      • We believe this can be covered in the C&I fund.
    • Tysons redevelopment.
      • Funding formula under discussion by the Planning Commission.
    • Transportation plan.
  • Debt service payments
    • There is not a lot of flexibility in adding to debt service.
    • Getting close to the 10% limit.

Tom Biesiadny

  • Presentation discusses transportation funding needs.
    • Includes Tysons, but not solely Tysons.
  • Three existing transportation plans were combined to provide a comprehensive overview.
    • 10-Year Transportation Needs/Revenues.
      • Original plan was for FY 2011-FY 2020.
      • Updated plan is for FY 2012-FY 2021.
        • $5.3 billion deficit in original plan; $3.0 billion deficit in updated plan.
      • Refinements have continued since June 2010.
        • Analyzed project lists.
        • Pushed out project implementation and costs into the future where possible.
        • Updated cost and revenue estimates.
        • Researched and secured additional funding sources.
          • Federal government revenues are becoming more competitive and based on projects that are ready to go. The federal money is not as dependable as it used to be.
    • 20-Year Tysons Transportation Plan.
      • Current planning is based on staff’s original proposal.
      • Discussion are ongoing at the Planning Commission related to funding and projects
      • There is a need for flexibility in several areas:
        • Funding types.
        • Funding amounts.
        • Project priority and schedule.
    • Board of Supervisor’s Four-Year Transportation Plan.
  • Board of Supervisors also endorsed short-term projects on March 29, 2011 – mainly for the C&I.
  • Assumptions built into this plan:
    • Planned Metro bond referenda – approximately $23.5 million annually – ongoing.
    • Proposed increase in transportation bond referenda from $20 million to $40 million annually – ongoing.
    • Proposed additional bond capacity – another $25 million annually (beginning in 2018 for Tysons).
    • Proposed increase to raise C&I tax to 12.5 cents.
      • Yields additional $5.7-$6.8 million annually.
    • Limited C&I flexibility beyond FY 2014.
      • No additional funding for local cash match.
      • No additional funding for new capital construction projects.
      • No additional funding for bike, pedestrian, bus stop or spot improvements.
      • C&I tax debt service has been used for Phase 2 and some of Phase 1 of Dulles Rail.
      • We have used C&I tax as the piece of the puzzle to get projects to construction.
    • No costs included or planned for potential devolution of the secondary road program.
  • Project category details in 10-Year Transportation Needs/Revenues plan.
    • Tier 1 – Existing Board commitments in place; service and legal agreements in place.
      • Examples of fully funded Tier 1 projects:
        • Route 50 Pedestrian Initiative 11 Walkway.
        • Dulles Rail, Phase 1.
        • I-495 Beltway HOT Lanes.
        • I-95 HOT Lanes.
        • Lorton Road widening.
        • Mulligan Road.
      • Examples of projects needing additional funding:
        • Dulles Rail, Phase 2.
        • Tysons improvements.
        • Connector – bus replacement program.
        • Tysons Metrorail Station access management study.
        • Reston Metrorail access group.
    • Tier 2 – Commitments needed; planning currently underway.
      • Examples of projects needing additional funding:
        • Roadway improvements.
          • Route 7 (I-495 to Falls Church).
          • Frying Pan Park Road (Rt. 28 to Centreville Road).
          • Backlick Road Bridge.
        • BRAC improvements.
          • Fairfax County Parkway/Neuman Street interchange.
          • Rolling Road (Old Keene Mill to Fairfax County Parkway).
        • Columbia Pike Streetcar.
        • Transit Development Plan recommendations.
    • Tier 3 – Commitments desired, but no action taken yet.
      • Examples of projects needing additional funding:
        • Future transit services.
        • Results of countywide transportation network study.
        • Connector maintenance garage.
        • New interchanges.
          • VA 123/Braddock Road.
          • Van Dorn Street/Franconia Road.
          • Route 50/Stringfellow Road.
          • I-66/Route 28.
        • New road widening.
          • Route 29 (Pleasant Valley Road to Shirley Gate Road).
          • Braddock Road (Burke Lake Road to I-495).
  • Framework for the next Four-Year Transportation Plan.
    • Calendar years 2012-2015 (FY 2013-FY 2016).
      • C&I revenues through FY 2016.
      • CMAQ/RSTP funds through FY 2016.
      • General Obligation bonds through FY 2016.
    • Project categories.
      • Already committed projects.
      • Tysons improvements.
      • Categorical projects – pedestrian, bicycle, spots, bus shelters.
      • Other new projects – depending on funding availability.
  • Possible options to reduce deficit for Four-Year and Ten-Year Plans.
    • Additional federal funds.
    • Additional state funds.
    • Additional local funds.
      • Use County property tax to fund transportation.
      • Dedicate 50% of future carryover funding to transportation.
      • Meals tax.
      • Other specialized tax districts.
      • Delay projects to match available revenues.
    • Public-private partnerships.
  • Upcoming tasks.
    • Prepare a straw man for next Four-Year Program in February 2012. 
    • Board discussion and consideration of transportation revenue sources.
      • Short and long term.
    • Board consideration and approval of proposed Four-Year Plan in April 2012.

Board Discussion on Devolution

Chairman Bulova began the discussion by asking what would happen to the state budget if devolution occurred and the responsibility to maintain roads was passed onto the local level.

County Executive Griffin noted that the state is looking to save money with devolution and the amount of money given to towns and cities may be reduced. The state may also change how roads are classified – we have five or six categories, but the national standard is fewer.

Supervisor McKay indicated that the biggest challenge is not what is given to localities in the first year of devolution; instead it is the amount of funding allocated in subsequent years. History has shown that the funding levels decrease regularly when the responsibility for programs are transferred to local governments. The “real” cost needs to be examined – short and long term. The County should assume funding 100% of the obligation in future budgets if devolution occurs.

Supervisor Cook agreed and said that transportation is the number one concern for residents and it’s not getting addressed at the state level. This could be an opportunity to make a real difference in the lives of the constituents, and yes it will require some money.

Board Discussion on Proffers

Supervisor Herrity suggested studying the proffer system in Fairfax County.

Supervisor Smyth noted that the County currently does proffers, but the key is determining what an equitable share is. Each development proposal is unique and requirements for each development have changed over time. Areas like Tysons are different than developments of the past.

Supervisor Herrity stated that the developers in Tysons have indicated that the costs of proffers are expected to be $27 per square foot.  Director of the Office of Community Revitalization Barbara Byron stated that the developers have been requested to provide a breakdown of their numbers but have not done so.  The only information that staff has is something from them that shows total projected costs for all proffers, including among other things, stormwater, schools and transportation and divides that number by projected square feet of development, deriving the dollar per square foot amount. 

Tom Biesiadny explained that there are different types of proffers in Tysons: a piece of Greensboro Drive; a piece of the grid of streets associated with the buildings; and Transportation Demand Management efforts to reduce kiss and ride. These are different types of proffers than 20 years ago when TDM didn’t exist, but they are still significant.

Board Discussion on Connecting Communities

Supervisor Cook noted that this is the best hour he has spent since he’s been on the Board and that they are making real progress. This is a framework that can be used to have a countywide discussion this year. He recommended developing a task force that includes the business community.

Supervisor Hudgins noted that the transit improvements are not just occurring in Tysons. The transit development plan needs to be expedited to make sure all rail riders are being served now. Reston is a community that works in Fairfax and we need to make sure it continues to work. We need to connect all these pieces. The internal development benefit won’t happen until after 2014 – it will come from the surrounding communities who want to get to Tysons on bus or rail without getting in their cars.

Chairman Bulova supported Supervisor Cook’s suggestion of having discussions with the  business community on what the County is trying to accomplish, what the challenges are and how they will be funded. We need to engage our community. These are sensitive subjects, but we have had success in the past with the budget and we can build on that.

Board Discussion on the Meals Tax

Supervisor Hyland suggested that the meals tax needs to be explored again.

Chairman Bulova explained that the meals tax was on a bond referendum in 1992 and it failed.

Supervisor McKay suggested that if a meals tax were considered for the future, it would have to be a package that doesn’t just address devolution. It has to include funding for new projects instead of just balancing out what residents are already paying the state.

Supervisor Hudgins agreed and said that the meals tax should be used to pay for other projects.

Supervisor Smyth suggested that if we have a discussion with the community, we should present a menu of options. Not just a meals tax, but something more similar to a sales tax that doesn’t just affect the restaurants.  She questioned whether the County could get authority from the state to implement a meals tax, rather than putting it on a referendum.

Supervisor Frey noted that the Republican Party at the state level will not give the County authority to implement a meals tax because it is too similar to a tax increase.

Supervisor Cook said there should be a freeze on the property tax to make it work. The trade-off for residents would be the assurance that their property taxes would not rise.

County Executive Griffin suggested that having the meals tax on a referendum during a presidential election would ensure the greatest voter turnout. He also suggested imposing the meals tax for four years with a specific list of projects that would be built from the revenue. After the four years expire, another referendum could be included on the ballot. He gave an example from Oklahoma where a new tax barely passed in the first year, but it was approved by a much larger margin the next time because residents were able to see the benefits of what was being built with the money.

Chairman Bulova finished the discussion by emphasizing that a conversation would need to take place first with the business and restaurant communities, and then with the residents. It is important to engage them from the beginning and explain the benefits. This discussion will continue at the Board’s next Transportation Committee meeting.

County Executive Tony Griffin

  • A number of challenges have been outlined for the Board.
  • When the budget is presented later this month, the Board will see 3% growth forecasted for the foreseeable future.
  • The Board has an incredible number of strengths – take comfort in that.
  • The number of challenges can be somewhat intimidating, but historically the Board has met those.

Board of Supervisors Retreat 2012

  Day 1

  Day 2

  Presentations & Related Media

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