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TextFY 2011 Financial Forecast and Community Engagement Process - 2009 Retreat
The Board received a
financial forecast for Fiscal Year 2011 
with a projected shortfall of
$316 million, which will prolong fiscal challenges another year.
The number of jobs in Northern Virginia declined 19,600 in April 2009 compared to a year earlier. Fairfax County’s unemployment rate was 4.5 percent in April, and during the last two downturns, unemployment never exceeded 4.0 percent
Without the 12 cent real estate tax rate increase and other revenue enhancements, revenue in FY 2010 would have declined 8.1 percent.
Approximately 73.1 percent of the total base is residential, and residential values decreased 12.55 percent in FY 2010. A 10 percent decline is projected for FY 2011.
Nonresidential property values are projected to decline 18 percent in FY 2011. Fifty-one buildings with 4.5 million square feet stand empty in Northern Virginia. The current forecast is for values to stabilize in FY 2014; nonresidential values fell for five straight years during the 1990s recession.
Regarding other County revenue, new model vehicle registrations in Fairfax during the first five months of the year have fallen 10 percent from the same period of 2008. Sales tax receipts have worsened significantly during the past three months.
Actions by the commonwealth have reduced County revenue by $15.1 million during the past two years.
The FY 2011 projected deficit is $315.6 million, due to a loss of revenue of $232.5 million and disbursement/balance requirements of $83.1 million. This includes no funding for salary adjustments/inflation. The forecast assumes no increase in the school transfer.
FY 2010 Budget Reduction-in-Force (RIF) Placement Process
| # | # remaining | |
|
# employees originally receiving RIF Notification Memo
|
76 | 76 |
|
# employees receiving a placement from their agency due to retirements/resignations, prior to being placed via the RIF Placement Process
|
11 | 65 |
|
# employees opting not to participate in the RIF Placement
Process |
7 | 58 |
|
# employees receiving RIF Notification Memo who were probationary status and not eligible for participation in the RIF Placement Process
|
11 | 47 |
|
# employees in the RIF Placement Process receiving lateral transfers into vacant positions
|
13 | 34 |
|
# employees in the RIF Placement Process receiving lateral transfers by bumping/displacing a probationary employee
|
9 | 25 |
|
# employees in the RIF Placement Process demoted into vacant positions
|
17 | 8 |
|
# employees in the RIF Placement Process demoted into a position by bumping/displacing a probationary employee
|
1 | 7 |
|
# employees not placed who wanted placement |
7 | 0 |
Board Discussion of Budget Strategy
Diversification of revenue via a meals tax would have to be approved by voters; if approved it could bring revenue of $80 million to a future budget year. However, to put a meals tax referendum on the November ballot, the Board would have needed to take action at the June 22, 2009, Board meeting. So it’s too late to get this placed onto the November 2009 ballot. Four counties in Virginia can impose a meals tax without a referendum, but Fairfax County is not one of them.
Board members stated that budget problems can’t be solved by doing the same things every year. Some budget reductions can be done for a few years but they’re not sustainable, such as elimination of salary adjustments.
To balance the FY 2011 Budget in light of the projected $315.6 million deficit, there will need to be significant cost reductions, so the Board discussed programmatic reductions and potential government restructuring.
Partial programmatic reductions were discussed, rather than the elimination of whole programs.
Consolidation of the current 50+ County agencies and consolidation of programs within and across agencies were discussed. Outsourcing additional human service delivery to nonprofits was suggested.
A review of the cost of hiring contractors vs. County staff was requested.
It was noted that the vast majority of positions added over the past decade have been in the areas of public safety and child care. The overall budget growth has been in the areas of schools, public safety and human services.
Guidance will be given to County agencies to reduce agency salary budgets by 3 percent and reduce overtime and limited-term funding substantially, between 25-50 percent for most agencies.
Other ongoing budget initiatives include the Smart Savings/Smart Solutions Committee; reviewing a compensation philosophy; evaluating options to keep health insurance premiums low; looking at recommendations for older adult services; evaluating management structures within agencies; carefully tracking stimulus applications and funding; and reviewing fuel and utility requirements.
Public Dialogue Opportunities
The effective community engagement process conducted last year will continue this fall as the community again will be invited to work with elected officials and County staff to address the continuing revenue shortfall. Budget forums are expected to begin this September for the public and employees to participate in this process.
The Board’s Budget Committee will begin discussions early to look at potential strategies for balancing the budget.
Ad Hoc Citizens Budget Issues Advisory Committee
The goal of this potential new group would be to make recommendations to the Board on specific ways to enhance efficiency and cost effectiveness of County government and to identify service enhancements that can be implemented with no additional cost. The Board would make appointments on an annual basis and appointees would serve for one-year terms or until the conclusion of specific analysis. The Board chairman would select the committee chairman and each Board member would make one appointment to the committee.
Specific issues for the committee’s review would be part of the budget guidance for the upcoming year. Possible topics could include public safety operations; parks and recreational services consolidation; senior services; Fastran/Connector system improvements; public affairs consolidation; and revenue diversification opportunities.
It was stated that it is the job of the elected Board to actually make the budget decisions; this committee would make recommendations to them.
A number of the districts have their own budget committees; there was discussion of how a Countywide group would integrate and coordinate with the district groups. There was also discussion about whether a Countywide committee should have a broader focus on the entire budget, rather than focusing efforts on a few potential cost reduction issues.
The Board agreed to defer further discussion on a possible Countywide Ad Hoc Citizens Budget Issues Advisory Committee and to revisit, perhaps at a future Board Budget Committee meeting.
Fiscal Transparency on the Web
County staff will review best practices for providing more fiscal transparency online. The new Enterprise Resource Plan (ERP) (enterprise system that will support finance, human resources, budget and procurement for the County government and schools) will provide the means to place more budget information online. An online portal also can be created that will point to all the fiscal reports and budget reports.
Website Survey 