Fairfax County will mail out a salvo of real estate assessments on Monday that supervisors say will almost certainly reflect a further dip in the housing market and force a new round of program and spending cuts.
The county has been curbing its expectations for the fiscal 2009 budget for more than a year, but officials say the drop in home values is likely worse than the 4 percent forecast as recently as January. For a government that depends on real estate taxes for six of every 10 dollars in its general fund, the additional drop will lead the board to squeeze agencies even tighter and worsen a projected $120 million shortfall for the coming fiscal year.
The decline is intensified by a tremendous spike in home foreclosures last year, which grew to about 4,000 after only 593 foreclosures in 2006. Revenue from taxes on home sales also shrank, as did investment revenue from the Federal Reserve’s interest rate cuts.
“In order to make up the gap, we will have to make cuts,” said Mason District Supervisor Penny Gross.
The bad news could spur talk of a residential tax increase among a board that boasts of doing just the opposite. A source with knowledge of the budget preparations expects County Executive Anthony Griffin to recommend consideration of a real estate tax increase beyond the existing 89 cents per $100 value. The board is also weighing a separate 12-cent commercial property tax for local transportation projects.
Most officials were hesitant to pinpoint where potential cuts could come from and whether they would entail layoffs. Newly elected Springfield District Supervisor Pat Herrity, who says the county has become “addicted to rising assessments,” convened a budget review committee that will look to trim unnecessary programs added in recent years.
Sully District Supervisor Michael Frey predicted the decline will be worse than that in D.C.’s innermost suburbs but better than that faced by outlying Northern Virginia counties. Loudoun County homes fell $4 billion in value last year, fueling a $250 million shortfall.
