Fairfax County departments are looking at lean times for first time in years as their largest source of revenue — real estate taxes — goes flat in a cooling housing market.
County Executive Anthony Griffin has told agency heads they should leave new programs and expansions out of their fiscal 2008 budgets in light of the drop-off of residential tax revenue growth, according to Susan Datta, director of the Department of Management and Budget.
As in other parts of the country, Northern Virginia’s housing market is showing signs of a dramatic slowdown following a years-long period of unprecedented growth. Home inventories and the length of time a house stays on market are increasing, while home sales are decreasing. All are indications of a market downturn.
Gone are the annual jumps in home values of more than 20
percent, according to the most recent forecasts by the county. Fairfax is now projecting a 1 percent increase in residential assessments over the next fiscal year.
For a county that garners 60 percent of its revenue from real
estate taxes, the trend will likely curb spending in county departments.
“In order for the county’s budget to accommodate [cost] increases in things that we can’t control, like gasoline, like utilities, there will probably need to be reductions in other areas to make it work,” Datta said.
Even so, she said she does not anticipate layoffs of county staff at this time.
“There will be significant belt-tightening for us and the schools,” said Board of Supervisors Chairman Gerald Connolly.
Likewise, Mario Schiavo, the budget director for Fairfax County Public Schools, said he anticipates a “trickle effect” from the slowing assessments on its budget. About 75 percent of the schools budget comes from a county contribution.
“If they’re not seeing the revenue increase on the county side, that definitely impacts our [budget] as well,” he said.
