Shrinking investment revenue, rising fuel costs and diminished sales tax receipts have led Fairfax County into a new $25 million shortfall, according to the latest economic forecasts.
The new information boosts the likelihood the Board of Supervisors will approve a proposed 3-cent increase on the tax collected on each $100 of appraised real estate value.
The gap, which spans both the current fiscal year and the next, is bad but not entirely unexpected news for a county government suffering from a sharp economic downturn, due almost entirely to the sputtering housing market.
Fairfax County supervisors agreed last month to consider raising its 89-cent real estate tax to buffer against worsening economic times, and the most recent shortfall is sure to intensify calls for the tax increase’s approval.
“We’ve said all along as we’re considering the budget — when we agreed to advertise a tax increase — that we felt it was only prudent to do so given the deteriorating fiscal situation,” said Supervisor Sharon Bulova, the board’s budget chairwoman. “I think the additional loss is evidence of that happening.”
Bulova, nevertheless, said she will wait until the end of a round of public hearings to make up her mind about the increase.
In fiscal 2009, which starts July 1, projected sales tax revenue is down $3.9 million, and anticipated interest rate cuts by the Federal Reserve will reduce the revenue Fairfax County derives from its investments by $10.1 million, Fairfax County Executive Anthony Griffin told supervisors last week.
Projected revenues are down $6.1 million in the current year, mostly from an expected $4.4 million drop in investments, though receipts from sales taxes also will grow less than budgeted.
Money from deed of conveyance and recordation taxes, both of which are tied to home sales, also may be lower than expected.
The county needs almost $5 million to cover the rising cost of fuel in both fiscal years.
“The county executive had already trimmed the proposed budget by millions, and now this new shortfall will have to be addressed,” said county spokeswoman Merni Fitzgerald.
The best way to do that, said Arthur Purves, president of the Fairfax County Taxpayers Alliance, is to bring county salary and benefit increases on par with the private sector.
