Fairfax County rolled out its $5.8 billion budget proposal Monday, a spending plan driven in large part by a deflating real estate market and mediocre revenue growth.
For a county that depends on real estate tax for about 60 percent of its general fund revenue, the fiscal year 2008 budget represents the first belt-tightening in what could become years of financial doldrums.
“When the real estate market catches a cold, our budget is at risk of pneumonia,” Board of Supervisors Chairman Gerald Connolly said.
The budget includes a $3.29 billion general fund — the main pool of money that pays for things like schools, public safety and public works — with revenue that grew only 2.88 percent over last year. About half of that fund would go toward public schools under the proposed budget.
The county’s current year budget is about $5.5 billion.
Fairfax County staff did not suggest cutting programs or staff as a result of the downturn, in which residential real estate fell in value by 0.3 percent, according to 2007 assessments also unveiled Monday that showed the first such drop since 1998. Instead, the proposed budget suggests holding open staff vacancies and using funds carried over from last year to meet the bottom line.
The budget squeeze represents another concrete sign of the end of Northern Virginia’s building boom. The outlook would have been more grim, officials said, were it not for the 13.5 percent increase in tax revenue from commercial, industrial and other sources. Altogether, real estate values jumped by 4.15 percent.
Those increases, however, also could dwindle in the coming years, due in part to over-speculation, said County Executive Anthony Griffin during a midday budget press conference. That slowdown, coupled with a possible further drop in the real estate market, could equate to a lean financial picture in the coming years.
“Residential, I don’t think it’s quite bottomed out yet,” Griffin said. “There is a lag when we do assessments, relative to what’s happening in the residential market, before we see the full impact of the slowdown.”
The proposed budget suggests keeping the real estate tax rate at 89 cents per hundred dollars of value. The Board of Supervisors should adopt the budget April 30.
