Deirdre Fernandes
The Virginian-Pilot
©
VIRGINIA BEACH
The city is bracing for at least a $22 million shortfall in next year's budget as officials predict revenue from real estate taxes will drop for the first time in 15 years.
Commercial and residential tax revenue is expected to slip by 4.5 percent, the city's first decrease since the recession of the early 1990s, said Catheryn Whitesell, Virginia Beach's budget director.
"Just like for every other city, it's going to be a very difficult year," said Whitesell, who will present City Council and School Board members a five-year forecast and more comprehensive numbers Tuesday.
City officials estimate that real estate taxes will bring in $467.2 million for the 2009- 10 budget year instead of the $489.4 million initially projected, Whitesell said.
The shortfall could go beyond the $22 million, with anticipated cuts in state money and drops in other taxes, Councilman Bob Dyer said.
"We better start getting ready," he said. "It's going to be worse than we think. The nature of government is going to change. The expectations have to change."
The city's budget outlook for 2009- 10 has worsened in recent months. In August, Jerry Banagan, the Beach's real estate assessor, predicted the tax base would be flat after years of skyrocketing assessments.
But home sale prices continued to fall in September and October, and more specific neighborhood studies forced Banagan to warn of declines.
Even modestly priced homes aren't selling, Banagan said.
"They're falling more than we expected," he said.
Council members said they aren't surprised by the shortfall, given the nation's economic troubles. In Norfolk, City Manager Regina V.K. Williams has announced that she expects a $24 million budget shortfall.
"It's all part, dare I say, of the perfect storm of lower tax receipts, less money from the state, less money from the federal government and increases in providing services to citizens," Beach Councilman Jim Wood said. "We'll have some extraordinarily difficult decisions to make."
Cuts are likely, Wood said, but he hopes they affect capital projects more than personnel.
Councilman Bill DeSteph said the city should maintain public safety, education and human-services departments, but "pretty much everything else should be put on the table."
"You start looking at things that are needs and things that are wants," DeSteph said.
He did not rule out layoffs.
Council members said they are not currently considering raising the tax rate to make up the shortfall.
"Before we do any tax increases, we have to look at budget cuts," Wood said. "We're in this together with the average citizen. We have people whose 401(k) s are evaporating and people who are losing their jobs."
City finance officials have not asked department directors to cut next year's budgets by specific amounts yet, White-sell said.
Because the city has a two-year budget, officials can wait to find out how deep the state's cuts will be, Whitesell said.
Deirdre Fernandes, (757) 222-5121, deirdre.fernandes@pilotonline.com
Aaron Applegate, (757) 222-5122, aaron.applegate@pilotonline.com
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Would someone please kick
Would someone please kick Spore and Sessoms to the curb….While are Governor was cutting his own pay and budget.
http://hamptonroads.com/2008/10/kaine-will-cut-nearly-1-million-his-offices-budget
Spore was giving himself a raise and urging council to move forward with development…Huh??
“There are more instances of the abridgment of the freedom of the people by gradual and silent encroachments of those in power than by violent and sudden usurpations.” - James Madison, speech to the Virginia Ratifying Convention, June 16, 1788
Shortfall Is Based On Budget Increase From Previous Year
Shortfall is pretty misleading. You see Virginia Law currently limits property growth in each locality by 101% of the previous years budget. Regretfully, this ceiling can be circumvented by the governing body of the local government after holding a public hearing which for years has ignored the intent behind the law. The tradition for Council has been to raise the budget well beyond inflation and cost of living for each VB household. Since 2000, the City budget has increased by a staggering $700 million. So the shortfall represents a projected increase in the previous years budget that is proposed by the City Manager. Mr Wood is right about cuts to the budget which I am sure will circumvent essential services. Reliance on State money is simply a return of paid (includes income tax) taxes by the 171,000 households and the 31,000 businesses so its essentially a return of a percentage of our own money. Its important to note that since 2000, the tax rate was cut by just 27% while the real estate tax burden was increased by over 115%. The implications of the previous $700 million budget hike is what needs serious review by council. Why?
Mike, remember
a lot of those investments, i.e. town center, have actually caused a lot of other business in the area to lose sales and are hurting. Yea, the town center looks nice and I like to visit it, but don't fool yourself. I have visited the area restaurants and businesses. A lot of those owners are not happy about the revenue they are losing. Same thing with the Hilton and Catch 31. It's nice but the money has left other areas for the benefit of 31st St. Kind of hard to evaluate, but council needs to rachet back until the economy resurfaces.
Maybe Virginia Beach should
Maybe Virginia Beach should follow the SPSA management model. Ha Ha ! Better yet, replace Jim Spore.
Well actually, that is
Well actually, that is exactly the wrong thing to do. The City has prospered because it has had the courage and long term vision to invest in projects which have created great value and which finance themselves, thereby creating jobs, new businesses, more income from sales and personal property taxes, and thereby relieving the reliance on the Commonwealth of Virginia which is paying less and less of its share of public safety, education, courts and justice, and human services. If the City had done ten years ago what you just suggested, our reliance on state money would have required us to drastically cut programs and services, and to pay a much higher tax rate. There is a reason why we have the lowest real estate tax rate in the region, and it is because of the aforementioned investments that produce long term financial gain.
Unfortunately I'm not
Unfortunately I'm not suprised by this. The value of the market was artificially high and instead of being a fiscally sound city governmnet did we save, or did we put money aside for a "rainy day"? Nope we spent baby spent now the money is gone and so is the tax base from which to get it. Oh no The city of Virginia Beach is in the same boat as everybody else they are going to have to tighten their belts and reign in unrestrained spending. I'm sure City Council will sugest something "intelligent" like cutting the Public Safety budget instead of cutting money from the ocean front.
suggestion
Maybe Town Bank can loan the city a huge sum of money, then pay Runnymede a huge sum of money to develop any remaining green space in VB. Sessoms wins, Barrett wins, and - well, the heck with the rest of us.
cut the waste...
Basic budget management that is no less simple than running a typical household only with more people involved. This city in my opinion has wasted revenue on too many misguided projects to mention over the years. None to the overall benefit of a majority of citizens. Enough about the oceanfront. They're done. no need to do anything other than upkeep there. Looking around the city it's in excellent shape across the board except for a litany of "feel good" projects. Much like a household buying big screen TV's, and maxing out the cable/internet options when they don't make the money to sustain a higher standard of luxury living. They go in debt just like our new government will surely do. We as a city simply need to buckle down and suspend or re-evalute what is truly needed NOW, and put off or forget about the junk projects benefitting only the few or those who scream loudest until our banking outlook rights itself. I'm saddened we couldn't get fiscal conseratives like John Moss in office to help bring responsibility to our budget vice letting managers and budget planners run amok trying to pad their resume's with "see what i done" projects for a job in another larger city. People sh
Hey aalto
In case you haven't noticed, the development segment has come to a screeching halt. There are no new big develoments going on. The Fed has hosed up the economy by keeping interest rates too low for too long, which weakend the dollar and artifically raised gas prices tremendously, which in turn raised the price of EVERYTHING. Which reduces the amount of money people have to spend, which snowballs from there. As gas prices continue to drop, other prices will follow. If the fed doesn't forget to raise the interest rates, to make the dollar strong.
I don't...
...understand!?!?!...just raise taxes again...geez...this is a no brainer!..(Elvis is laughing out loud)