The Botetourt County School Board is considering what they consider some catastrophic cuts, while the Board of Supervisors budget committee is issuing a list of possible cuts it may be making on its side of the ledger because of what is now a projected $3.7 million budget shortfall in the next fiscal year.
That’s why the supervisors are asking for public input at a Tuesday, March 27 public meeting at 6 p.m. at Lord Botetourt High School. They will be joined by the school division at the meeting where they’ll take comments on cuts that could include closing one of the county’s elementary schools or dropping funding for athletics in the middle and highs schools.
The supervisors are considering cuts that could mean county libraries are open as few as three days a week, while imposing a fee for youth to play recreation sports and eliminating such cooperative activities as the Children’s Fishing Carnival and the JAKES Day along with adult programs.
Both the supervisors’ General Fund Budget Committee and the School Board Budget Committee met Wednesday and Thursday to absorb the challenges associated with trimming $1.25 million each from prospective budgets they already considered bare-bones.
Those cuts did not take into account another $600,000 they may have to make up because of late passage of legislation in the General Assembly that could force municipalities and school divisions to make employees start paying their 5-percent share of Virginia Retirement System (VRS) contributions while giving the employees a 5-percent pay raise to offset the drop in their take-home pay.
The School Board committee on Thursday morning was adamant about trying to keep any more budget cuts from affecting instruction, but balancing their budget with other VRS mandates was not going to be possible without increased revenue that would have to come from local taxes or cuts as extreme as closing a school.
During his presentation to the committee, School Superintendent Dr. Tony Brads said to meet all the cuts and have a balanced school budget without an increase in local funding, the school division would have to consider either one or a mix of:
• salary reductions (the committee had not sentiment for this),
• staff (including teacher) reductions that could affect classroom sizes,
• elimination of programs/courses (possibly arts, music, band, technical education, electives, etc.),
• elimination of middle school and high school athletics (and creating a “pay to play” program as a revenue source),
• an elementary school closure.
Those would be on top of eliminating eight support positions currently funded with federal dollars, not replacing the Lord Botetourt High School roof this year (leaving buckets around the school), and dropping the single replacement bus the school division was going to buy. It would also mean taking almost $251,000 from the school division’s capital reserve fund.
Other cuts on the county’s general fund budget would include eliminating about $145,000 in funds for some 30 community and other organizations such as the Buchanan Resource Center, Child Health Invest Partnership (CHIP), Center in the Square, Botetourt Chamber of Commerce, Historic Fincastle Inc., Roanoke Regional Chamber of Commerce and Town of Troutville.
There would be cuts in almost every other department as well, from the Sheriff’s Department where now open positions would not be filled, to the other Constitutional offices.
Like the school division, the shortfall in the county’s general fund budget (that does not include the schools) is primarily the result of General Assembly-mandated increases the county and school division have to pay into the Virginia Retirement System (VRS).
The school division has to pay $1.77 million more to VRS in the coming fiscal year.
On the general fund side of the budget, Deputy County Administrator David Moorman said without the VRS increase, the general fund budget would actually be down about 1 percent without having to cut any services.
Instead, the county’s draft general fund budget is up 4.8 percent because of the mandated VRS increase.
The school division has been considering a budget that’s $2.14 million above the current budget— which includes the VRS increase. That would require a 10.5 percent increase over the local contribution this fiscal year.
Moorman said the county staff has reviewed all the department and other spending requests and, to maintain current services, presented a budget that totaled $31.6 million— a budget that had already cut $1.1 million in requested expenditures.
“Despite reducing the budget and still maintaining services, we still have a shortfall because of the mandates,” Moorman said.
“The budget committee wants to hear from residents on how they want to deal with the shortfall,” Moorman said of next week’s meeting. “It would mean reducing services… all across the board.”
The General Fund Budget Committee has asked the county administration and the school division to see what would happen if each has to take $1.25 million out of the budgets they have been considering.
To keep current services, he said, would “mean doing something on the revenue side.”
That would require a tax rate increase.
Botetourt’s current tax rate is 65 cents per $100 assessed value on real estate. Each 1-cent in the tax rate generates $345,000, Moorman said.
Botetourt cut its tax rate from 70 cents in 2007, and before that cut the rate from 75 cents in 1999. Both tax rates followed reassessment years, which the county has traditionally done every four years.
Moorman said one way the county could save some money in the 2012-13 budget is to defer the next reassessment a year. The county has $180,000 budgeted for reassessment in the upcoming budget, that is scheduled for completion in 2014.
Moorman said the county has cut staff, streamlined and reorganized the past three or four years in an effort to balance the budget and still maintain services. “Now, it’s cut services. There’s no low-hanging fruit left,” he said.
The county administration has advised against dipping into the county’s fund balance for the coming fiscal year, but is considering pulling $750,000 out to use to balance the budget.
Slow growth is also impacting county tax revenues. The county expects another year of slightly declining local revenues that is expected to total nearly $39.4 million. That’s just off from the $39.5 million expected in the current fiscal year and below the $40.4 million the county took in the 2010-11 fiscal year. Over half of local revenues go to the schools.
State revenue is expected to be flat at just over $10.6 million.
Another glitch that became part of the two budget committee discussions Wednesday and Thursday is the added $609,000 in possible employee expenses the county learned about just last week.
Of$244,000 another state mandate is expected to cost the county.
As it was closing, the General Assembly passed legislation that requires state and county employees to start paying the 5 percent employee’s share of his or her contribution to the VRS beginning July 1. At the same time, the legislation requires counties to give employees a 5 percent raise as an offset to the reduction in the employees’ take-home pay.
The problem—it’s not a wash. Moorman said it will cost the county about $244,000 because of the tax costs, FICA, etc. associated with the higher wages. And, it adds nothing to the VRS pool.
Brads said it will cost the school division $345,000. The school division can phase it in over five years, but Brads said it would cost the school division more in the long run to phase it in rather than do it all at once.
Moorman said Gov. Bob McDonnell has amended the legislation to have a phase-in for counties, but it has to be approved during the General Assembly Veto Session in April.
Brads said the Governor may also be considering vetoing the legislation and delaying implementation another year.
For additional information about Tuesday’s public meeting, contact Director of Finance Tony Zerrilla at 473-8222 or tzerrilla@botetourt.org or Moorman at 473-8233 or dmoorman@botetourt.org.
