Wednesday, February 21, 2007

County Budget Recommendations not encouraging

That was what I thought my column for February 8th would be titled. However, not only was the column publication postponed for over a week, but when it finally was published in a rare Sunday appearance, it was titled "A county adjusts after the gravy train stops running". So let me apologize for my use of the trite phrase "gravy train" in my column which led to this headline.

That said, my article, which notes that most of the cuts recommended aren't really cuts, and that we have to do better if we really want to control the soaring costs of local government:

A county adjusts after the gravy train stops running
Potomac News
Sunday, February 18, 2007

The last five years have been an easy ride for the Prince William County government. With housing prices skyrocketing, revenue from the real estate tax shot through the roof. Supervisors were able to take credit for reducing the tax rate while homeowners' taxes increased by almost twice the rate of inflation.

With almost no new development left unapproved, thousands of new taxpayers moved into new, expensive homes in the county, providing a growing source of new revenue. And with an increase in proffers extracted from developers to secure zoning changes, county coffers were flush with new cash. About the only money decisions to be made were where to give away the "surplus money" at the end of each year.

But whenever a supervisor suggested preparing a budget that showed some fiscal restraint, the board would have none of it. Rather than having the county staff prioritize spending, the budget misers were told to develop their own budgets indicating "what they would cut" -- a difficult task for a part-time supervisor with limited staff and no support from county departments loathe to help cut their own budgets.

But a new day is here, as one of those cost-conscious supervisors now chairs the board, giving him much more control over the workings of government. So it was with high hopes that budget-mindful constituents waited to see what savings would come from a new budget process which asked the county staff to consider controlling expenses.

Of course, this job was made difficult because, at the same time, the gravy train has come to an end. There will be no expanding revenue from proffers -- the board froze new zoning consideration, and with the housing market slowdown fewer residences are being built and sold. Also, home prices are retreating, not growing, so in absolute dollars the per-house tax burden is dropping.

To their credit, the board requested a budget that held the line on the tax rate. This means that the county has to find $22 million or so in cuts for next year. But first, it must deal with an $18 million shortfall this year, of which $9 million must come from the county government (the rest of the shortfall affects the public school budget).

Given the lack of focus on cost containment the past few years, saving $9 million out of a budget of over $450 million shouldn't be hard, especially since last year's budget had $51 million more in spending than the previous year. The staff report to the supervisors detailing how the shortfall would be covered was delivered this Tuesday. But the proposed "cuts" are disappointing, and do not bode well for the new budget to be presented in March.

The staff was expected to present $19 million in "budget savings." Only a small portion represents real cuts in the cost of government. Most are budget gimmicks. For example, the "cuts" include $6.3 million in what they call "one-time expenditure savings. To illustrate, if you decided not to go out to eat this week, it would be a "one-time expenditure savings."

But the county isn't skipping dinner. Instead, it is, as detailed in the Potomac News, "foregoing equipment purchases and other 'one-time expenditures' such as renovations and emergency communications improvements." The equipment will be purchased eventually, and the renovations and improvements will need to be made, so it's really just pushing expenses into the next year. Since each year has its own set of "one-time expenses," the county will have to catch up eventually.

It's not all bad. They propose to "save $1.9 million by leaving 67 vacant positions unfilled." One hopes the vacant positions are for unnecessary jobs. If not, it would make sense to transfer people from less-useful jobs to the vacant jobs, but I doubt the county will consider that so long as the positions exist. The board will have to vote to actually eliminate the vacant positions if we want long-term savings.

So it's a start, but a minor one. For next year's budget, we need some real cuts, not just one-time savings and accounting gimmicks. We have a real chance to get the county's fiscal house in order. Let's not squander the opportunity.

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