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State budget cuts will impact county offices

by Larry S. Chowning

During a public meeting in Jamaica District last week, Middlesex County Administrator Charles Culley reported that every county department that receives state funds is facing a reduction in revenue in the 2009-10 (FY10) fiscal year.

Virginia Governor Tim Kaine is proposing to eliminate $2.9 billion from the state’s general fund, and a lot of these cuts are being passed on to localities such as Middlesex.

The Middlesex Public School System, for example, is expected to lose over $500,000 in state funds in FY10.

Some reports have state funding to local constitutional offices being reduced by as much as 7 to 10%.

Short of raising real estate taxes, there are no easy answers for making up the loss of these state funds, said Culley. A county meals tax would help, he indicated, but Middlesex voters have twice rejected the referendum required to establish a 4% meals tax that would generate about $270,000 in local funds annually.

The proposed meals tax failed by almost a 3 to 1 vote margin in the 1999 election, and in 2005 the proposal was defeated 2,081 to 1,530. 

Culley described a meals tax as a tax that is paid primarily by people visiting the county. He also noted that people now expect to pay a meals tax because it is so common in other localities. “Those lost revenues would really be helping us now,” he said.

He noted the Urbanna Town Council was able to adopt a meals tax several years ago without a voter referendum because it is an incorporated town.

However, state law requires counties to get voter approval before implementing a meals tax. “It’s a shame that a town of 600 people has more ability to tax than a county of 10,000,” said Culley.

Most of the counties and towns near Middlesex have a meals tax. King William County supervisors recently voted to establish a 4% meals tax. A voter referendum on a meals tax was approved by King William voters in November, 2008 by 45 votes. Six other Virginia counties defeated similar referendums in 2008.

Culley said each penny on the county real estate tax rate generates about $270,000 in revenue.

The real estate tax rate was lowered last year to accommodate a reassessment, which included huge increases in the value of some waterfront property in Middlesex. The reassessment was based on values gathered during the “real estate bubble” a couple of years ago when the value of most homes and property were much higher than they are today. When that bubble burst in 2008, real estate values decreased across the nation. Middlesex, however, will use these “inflated” values for three more years, when a new reassessment will be held. 

Culley said he is not sure how much the national real estate crisis has affected home values in Middlesex, but he did say new home construction has slowed in Middlesex and this will impact local tax revenues.
“When a house is completed, its value goes on the tax books, which means we pick up additional funds during the year,” he said. “When people aren’t building or improving their property, we don’t get that extra funding.”

Culley said Middlesex might want to consider a lodging tax. “We don’t have many commercial places to stay in the county, but that might change,” he said.

He noted that a major hotel chain and restaurant have shown interest in locating in the Saluda area. However, this is not possible without central water and sewer. “We have [central] water, and we are trying to get [central] sewer,” he said.

The county board of supervisors is currently trying to get a permit to build a new sewage treatment plant to service the Saluda area.

Culley said he has requested all county departments to come up with ways to decrease their budgets by 5%. 

posted 02.04.2009

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