Typically, it is Loudoun’s rapid growth that drives the debates surrounding the county budget. This year, it’s all about boosting the paychecks of the county’s government and school district employees.
Compensation initiatives on the table this spring already have torpedoed plans to cut or hold level real estate tax bills for the “average” homeowner for a fourth consecutive year. County Administrator Tim Hemstreet last week told the Board of Supervisors that a tax rate cut likely would result in a reduced level of service in at least some areas of government operations. The new approach, holding the current $1.045 tax rate next year, is projected to cost those average homeowners an extra $126.
A key challenge in the county budget is the implementation of the final phase of a three-year effort to revamp the government staff classification and compensation system. The impacts of the program will begin with changes that are scheduled to take place in March. The pay hikes cost $11 million in the fiscal year 2020 budget. However, those changes will be in place for the entire year in FY21, providing a $24 million increase to the base budget. That hit, plus the $49.3 million increase in annual debt service payments, leaves little left over to address services demands generated by the county’s population growth.
At the equalized tax rate that had been targeted by the previous board, projections are that an additional $29 million would be available for the county government side of the budget. With the classification and compensation bubble, that leaves only $7 million to pay for other initiatives already approved by the board—such leasing new office space and upgrading the public safety radio system—creating 34 new staff positions needed to open newly-built facilities, as well as expanding services to accommodate growth at the rate of nearly 1,000 new residents per month. Some of those needs would go unfunded, Hemstreet told supervisors last week.
At the current tax rate now advocated by Hemstreet and his budget staff, the $37 million revenue boost would cover those expenses and allow many departments achieve their top priority service expansions.
Holding the current tax rate also would provide $71.8 million in additional school funding. However, the school budget proposed by Superintendent Eric Williams last week requires a $94.2 million increase in local funding—a $22.4 million shortfall.
Williams’ budget increase also is driven by proposed pay hikes—a $64.1 million package that is led by a $38 million effort to continue restructuring the teacher pay scale, and is offset by $11.2 million in projected vacancy savings.
The School Board will hold its first of five planned budget work sessions Tuesday night and has not yet discussed Williams’ pay plan. Increasing the tax rate to cover the entire proposed school budget—to a rate close to $1.07, if all the additional revenue jump was allocated to schools—would cost taxpayers another $126.
Using those figures, instead of holding tax bills level with an equalized tax rate, the potential exists for bills to increase by $252 for the average homeowner.