Covid Creates “brutal” FY21 County Budget

Fluvanna Unemployment Over 10 Percent

By Heather Michon

The Board of Supervisors voted unanimously Wednesday night to approve a $79.8 million budget for Fiscal Year 2021 (FY21). The real estate tax rate will remain at 92.5 cents.

The final budget is around 4 percent lower than earlier proposals and the tax rate two cents lower than initially advertised in March. It also severely limits the amount allocated to capital improvement plans (CIPs). Supervisor Tony O’Brien (Rivanna) called it “a brutal budget,” much more austere than in recent years. 

These last-minute cutbacks became necessary as the Covid-19 pandemic has spawned an economic crisis that will likely impact budgets for the next year or more. County Administrator Eric Dahl said that 1,164 Fluvanna residents have applied for unemployment since March 14, raising the county unemployment rate from 2.3 percent before the economic shutdown to around 10.4 percent today. 

In recent weeks, the supervisors and county officials have worked to create a budget that places the minimum burden on taxpayers while keeping county services intact and county employees on the payroll.

Cost of living

Among the final issues the board took up for debate before the final vote were cost-of-living pay increases and the insurance for 15 employees facing significant increases in monthly payments under the county’s new carrier, Anthem’s The Local Choice (TLC).

The original budget called for a salary increase of two percent for county employees, at a cost of about $150,000. The school system was planning a one percent increase at a cost of around $300,000.

“I really think this is a year when we can’t give raises to anybody,” said Supervisor Patricia Eager (Palmyra). She proposed revisiting the issue later in the year and look towards starting raises in January, provided the economy was showing signs of recovery. 

After some debate, supervisors coalesced around the idea of giving both county and school employees a one percent raise, in part to help offset some health insurance costs. This left  the budget short by $129,000.

Supervisor Mozell Booker (Fork Union) asked if they could look at a real estate tax of 92.9 cents. That would cover the $129,000 and actually give the county a small surplus.

O’Brien pointed out this would increase the taxes on a home valued at $200,000 by $9 a year. “I’m sorry, but asking taxpayers to not drink two cups of coffee at Starbucks, while asking teachers not to get a raise, or county staff not to get a raise, is really not acceptable to me.”

Supervisor Don Weaver (Cunningham) said that there were two sides to the argument, particularly given the job losses and uncertainty of the moment.

Commissioner of the Revenue Mel Sheridan reminded the board that, even at the 92.5 cent rate, the county was going to see an influx of money in the second half of the fiscal year, once tax assessments were complete. He said that even if they assumed an ultra-conservative two percent increase in revenue, that would be $350,000 in additional funds. His belief is that it would be an increase of four to five percent. 

With that in mind, supervisors agreed to cover the $129,000 from the county’s fund balance with the assumption that it could be repaid in tax revenue before the end of FY21.

The insurance question turned out to be a much more challenging topic. That group of 15 employees, all families with children, would end up paying $5,600 more a year for coverage. 

Sheridan pointed out that this was around 15 percent of annual salary for employees at the lower end of the pay scale. “That’s enough money to have a good employee start looking somewhere else for a job,” he said, asking the board to see if there was any way they could cover all or part of the cost increase.

Following a long debate, supervisors decided to put $50,000 towards a health insurance contingency fund to give human tesources some flexibility to look at different options for employees most impacted by the rate increase. 

Capital improvement

Funding for capital improvement projects (CIP) were reduced to a bare minimum. In a normal year, there would be a couple million dollars allocated for these projects; this budget sets aside a half-million for a few projects that couldn’t be put off. 

O’Brien has advocated taking out low-interest loans to cover CIP projects. “I think that this is a good budget, but I also think that we’re doing a disservice by having zero allocated to the CIP,” he said. “I’m going to vote for this. But in the long run, not having put aside either debt and or some money for the CIP is going to cost us tomorrow. And that’s just a reality.”

But given the extraordinary moment the county finds itself in, “I think it’s really important that we show cohesion and that we’re all together.” 

The motion on the tax rates and the CIP funding both passed by a vote of 5-0.

In their final action of the night, they voted to approve a public hearing on May 6 to hear public comments on temporarily suspending penalties and interest on personal property tax payments.

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