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More costs, less revenue: Halifax County budget woes brewing / December 16, 2013

With declining property values and anticipated cuts in outside revenue in the offing, Halifax County supervisors and School Board trustees sat down Thursday to discuss ways to make their budget numbers add up.

Supervisors and trustees went over fiscal projections for nearly three hours, hoping to come up with ideas to streamline services in the face of stagnant revenues.

“We are going to have to find ways to cut costs by working together since our prospects for more revenues are flat,” said Doug Bowman, chairman of the supervisors’ budget committee.

Neither the supervisors nor the trustees offered any recommendations at the end of the session, although each of the officials on hand received a full rundown of the challenges ahead.

Even without accounting for the proverbial elephant in the room — pending renovations to the Courthouse, expected to cost at least $10 million — county officials face a tough year:

Real estate values in Halifax County dropped 1.5 percent overall in the recent reassessment, cutting into the county’s tax base. Unless tax rates are adjusted upwards to compensate for the falling property values — a process known as “revenue-neutral” tax adjustments — Halifax County will collect $479,127 less in real estate taxes in 2014 than it did in 2013.

By the same token, real estate taxes on existing public service entities (including the Clover Project) will dip by $144,000 in 2014, compared to 2013.

On the bright side, however, the county expects for the first time to collect public service taxes on the new Halifax County Biomass Plant in South Boston. Just how much tax revenue that project will bring to Halifax County — estimates run between $400,000 to $600,000 annually — will be determined when the state’s Public Service Commission places a value on the plant.

Also on the tax front, County Administrator Jim Halasz said income from the county meals and lodging taxes will be “flat” in the coming year. Halifax County’s other options for raising revenue are limited: Halasz noted that Halifax already charges the maximum amount allowed under state law for vehicle decal fees and for business license taxes.

Finance Chairman Doug Bowman also pointed out that two major sources of county revenue — the machinery and tools tax and the business license (BPOL) tax — “are under attack” in Richmond. Members of the General Assembly and both gubernatorial candidates this year, including Gov.-elect Terry McAuliffe, have touted plans for rolling back the taxes, which raise revenue for local needs.

Lastly on the revenue side, Superintendent of Schools Dr. Merle Herndon, on hand for the meeting, projected that the county school division will suffer revenue reductions of $781,000 in the upcoming fiscal year that begins July 1. The reductions are the result of the federal budget sequester, which Herndon said will cost the county $445,933, and changes to the local composite index, the cost-sharing formula that the state uses to apportion education dollars. With updates to the index, Halifax County schools will receive $335,000 less from the state.

The composite index is a measure of localities’ ability to shoulder the costs of local school spending. Halifax County’s index has gone up slightly, prompting, in turn, reduced state spending.

The wild card in school financing is the eventual size and shape of the state budget. Gov. Bob McDonnell is due today to make public his proposed budget, although that document will undergo many changes by incoming governor McAuliffe and the General Assembly before local school divisions will know exactly how much money to expect from the state.

School officials have a clearer picture of their most pressing needs, both in the coming fiscal year and in the mid- and long-term. Herndon presented a three-year list of capital projects at the strategic retreat that combined added up to $2.5 million.

In the coming 2014 fiscal year, the three big-ticket items include roof replacements for the C wing and the vocational wing at Halifax County High School, and an upgrade to the HVAC system. Roof and ventilation issues have been blamed for an outbreak of mold at the high school over the summer and early in the school year.

With smaller items on the to-do list added in — examples include security upgrades at three schools, refinishing of middle school student lockers, and minor work to the high school track and tennis courts — the tab for capital improvements in the first year of the three-year cycle comes out to $1,052,250.

In the second and third year of the capital budget, school administrators envision a number of small-bore projects, from resurfacing of the tennis courts at the middle school to replacing of a hot water heater at Cluster Springs. The two most expensive projects envisioned is the addition of parking at South Boston Elementary and the STEM Center, costing $250,000 and $200,000, respectively.

Long term, the Central Office is projecting the need for $27 million in renovations to Halifax County High School, which opened in 1979, as well as a $6 million overhaul for athletic fields and the HCHS football stadium, built some 50 years ago.

Two elementary schools that were not upgraded during the last round of school facilities improvements — Sinai and Meadville — need renovations and expansions costing roughly $6 million and $5 million, respectively.

For the immediate future, “We have some money left in our capital improvement funds,” Herndon said, but the funding will be not enough to cover all the planned work this year, let alone future years. The schools should have just enough carryover money to pay for the high school roof repairs, she noted.

On the savings side, Herndon reviewed action taken on the top 13 recommendations made in last year’s School Efficiency Study. She noted that just one of the recommendations — dealing with the handling of custodial care in county schools — produced savings that more than paid for the cost of the study. Other recommendations are being implemented to save more money, she said.

Along with the schools, which account for the bulk of the county’s budget — $57.1 million in 2013, out of an overall county budget of $87.2 million — the needs of other county departments are weighing heavily on the supervisors.

Big ticket items include:

A major upgrade to the radio consoles at the E-911 Center, expected to cost $400,000.

An upgrade to the center’s radio system and towers, expected to be mandated by the state within the next two years, is projected to cost between $4 to $6 million.

Another state mandate, for $200,000 upgrades to voting machines, is also expected to come down in the next two years.

Also, the Sheriff’s Department is projecting the need for $80,000 for new vehicles.

Supervisors and school trustees agreed to look at the county’s health insurance costs in the hope of gaining more favorable rates with a larger combined pool of county and school employees.

With the question on all their minds of “where is the money coming from?”, members of both governing bodies agreed to meet jointly over the next several months as their respective budgets are drafted.

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