Monday, October 13, 2008

Chesterfield County: The Future of Chesterfield?

While many of us remain fixed on the upcoming Presidential Election and endeavor to ask ourselves just whom we think will be better suited to handle the economy and the fallout from the current financial crisis, we need to also consider just what impact such developments will have on our local community.

Most of us have seen our 401k's and investments take a hit as a result of the crisis, but while we may be tempted to only look at this situation from a personal perspective we must also consider the impacts that will face our community.

While our media concentrates on the issues in Washington and to a lessor extent the shortfalls in the State budget in Richmond, most outlets have neglected the impacts that are around the corner for local governments.

Many of us fought the good fight last year here in Chesterfield when the Board sought to lower property taxes as a result of rising real estate assessments. Many of us sought to have a small percentage of the taxes set aside for transportation and roads, instead of lowering the tax rate to accomodate the politics of the issue. We were told that the State funding as well as the Capital Improvement Plan could recognize and address many of the neccessary requirements facing the County.

In my view, they were wrong. The State funding will be decreased substantially due to the shortfall in Richmond.

Much of any budget is based on forward looking assumptions. The State is dealing with the ramifications of a misguided assumption of 3.6% growth and have to deal with the current shortfalls. The County of Chesterfield may have been misguided in its assumption that real estate would continue to rise in value which would offset the tax rate reduction in terms of the real tax revenue that would be generated. In short, the reduction of the rate and given the rising assessments, in some instances 16%, would allow the County to generate required tax revenues but also provide political cover by providing some tax relief.

One year later, we are faced with the most severe housing crisis in the history of the nation. Fortunately, Chesterfield County has faired better than many other areas in the region and the country with regard to foreclosures and the fallout from sub-prime loans. However, home sales are declining as well as new home starts and the market price of homes on the market is falling. These falling home values in the market will in the end result in falling tax assessments. Residents will not stand for having a tax assessment /market value inbalance where the taxes are being paid on an assessed value greater than market value in the area.

The result of such a decline in home values and a reset of tax assessments will result in less revenue generated through property taxes. These taxes are a significant engine to the plans the County has in terms of Chesterfield's future. They of course are not the only means to address the future of services in the County.

The County has continued for decades to attempt to attract new business. There has been in inability for the ratio to climb between business to individual (20/80%) in terms of the lions share from which revenue is generated over the last decade. The issue now is we may be in store for some really slow economic times. Many of the projects going on right now are facing some real hurdles in terms of financing and lease occupany contracts. They will certainly move forward, but the planned and predicted level of business starts will be slower than anticipated. Revenues generated from the business community could be impacted should the economy retreat further into a deep recession and the revenues associated with the business community could decline as well.

A look at the Capital Improvement Plan (CIP) demonstrates a forward looking plan where some basic assumptions certainly must be re-thought. The plan calls for 855 million in spending spanning County requirements, School Board needs and Utility infrastructure. The six-year CIP spans FY 2009 through FY2014. It takes 173 million to focus on transportation and road requirements which the County surely needs with 18 million of that number being allocated for the Meadowville Technology Park, but the means in which the funding is acquired now may be in jeopardy. 40 million of the funding will come from the 2004 Bond Referendum approved by County residents, but the remaining funds were to come from the sale of new bonds (113 million). How will this sale of general obligation bonds or other bonds issued be impacted by the current environment on Wall Street and the turmoil going on with the rating services whom rate these bonds.

The November 2, 2004 Bond Referendum approved 342 million bonds for schools, public safety, library, parks and recreation, and road improvements projects.

The current Capital Improvement Plan also makes the ssumption that the County will generate 3 million dollars from imposing "impact fees" on those properties not falling under the cash proffer policy. However, the County has yet to implement the impact fee through Board vote and in fact appears to be shelved as a Transportation Authority proposal is considered. There are two issues here. One, the CIP takes into account some three million that cannot be generated currently or in the specified FY2010 as referenced in the Plan and two, the impact fees have been placed on hold as an Authority is considered which will impose some very defined increases in fees on residents like auto repair taxes, registration fees and others.

I doubt residents of Chesterfield will support an authority or proposal that will raise fees on auto services and the like if they are made aware of such a proposal. Any measure resulting an Authority that will generate funds through fees charged to residents for services must require scheduled Town Hall meetings and Public Hearing sessions before such measure is implemented. There may also be a question of constitutionality if an Authority has taxing powers by an a Board not elected directly by the people.

There are many things we must face in terms of maintaining and increasing the quality of life and living standards in Chesterfield, but the current financial crisis and a potentially deepening recession may prevent such actions by the local government from being undertaken. The generators of taxes, cash porffers and impact fees all seem to be facing a challenged environment and though such developments may have been zoned and approved there is no way in knowing just how long it will be before the housing units are begun and thus financial revenues taken in by the County.

Looking back, and of course that is always dangerous, but it may not have been the best measure to reduce the property tax rate on those other than the elderly and only increase the cash proffer policy marginally. The Board may have been overly optimistic regarding the economy and if housing starts continue to decline, business starts slow, sales tax revenues are reduced in a poor economic environment, the future of our quality of life here in Chesterfield will come under fire.

The current economic environment demands that the Board begin cost-cutting and spending reductions, beginning with the size and scope of the government itself. There will be some hard choices, but the times require such action.

15 comments:

Anonymous said...

In terms of choices the Board has but two real options. They can either raise taxes on individuals or raise the fee structure on business entities; which includes revisiting cash proffers again.

There is doubt concerning the impact fees and many see those more as a tax on individual landowners than say developers, but there is still land that was zoned prior to the 1989 cash proffer system that resides in the hands of developers.

One idea that always gets passed over is the idea that those land-banking acreage and have held that land with no real property use should be charged an additional proffer based on the current value in relation to the purchase value, especially if there is a request for a rezoning of the underlying property.

In times like this it is rather easier for officials to go after individuals than business. Call it the mental rationale. We all have been told how bad it is or is going to get so the officials use that as a means of mandating higher taxes.

LUCKS LANE said...

The BOS needs to uncouple the set rate of the RE tax for schools.

The school board (SB) has a reckless disregard for finances. They thought the drunken party of plenty was going to last forever. Huge increases every year. More middle and upper mgmt postions. Lets build palaces for middle schools.

There is no internal control at all. Just pay any 500,000 A and E bill although we have already paid it.

First thing to do is put Ms. Kitchen out to pasture and get a CPA in there. I guess the SB will need to hire a consultant to tell them they need to.

James said...

It looks like the Board passed over a vote on impact fees in order to drum up support for this regional transportation plan but appear unwilling to go on record to just how the revenue will be raised by such an authority and who it will be raised from given the wide span requirements across the region.

Have Supervisors Durfee and Gecker flip flopped from their campaign promises in terms of impact fees in favor of a wider, more expansive taxing authority. The number one complaint was that the impact fees would only be singling out a few zoning cases. At the same time, will not the Assembly consider Sen. watkins impact fee legislation to do away with cash proffers next session as well.

Crestwood Farms said...

Mr. Gecker is backing the transportation proposal and is not in support of the old impact fee initiative.

The proposal was sponsored originally by Delegate Hall in the General Assembly.

It seeks to join Richmond, Ashland, Hanover, Henrico, and Chesterfield primarily but also wants to get Powhatan, Goochland, New Kent and Charles City involved as well.

The authority is proposed to address those needs in the transportation arena that cannot be funded by the Geberal Assembly through convention bills of appropriation. Thats code for lack of funds.

Instead the authority will seek to tax and fee residents to raise capital to offset an issuance of bonds to finance the projects.

J.D. said...

The taxing and fee is based on the following:

1. additional yearly increase of $10 in registration fees for autos

2. new registration fee of 1% of value of auto
3.$10 additional inspection
4. 5% sales surtax on auto repairs in addtion to current tax structure
5.regional congestion fee of .04% on real estate sales
6. 2% increase in area gas tax
7. 2% surtax paid on autop rentals in the area

These are the taxing and fees that are proposed to generate the funds required by the authority. The stated goal is somwhere north of 100 million.

There is talk that the members of the Authority would be selected Supervisors, Councilman and one business leader per area joining the Authority.

The short of it is, they plan to increase government with naother layer of bueracracy as well as increasing taxing powers which will hit every resident in the region very hard.

These fees will hit all residents and those at the lower end of the income scale will be hit profoundly.

John said...

The State transportation funding will be reduced from the 7 million dollar level to about 1 million.

The budget shortfall of 2.5 to 3 billion through 2010 will result in further hits to the Commonwealth Transportation Boards mandates.

The Board had to cut 1.1 billion in project funding this year (June) and will have to cut another projected 1.8 billion.

Keep in mind, what the Supervisors are not telling us is that how can we make due with such limited funding and address the needs of our roads- simple. Pass the Regional Transportation Authority to raise the money that the State could not provide.

Also, one may question just how expensive roads have gotten. The project at Hull Street and Woodlake undertaken to widen the road area was two miles and cost 20 million. 20 MILLION!!!!!!!

The BOCS is getting a pass and has no other answers than to implement an authority to raise the revenue required to keep us a First Choice Community. They have not the stomach or the backbone to cut spending or size of its own infrastructure or revise the Capital Improvement Plan for the current market environment.

There are hard choices Alter but even harder questions that demand answers from local officials. Cuts should be undertaken now and projects like the Courthouse building and these new 16 million dollar libraries need to be put on hold while we face more critical needs.

Anonymous said...

I just never understand why it is everyone seems so prone to want to increase spending all the time instead of cutting spending and identifying abuses.

With the upcoming census we will probably top 350,000 or more residents and how have our salaries for teachers and police/fire kept pace not with other areas but with the number of residents/students being served by these employees. Is not this number we should be looking at first and then how other areas are paying? One thing the blog as continually hit on is the construction of libraries, which I believe to be rather unneccessary given the trends, but it not so much the upfront costs and capital requirements, but the fact your also looking at hiring and increasing government payrolls in staffing those projects which also requires benefits. With every step, we are seeing our government outpace what it needs to be for 350,000 and we continue to see our schools be challenged to keep up with each cycle. We have been behind in the curve since 1985 with growth and schools and yet government continues to increase unabaited it seems. The number of positions may be less one year to the next but the size is still growing.

J. Scott said...

Well, I think we first have to look at the growth rate. Growth has long been the excuse for an increasing neccesity for bigger government.

Many of us do not subscribe to such a view, but that would be the conservative in us. The progressive in us would see the opportunity to captalize on the size of the population through taxes as a means of implementing large scale programs and projects to meet the needs of certain groups or consitituencies. Some of these program are certainly warranted but others are not.
The other aspect is the misnomer that growth pays for growth. It hasn't.
We have to ask ourselves if we are seeing these new developments being approved to meet demand or are being approved as a goal of supporting future programs or continuation of ongoing expenditures.
In Midlothian alone we will see a projected increase of 15,000 homes over the next 15 years which accounts for each year adding 1,000 homes, 1,000 couples, 2,000 automobiles and according to stats 1,500 children (1.5 per household) per YEAR. Of course the homebuilding aspect could slow, which would prevent the anticipated revenue from these projects to come on line, but then existing properties and citizens will eventually have to make up that shortfall. Remember this example is merely Midlothian. Factor in the rest of the County's growth and take it from there.
How this factors in to road funding is a huge problem. There is no basis currently that the County will be able to sustain funding from the State at previous levels, nor does it have the opportunity to use General Funds to address the problems of roads. Again, it will have to issue Bonds in order to fund these projects through the Capital Improvement Plan.
The Board appropriates exactly what we as a citizenry permit. Without any hurdles, tax revenues will be used throughout the budget as the committee guides and as the Board sees fit. As long as citizens have a passive relationship with government this will continue to be undertaken.
The same goes for the School Board budget and its funding from the Board of Supervisors. If parents remain detached from the process, what you get will be expenditures in areas that the establishment feels are required not what the public does.

Anonymous said...

More fallout coming from the State. Further cuts to VDOT are on the way according to the transportation board. Any word on how Chesterfield plans to handle such reductions in road funding?

LUCKS LANE said...

Lots of good posts here.

I rhink we will hear some noise during the budget process this year.

Ramsey did not allow for much citizen input.

James said...

Lucks Lane-

The current Board as an integral part of the campaigns of some of the new Supervisors pledged "transparency" of government.

We say see whether or not they really meant it or not in these tuff times ahead.

If they did not mean it, you can bet this blog and some others no just coming into their own here from Chesterfield will hold them accountable.

I would expect two, possibly three, new coalition groups to be come on line in 2009 as well to comfront the issues as well. Its sad that it takes an gloom and doom projection of the economy to finally get people to stand up and take notice of what has been going on for decades here, but from a community perspective we will take it whenever we can get it; involvement that is.

Wondering said...

What is going on with the new County Citizen's audit committee?

Alter of Freedom said...

That is a great question.

I know that the Budget and Audit Committee met already this moth but have not gotten a download as to the agenda.

The County has an Office of Internal Audit as well and Chesterfield is audited by external auditors which I believe is still KPMG.

Another committee that is interesting is the Committee on the Future, representing each district with (2) citizens serving at the leisure of the District Supervisor.

You can find the details of this as well as many other committees at the County website.

Wondering said...

KPMG has been in alot of trouble regarding the sale of fraudulent tax shelters.
They paid a huge Federal Criminal fine and may have lost their license in Texas.

Anonymous said...

While your "wondering" maybe we should all get a real feel for the amount of money the County is spending on "consulting" in addition to all the auditing fees paid to a KPMG.

Think of all these plans we have undergone and redone, like the Upper Swift Creek and such. I wonder how much in consulting we have paid out for environmental studies and for planning purposes.