Two of Virginia’s triple-A counties, Arlington and Fairfax, have released manager-proposed fiscal 2011 budgets that address revenue shortfalls and seek to maintain top-tier credit ratings.
The counties, rated triple-A by Moody’s Investors Service, Standard & Poor’s, and Fitch Ratings, share certain similarities. Both rely on the federal government for job growth and for real estate to generate tax. Both will address their shortfalls with cuts and real estate tax hikes. Fairfax faces a $257.2 million deficit for fiscal 2011 while Arlington announced a $32.5 million county and school shortfall for the same period.
Both are seeking real estate tax hikes. Virginia property taxes are expressed in dollars per $100 of assessed value. Thus, a tax rate of 86.5 cents per $100 would result in a real estate tax of $3,460 on a property assessed at $400,000.
In Fairfax, where property taxes account for 76% of general fund revenue, residential values are expected to drop for the fourth year in a row in fiscal 2011. Fairfax’s proposed budget calls for a 5-cent increase in real estate taxes that is estimated to generate $93.4 million. The county also proposes more than $100 million in general and school spending cuts.
Arlington’s budget proposes a 6.7 cent real estate tax hike to generate $36.3 million. The county would also slash about $16.2 million in government spending.
Arlington issued a record $223 million of bonds and two refunding deals in 2009 that will save the county about $4.8 million over the life of the bonds, said Jason Friess, an analyst in Arlington’s department of finance and debt management.
Under the proposed budget, the county’s fiscal debt service would increase by 4.3%, to $58.2 million, assuming the county issues $65 million of general obligation bonds and $13 million for a fire station this spring, Friess said.
Fitch analyst Barbara Ruth Rosenberg said she sees “nothing” that would threaten the counties’ stable outlooks.
