After seeing declines in sales and business tax revenues at the start of this year, Fairfax County’s budget department is lowering expectations for the next two fiscal years.
The revised revenue forecasts remove the little flexibility that was left in the current and proposed budgets, unless county supervisors decide to cut programs or raise taxes.
Sales tax receipts for March, which reflect purchases made in January, were down more than 4 percent, more than the 1 percent decline that had been forecast, said Chief Financial Officer Susan Datta.
Because bad weather continued through February and March, Datta said she is now expecting an overall decline of 2 percent in sales tax revenues for the current fiscal year, which ends June 30. Revenue from business taxes is also expected to decline by about $2.6 million.
While some of the declines are offset by an anticipated increase in bank franchise fees, Datta said she now expects that the county will end the fiscal year with less than $1 million left over.
Because of the current trends, the budget staff is now projecting slower growth in sales and business taxes over the next two fiscal years.
In addition, the county revised projections for the personal property tax on cars due to a reduction in the value of used cars in the county, which reduces anticipated revenues for fiscal 2015 by about $6 million.
“We are not seeing a lot of positives in any of the revenue categories,” Datta said.
With these projected declines and lowered expectations from other sources of revenue, Datta said the $10.6 million unallocated balance left in County Executive Ed Long’s proposed budget is no longer available.
In addition, what was a $13.7 million positive balance projected for fiscal 2016 is now projected as a $10.2 million deficit. This is due to the lower revenue projections and the additional $13 million the board voted last week to provide to the county school system in fiscal 2016 for building maintenance, Datta said.
These projections are based on the county’s current real estate tax rate. The Board of Supervisors has the option to increase real estate taxes by up to 2 cents per $100 of assessed value, following next week’s budget public hearings and other forums for community input.
Following Datta’s presentation, some supervisors said the news reinforces the need to increase the tax rate or pursue other revenue sources, like a meals tax.
“Most citizens, I believe, would much prefer to look at a meals tax” instead of an increase in their real estate taxes, said Supervisor Gerry Hyland (D-Mount Vernon), the most vocal advocate on the board for a meals tax. “Shouldn’t they be able to decide that?”
The county can only enact a tax on restaurant meals through a voter referendum, and supervisors last year voted not to pursue a referendum because they didn’t believe they were ready to ensure passage of such a measure.
Supervisor Pat Herrity (R-Springfield) said the board should instead be looking at reining in costs and taking actions to build up the commercial tax base so that there is less pressure on homeowners.