Local governments to see less from state, even as revenues rise

While Virginia’s revenue outlook is starting to see slight improvement, the state’s 134 local governments can expect to nab little to no part of any new funds, according to recent forecasts.

Over the last three fiscal years, state aid for mandated local services such as education, public safety and constitutional officers has declined by a collective $1 billion.

These cutbacks, which affect everything from jails to roads to public libraries, have pushed support for localities down from 52 percent to 47.3 percent of the state’s total general fund spending, according to the Virginia Association of Counties.

Lynchburg, which actually writes yearly refund checks to the state as part of a 2008 measure written into the commonwealth’s budget, has seen its state funding drop by about $1.8 million, or 6.6 percent, over the last three budget cycles.

These figures, calculated by The News & Advance, reflect only the impact on the city’s general fund. They do not include support for other high-dollar items such as the city schools or regional jail system.

Within the city’s coffers, the biggest blows were sustained by Social Services, which took a 9.9 percent cut in state aid, and the police department, which saw a 9.4 percent reduction.

“Those cuts have definitely been passed along to you,” Linda McMinimy, Lynchburg’s hired lobbyist in Richmond, said during a presentation made to City Council on Nov. 23. “And you know how difficult last year’s budget was as a result.”

McMinimy, fresh off the round of annual retreats held by the money committees of both the Senate and House of Delegates, updated council about the state’s current budget outlook.

Following steep drop-offs over the past two years, state revenues are starting to move in a positive direction again, she said, but not enough to offset mounting pressure from increasing expenses such as Medicaid and debt service.

“We are growing again, but we’re really not back to even the revenue levels of 2006,” McMinimy said. “… It’s a tight time money-wise.”

The General Assembly is projecting a budget shortfall of less than $200 million for the remainder of the current biennial budget — not nearly as severe as the multi-billion dollar deficits seen in recent years, but enough to limit the likelihood that any new funds will start flowing to localities.

Further tying the state’s hands is the slew of one-time actions it took to prop up previous budgets, such as relying more heavily on debt and deferring pension contributions for state employees and teachers.

The state has maxed out its debt capacity and is now sinking more into debt payments than it spends on local sheriff’s offices, according to the Richmond Times-Dispatch.

The Virginia Retirement System board also recently admonished legislators to start paying the full retirement rates. Officials have promised to repay all deferred contributions with interest, which will cost about $74 million a year, according to the staff of the Senate Finance Committee.

The state’s current budget, which will be revised in the next General Assembly session, calls for increasing direct aid for schools by about 3.5 percent next year, according to a November report from the Virginia Association of Counties.

Other categories, such as public safety and health/human services, are slated for additional cuts.

These projections were received in Lynchburg last week by a dour City Council, whose members are already facing the prospect of having to make further cuts in local spending next year.

Early forecasts suggest the city could be grappling with a budget gap of $4 million to $5 million.

The city just completed a series of community meetings soliciting feedback about next year’s budget. The outcome of those sessions, also reported to council last week, was a widespread desire to prioritize education, public safety and infrastructure needs.

Councilman Turner Perrow observed that “livable community,” a broad category that included services ranging from trash pickup to parks and libraries, generated many of the lowest rankings.

“Almost universally, people said this is where we need to reduce expenditures,” he said. “... But when we actually do it, this is where we get the most human outcry.”

“That says to me maybe we’re getting a vocal minority (during council’s regular budget process) and not hearing from the community as a whole,” he said. “I think that’s good takeaway.”

Council members Jeff Helgeson and H. Cary said that officials shouldn’t give great weight to the results of the community meetings.

“Hopefully, we can take it with a grain of salt,” Helgeson said. “It wasn’t a real (statistically valid) sample. Some people showed up every week and said the same thing at every meeting.”

“I don’t think we should take it as a clear directive,” he concluded. “… Don’t just agree with rhetoric. Look at reality and facts.”

The community meetings were open to all Lynchburg residents and business owners; a total of about 100 people took part.

Vice Mayor Ceasor Johnson said he thought the process had been excellent and commended those who participated for taking time out of their schedules.

“We saw those who were really concerned about community,” he said. “We can’t neglect their voices because other people didn’t come. They chose to come ... I think need to value the input of citizens who choose to participate.”

The city is currently accepting additional budget feedback online through its website. To comment, visit lynchburgva.gov and scroll to “Lynchburg is Listening” under the “Residents” or “Business” tabs.