The 2009 local budget season officially got started last week when city manager Gary O’Connell and county executive Bob Tucker unveiled their proposals for July 2009 through June 2010, and there was a sharp contrast between the moods of the two men as they divulged the details to the press February 17.
Reading from a statement, stern-faced Tucker recited the grim news: an 8 percent total budget reduction, down to $308 million; a 2.5 cent effective property tax hike; and 15 more frozen positions to bring the total to 50, about 8 percent of the county workforce.
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If the city and county hadn’t resolved their differences with the revenue sharing agreement, Charlottesville likely would have annexed the Fashion Square Mall and other tax-lucrative commercial properties on 29N. |
“There will probably be reduced response time for calls by our police department,” noted Tucker, as well as cuts in parks and library hours. The Crozet library project has been postponed.
Meanwhile, in city hall, an upbeat O’Connell waxed about the $143 million budget, despite seeing it decrease, by 0.9 percent, for the first time in his career. Charlottesville is without noticeable service cuts, and tax rates will stay the same.
“I think in the economy that we’re in, there’s some good news in this budget,” said O’Connell. “For the majority of our homeowners, they’re going to see either no increase or a decrease in their property taxes.”
If it weren’t for a little thing called revenue sharing, however, those moods might well be reversed. This year, $18 million will flow directly from county coffers to city coffers thanks to the 1982 agreement between city and county. That’s up 34 percent from last year, and 1,385 percent since 1982. Revenue sharing can account for up to 10 cents of the county property tax rate.
Inevitably, many county residents will angrily condemn the revenue sharing agreement during town halls and public hearings leading up to the Board of Supervisor’s decision in April on the tax rate, particularly if they stick with the planned tax hike.
And the diatribes won’t be limited to Joe Old Timer from Keswick. Some county supervisors have chafed at the yoke of revenue sharing, and Neil Williamson, executive director of the Free Enterprise Forum, summed up the revenue sharing quandary thusly in a recent blog post: “If you had to pay your neighbor 5% of your income to keep him from illegally hitting you with a fish, would you do it?”
In fact, county residents voted by referendum to impose revenue sharing back in 1982, and it was supported by five of six supervisors.
Why did the residents of the ’80s voluntarily tie the county in perpetuity to such exorbitant charity? Because they were under threat of a city annexation lawsuit that might have bitten off at least 10 square miles of Albemarle to expand Charlottesville. Most significantly, that land included the tax-lucrative commercial corridor along 29N, but also ritzy subdivisions like Farmington, Bellair and Ednam Forest. Many of those residents weren’t thrilled by the prospect of paying city tax rates; the county wasn’t thrilled at losing its cash cows. The referendum passed with 63 percent of the vote.
Revenue-sharing haters point out that the General Assembly now has a moratorium on annexation, so the city no longer has the teeth to take county land.
However, it still has the teeth to take county money. Due to the wording of the agreement, if the county stopped paying, the city could successfully take Albemarle to court for it.
“The county continues to derive value from the revenue sharing agreement,” says county Supervisor David Slutzky, “in the sense that by honoring our commitments that we entered into, we put the city in the position where they really need to show us the same good faith, and have increasingly done so.”
O’Connell contends revenue sharing is a win-win deal. Based on a staff calculation last year, “if annexation had occurred, the county would be short $25 million in property taxes, and it would all be coming to the city,” says O’Connell.
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