Henrico County is slashing its construction plans for next year by nearly 90 percent because of worries about the recession.
Hungry contractors are cutting bids to the bone as interest rates have tumbled and building looks easy to afford, but -- like many ordinary consumers -- county officials are loath to take on new financial obligations just now.
The plan -- which must be approved by the Board of Supervisors -- is to cut roughly $164 million of construction work scheduled for fiscal 2009-10, deferring much of the work for a year, County Manager Virgil R. Hazelett said. The proposal does not affect projects already under way.
"It gives us a little bit of breathing room," Hazelett said. "I don't know what else is coming with the economy; it isn't clear to me where the bottom is."
The county, which has been hit hard by major layoffs as several corporations based in the county filed for bankruptcy, expects the taxable value of real estate -- its biggest source of revenue -- to keep sliding.
On top of that, the county is trying to cope with cuts in state funds for school and road construction.
Hazelett is proposing cutting new capital spending for the fiscal year beginning July 1 to $19.2 million.
County agencies and the schools had asked for $183.1 million. That was down by more than one-third from what they had thought the county could afford when they drafted long-term capital plans a year ago.
Hazelett said his aim is to defer projects for which the county planned to borrow $77.5 million next year, including a new elementary school in the western part of the county and a new fire station and new fire department headquarters.
By delaying a bond issue scheduled for the next fiscal year intended to finance that work, Hazelett could save an estimated $4 million to $6 million a year that would have gone to pay interest on the bonds.
The delay also eases pressure on the budget for the following fiscal year. In that year, projects already under way will begin adding $20 million to $25 million to the county's annual operating budget, Hazelett said.
The projects Hazelett proposes delaying would add at least that much in operating costs, but not until the year after next.
In addition to the projects originally to be funded by the bond sale, Hazelett proposes cutting some $16 million of road projects that were to be funded by gasoline-tax revenue from the state. That revenue now appears to be out of the state budget.
He's also cutting from the plan school projects that originally were to be financed with $4.5 million of state lottery funds.
Other cuts, such as a proposed $24 million technical center for the new high school on Staples Mill Road, had no source of funds identified other than the county's operating budget.
In all, next year's cuts reduce construction and renovation on schools from the $94.3 million the School Board sought to $2.5 million. The School Board's request had increased from $72 million it had projected for fiscal 2009-10 when it drafted a long-term plan 18 months ago.
The proposed cuts would not affect projects under way, such as the new Staples Mill Road high school or the new middle school off Nuckols Road in the western part of the county.
Hazelett said federal stimulus money and adjustments to the state budget could lead Henrico to revise its construction spending plan, but he added that officials can't predict the timing and scale of any help from those sources.
Most area localities still are working on their budgets.
Richmond Mayor Dwight C. Jones is reviewing a proposal from city officials that calls for no cuts to capital spending.
Hanover County is delaying $600,000 of vehicle purchases, $350,000 of road improvements, and $111,000 of airport improvements. County officials also suggest delaying discussing any new borrowing until after the economy recovers.
Contact David Ress at (804) 649-6051 or dress@timesdispatch.com.
Staff writer Lisa Crutchfield contributed to this report.
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