Chesterfield and others bracing for revenue shortfall

Chesterfield County is projecting a $4 million pinch on its current fiscal year's budget because of state cuts.

Gov. Timothy M. Kaine last month announced a fiscal 2010 budget-reduction plan that will mean about $1.5 billion worth of cuts in state spending. As a result, Chesterfield officials expect to see at least $3.85 million less than expected from the state for the county's $716 million general fund.

The state cutbacks have local governments in the region looking for ways to save in this year's budget while bracing for deeper cuts in the budget that will take effect July 1.

Hanover County estimates it will lose $461,000 in state revenues this year, but that doesn't include likely reductions in sales-tax revenues for schools, Deputy County Administrator Joseph P. Casey said.

In Henrico County, finance officials say they have no plans to estimate cuts needed in this year's budget until after Kaine proposes his two-year budget in December, along with revisions to this year's state budget.

Henrico already expects a reduction in local real estate tax revenue of more than $20 million next year. The county is likely to propose changes to this year's budget next week to reflect reductions in state and local revenues.

"We do anticipate some sort of downward revision," Finance Director John A. Vithoulkas said last week.

In Richmond, officials estimate the city ended the last budget year in the black, despite getting about $8.1 million less in revenue, according to preliminary projections from the fourth quarter.

Deputy Chief Administrative Officer Marcus D. Jones estimates the city ended the year by spending about $12.4 million less than budgeted, but he cautions that the figures will not translate to a $4.3 million year-end surplus because some expenses will occur later.

Looking to this fiscal year, officials already are bracing for a $4.6 million loss in revenue from sales and business license taxes, but Jones adds that the budget picture is far from complete.

"With the state alone, it's going to be a challenge," he said, referring to state revenue reductions.

In Chesterfield, the state cuts mean $2.1 million less than expected in state sales tax for the county, all of which would have gone to the school system. In addition, the county will see almost $600,000 less in aid for local police operations and $326,000 less in sheriff's office funding.

Other Chesterfield offices affected by the state cuts include the commissioner of revenue's office ($144,000); commonwealth's attorney's office ($162,000); circuit court clerk's office ($146,000); and the treasurer's office ($144,000).

Now, Chesterfield faces the decision of how much of the shortfall -- if not all of it -- to cover with local money.

"How we overcome this has not been decided," said Allan Carmody, the county budget and management director. "We have not told the police department to cut their budget $600,000."

School officials expect to make up the $2.1 million shortfall through anticipated savings in other areas, such as fuel for buses and turnover of staff, whose jobs will be left vacant.

Midlothian District Supervisor Daniel A. Gecker said it's possible the county could find money to help cover the rest of the shortfall through similar savings and by holding open vacancies.

"But does it make long-term sense to cover it in those ways, or is now the time to start absorbing the cuts?" he asked. "That's a conversation we need to have."

The current fiscal year budget problems are a sign of more pain to come.

"This is certainly an indicator of where we're going to be going into next year's budget process," Gecker said. "We're anticipating increasingly higher amounts being withheld by the state."

The county already has projected a $38 million shortfall for fiscal 2011 based on an estimated $20 million decrease in revenue and an additional $18 million in spending.

"We have real concerns about the implications of further state reductions in the next fiscal year and trying to find a balance in those likely reductions and maintaining service levels," Carmody said.

Contact Wesley P. Hester at (804) 649-6976 or .

Contact Michael Martz at (804) 649-6964 or .

Staff writer Will Jones contributed to this report.