Joint Meeting of the Fairfax County   Board of Supervisors and the   Fairfax County School Board         NOVEMBER 29, 2011
Our Budget Fairfax County’s total budget ($6.1 billion in FY 2012)  is larger than the budgets of several states 61.6% o...
How We Are Different We are a full-service County Virginia is a Dillon Rule state   Counties have only those powers exp...
PerspectiveJobs 584,000 jobs in Fairfax CountyOffice Space 113.4 million square feet countywide   more space than Miami...
Spending Reductions and Savings The County has reduced spending through:   Across-the-Board reductions   Program elimin...
Compensation and Positions Since 1992:   All or a portion of employee compensation increases were    eliminated in 5 fis...
Community Input Budget decision-making has benefited from:   Lines of Business-type reviews    Citizen budget committee...
Economic Outlook  and Revenue                   8
FY 2012 General Fund Receipts:                         (“Where It Comes From”)                                            ...
National Economy – Where We Have Been Great Recession (December 2007 – June 2009)    more severe and recovery weaker tha...
Local Economy – Where We Have Been Northern Virginia lost over 68,000 jobs during the downturn  (from peak in June 2008 t...
National Economy – Current Conditions US economy grew in the third quarter of 2011 at its fastest  pace in a year, suppor...
Local Economy – Current Conditions Job Growth   NoVa. experiencing job growth each month since April 2010    compared to...
Unemployment Rates Fairfax County’s Unemployment Rate is Stable                     Sept   January   Sept                ...
Economy Future Projections Economic growth will depend on consumer spending and  business investment Modest economic gro...
Percent Change in General Fund Revenue    12%                        9.5%    10%             7.7%     8%     6%           ...
Real Estate Tax Base                      1993       1994        1995        1996           1997      1998         1999Equ...
Current Residential Real Estate Fairfax County   During the first 10 months of 2011, the number of homes sold has    fal...
Expectations for the            Residential Real Estate Market Very modest increases through FY 2015 Interest rates will...
Annual Changes in Residential Equalization25%                                                    23.09%                   ...
Impact on Typical Fairfax County Household                    Mean Assessed                      Value of       Real Estat...
Nonresidential Real Estate Fairfax County’s Office Vacancy Rates at Mid-year 2011     Direct – 12.8% down from 13.3%   ...
Annual Changes in Nonresidential Equalization20%                                                                          ...
Summary      Annual Growth in Major Revenue Categories                                   FY             FY              FY...
Disbursements                25
FY 2012 General Fund                Disbursements (“Where It Goes”)                                                       ...
County Disbursements Perspective Since FY 2009, General Fund disbursements have  increased only $24.9 million or 0.7% Du...
Projected FY 2013 Disbursement RequirementsRequirement                                    FY 2013 Cost IncreaseSchools    ...
Projected FY 2013 Disbursement RequirementsRequirement                                   FY 2013 Cost IncreaseOPEB Retirem...
Projected FY 2013 Disbursement RequirementsRequirement                                    FY 2013 Cost IncreaseFuel/DVS Ma...
Projected Disbursement Increases                    (in millions)    FY 2012 Base                      FY 2013    Schools ...
Reserves Used for FY 2012                             AmountReserve                      (in millions)Reserve for FY 2012 ...
FY 2013 Shortfall                           Amount                           (in millions)Additional Revenue          $130...
County Budget Actions In order to address the projected shortfall, the County is taking several actions:    Analyzing pr...
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Joint Meeting of the Fairfax County Board of Supervisors and the Fairfax County School Board

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Joint Meeting of the Fairfax County Board of Supervisors and the Fairfax County School Board: November 29, 2011

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  • Since FY 2010, the County has cut spending by almost $200 million:FY 2010: $90.8 millionFY 2011: $91.3 millionFY 2012: $9.5 millionTotal: $191.6 millionIn FY 2012, the tax rate was decreased 2 cents and the typical homeowner paid $79 less than in FY 2007.
  • In FY 1992, positions totaled 11,124; In FY 2012, positions totaled 12,070, for an increase of 946 or 8.5%If you exclude the positions converted from limited term, positions increased by 546 or 4.9% since FY 1992.During this same period, the population increased 30.8%.
  • Projected percent change in FY15 is lower than FY14 due to lower forecasted growth in commercial real estate equalization.
  • The FY2013 projection represents DTA’s November 2011 estimate. Total Residential equalization up just 0.84% mainly driven by single family homes, townhouses are projected to increase over 1% while condos are essentially flat. Drivers of Nonresidential equalization: Apartments rising double digits, Office Elevator values are strong due to lower vacancy rates.
  • Joint Meeting of the Fairfax County Board of Supervisors and the Fairfax County School Board

    1. 1. Joint Meeting of the Fairfax County Board of Supervisors and the Fairfax County School Board NOVEMBER 29, 2011
    2. 2. Our Budget Fairfax County’s total budget ($6.1 billion in FY 2012) is larger than the budgets of several states 61.6% of total General Fund revenue comes from Real Estate Taxes FY 2012 General Fund budget is $3.4 billion  52.5% goes to Fairfax County Public Schools Fairfax County has a Triple A bond rating from the three major rating agencies  One of only 8 states, 39 counties, and 33 cities currently have this coveted rating (as of October 2011)  Provided savings to the County of over $486 million 2
    3. 3. How We Are Different We are a full-service County Virginia is a Dillon Rule state  Counties have only those powers expressly granted to them by the General Assembly  Limits locality’s flexibility to raise revenue and diversify tax base  If Fairfax County had the same taxing authority as surrounding cities, over $100 million could be generated, enough to lower the real estate tax by 5 cents Tax Structure  State limits/controls/caps nearly 90 percent of the County’s non-real estate tax revenue  State levies and collects all income tax 3
    4. 4. PerspectiveJobs 584,000 jobs in Fairfax CountyOffice Space 113.4 million square feet countywide  more space than Miami, San Diego, Oakland, Charlotte and Kansas City Tysons Corner alone is home to 26.6 million square feet of office space 4
    5. 5. Spending Reductions and Savings The County has reduced spending through:  Across-the-Board reductions  Program elimination  Service hour modification  Specific agency budget cuts The County has reduced paydown project funding as well as new IT investment The County has maximized savings from current years and reserved ending balances from previous budget years to meet fiscal requirements  In other years, where balances resulted, the County has established and funded additional reserves The County has managed the real estate tax rate with the affordability to the homeowner in mind 5
    6. 6. Compensation and Positions Since 1992:  All or a portion of employee compensation increases were eliminated in 5 fiscal years (FY 1992, FY 1993, FY 2010, FY 2011, FY 2012)  The ratio of County positions per 1,000 residents has decreased from 13.57 to 11.09, an 18.3% decrease. At the same time, the County has opened a large number of new facilities, including police and fire stations, SACC centers, and human service facilities. 6
    7. 7. Community Input Budget decision-making has benefited from:  Lines of Business-type reviews  Citizen budget committees – by district and countywide  Community dialogues  Online feedback from citizens 7
    8. 8. Economic Outlook and Revenue 8
    9. 9. FY 2012 General Fund Receipts: (“Where It Comes From”) REVENUE FROM THE COMMONWEALTH* $90,612,431 PERMITS, FEES & CHARGES FOR SERVICES REGULATORY LICENSES VA Public Assistance $41.5 SACC Fees $64,161,281 $31.8 Law Enforcement $23.7 $30,152,648 Building Permits/ (subcategories in millions) Other $25.4 EMS Transport Fees $15.5 Inspection Fees $20.5 Clerk Fees $4.6 Other $9.7 Other $12.3 1.9% 2.7% REVENUE FROM THE 1.0% 0.9% FEDERAL GOVERNMENT REAL ESTATE TAXES $34,566,131 $2,035,455,407 Social Services Aid $34.1 Current $2,025.8 Other $0.5 Delinquent $9.7 LOCAL TAXES $488,212,410 14.8% Local Sales Tax $150.2 61.6% B.P.O.L. $143.4 Communications Tax $52.3 Other $142.3 RECOVERED COSTS/ 0.4% 0.5% OTHER REVENUE $12,079,289 REVENUE FROM THE USE OF MONEY AND PROPERTY 15.7% $16,711,665 % PERSONAL PROPERTY TAXES * $518,132,388 0.5% Current $508.8 Delinquent $9.3 FINES AND FORFEITURES $16,868,801 District Court Fines $8.1 Parking Violations $3.2 Other $5.6 FY 2012 GENERAL FUND RECEIPTS = $3,306,952,451* For presentation purposes, Personal Property Taxes of $211,313,944 that are reimbursed by the Commonwealth as a result of the PersonalProperty Tax Relief Act of 1998 are included in the Personal Property Taxes category. 9
    10. 10. National Economy – Where We Have Been Great Recession (December 2007 – June 2009)  more severe and recovery weaker than last 3 recessions 8 million jobs lost during the recession  Unemployment rate peaked at 10.1% in October 2009 Economy contracted for 4 consecutive quarters in 2008 and 2009  GDP dropped 8.9% in Q4 2008 and 6.7% in Q1 2009 Consumer Confidence hit record lows in 2009 Inflation remained in check 10
    11. 11. Local Economy – Where We Have Been Northern Virginia lost over 68,000 jobs during the downturn (from peak in June 2008 to low in February 2010)  Unemployment rate reached 5.9% in January 2010 Fairfax County’s unemployment rate peaked at 5.6% in January 2010  Prior to the downturn, it was 2.2% in 2007 and 2.9% in 2008  Never exceeded 4% in the last 3 recessions  Over 33,000 unemployed residents Foreclosures in Fairfax County peaked in September 2008at 2,257 11
    12. 12. National Economy – Current Conditions US economy grew in the third quarter of 2011 at its fastest pace in a year, supported by:  Consumer spending  Business Investment Job Growth has averaged 125,000 per month over the past 12 months Unemployment rate in narrow range from 9.0% to 9.2% since April 2011  13.9 million unemployed persons Case-Shiller Home Price Index for the nation still declining  Dropped 3.8% in August 2011 from a year earlier 12
    13. 13. Local Economy – Current Conditions Job Growth  NoVa. experiencing job growth each month since April 2010 compared to the same month the previous year  NoVa. unemployment rate at 4.8% in Sept 2011 Fairfax County’s unemployment rate at 4.6% in September 2011  Almost 28,000 unemployed residents As of September 2011, 746 foreclosed homes in Fairfax County  Down from 873 in September 2010  Up from 670 in May 2011  Less than ¼ of 1% of all homes in the County 13
    14. 14. Unemployment Rates Fairfax County’s Unemployment Rate is Stable Sept January Sept 2010 2011 2011 Fairfax County 4.6% 4.8% 4.6% Virginia 6.5% 6.9% 6.4% Nation 9.6% 9.1% 9.0% 14
    15. 15. Economy Future Projections Economic growth will depend on consumer spending and business investment Modest economic growth will restrain job creation Unknowns  Federal Spending Cuts to Reduce the Deficit  State Aid - The Governor asked for agencies to provide potential reductions of 2%, 4% and 6% for the upcoming state budget 15
    16. 16. Percent Change in General Fund Revenue 12% 9.5% 10% 7.7% 8% 6% 4.3% 4% 2.8% 2.5% 2.4% 1.8% 2% 1.1% 0.6% 0.7% (0%) (2%) (0.9%) (4%) (6%) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Fiscal Year Projections* FY 2009 FY 2010 FY 2011 Growth rate without tax adjustment: (1.0%) (6.9%) (3.7%) Real estate tax adjustment +3¢ +12¢ +5¢* As of November 2011 16
    17. 17. Real Estate Tax Base 1993 1994 1995 1996 1997 1998 1999Equalization (6.48)% (2.46)% (1.29)% 0.36% 0.57% 0.80% 1.77% - Residential (3.74) (0.52) 0.01 0.49 (0.23) (0.50) 0.04 - Nonresidential (13.22) (7.86) (5.28) (0.09) 3.27 5.05 7.12Growth 0.40 1.08 1.97 2.16 2.13 1.93 2.19TOTAL (6.08)% (1.38)% 0.68% 2.52% 2.70% 2.73% 3.96% 2000 2001 2002 2003 2004 2005 2006Equalization 2.96% 5.13% 9.70% 11.72% 9.94% 9.54% 20.80% - Residential 0.77 5.13 11.26 16.27 14.55 11.29 23.09 - Nonresidential 9.24 5.15 5.92 0.52 (2.94) 3.74 12.74Growth 3.37 3.81 3.94 3.42 2.54 2.50 2.69TOTAL 6.33% 8.94% 13.64% 15.14% 12.48% 12.04% 23.49% 2007 2008 2009 2010 2011 2012 2013 ProjectionEqualization 19.76% 2.47% (1.02)% (10.52)% (8.98)% 2.67% 2.34% - Residential 20.57 (0.33) (3.38) (12.55) (5.56) 2.34 0.84 - Nonresidential 16.64 13.57 7.00 (4.51) (18.29) 3.73 7.00Growth 2.94 1.68 1.53 0.57 (0.22) 0.60 0.34TOTAL 22.70% 4.15% 0.51% (9.95)% (9.20)% 3.27% 2.68% Projected Value of “One Penny” in FY 2013 = $19.8 million 17
    18. 18. Current Residential Real Estate Fairfax County  During the first 10 months of 2011, the number of homes sold has fallen 12.9% from 11,858 to 10,329  October home prices stabilizing  Average price of $455,863, essentially level with October 2010  Median price of $383,000, up 2.3% over October 2010  Average days on the market in 2011 are in-line with the time it took to sell a home in 2006 - prior to the downturn  The percentage of seriously delinquent loans is declining  Prime loans that are seriously delinquent (90+ days past due) fell to 1.5% in the 2nd quarter of 2011 from 2.4% in the 2nd quarter of 2010. Subprime mortgage delinquencies fell from 16.1% to 10.5% 18
    19. 19. Expectations for the Residential Real Estate Market Very modest increases through FY 2015 Interest rates will remain favorable Extension of higher conforming loan limits for jumbo mortgages is expected to help provide stability to the housing market through 2013 19
    20. 20. Annual Changes in Residential Equalization25% 23.09% 20.57%20% 16.27 % 14.55% 15% 11.26% 11.29%10% 5.13% 5% 2.34% 0.04% 7% 0.7 0.84% 1.00% 1.00% 0% (0.23%) (0.50%) (0.33%)(5%) (3.38%) (5.56%)(10%)(15%) (12.55%) 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Fiscal Year Projections 20
    21. 21. Impact on Typical Fairfax County Household Mean Assessed Value of Real Estate Fiscal Residential Tax Rate Tax per Year Property per $100 Household FY 2005 $361,334 $1.13 $4,083,07 FY 2006 $448,491 $1.00 $4,484.91 FY 2007 $544,541 $0.89 $4,846.41 FY 2008 $542,409 $0.89 $4,827.44 FY 2009 $524,076 $0.92 $4,831.21 FY 2010 $459,228 $1.04 $4,762.14 FY 2011 $433,409 $1.09 $4,724.16 FY 2012 $445,533 $1.07 $4,767.20 FY 2013 $40.04 more than FY 2012 $449,275 $1.07 $4,807.24 $39.17 less than FY 2007 Projection Projected value of “One Penny” on FY 2013 Real Estate Revenue = $19.8 million Each penny change = $44.93 on the tax bill 21
    22. 22. Nonresidential Real Estate Fairfax County’s Office Vacancy Rates at Mid-year 2011  Direct – 12.8% down from 13.3%  Including sublet space – 14.7% down from 15.3% Total 113.4 million square feet of office space in the County  4 buildings totaling 870,000 square feet are under construction Renewed Interest in Speculative Building  3 of the 4 buildings under construction are 100% speculative Leasing activity is on track to meet or exceed the average, 10.8 million sq. ft., of the last 5 years  Through the 3rd quarter of 2011, leased 9.2 million square feet 22
    23. 23. Annual Changes in Nonresidential Equalization20% 16.64%15% 12.74% 13.57% 9.24%10% 7.12% 7.00% 7.00% 5.05% 5.15% 5.92% 5.50% 3.27% 3.74% 3.73% 4.00% 5% 0.52% 0% (5%) (2.94%) (4.51%)(10%)(15%)(20%) (18.29%) 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Fiscal Year Projections 23
    24. 24. Summary Annual Growth in Major Revenue Categories FY FY FY FY FY FY(Dollars in millions) 2008 2009 2010 2011 2012* 2013*Real Estate $1,962.3 $2,035.7 $2,105.6 $2,008.8 $2,031.1 $2,086.4Percent Change 4.1% 3.7% 3.4% (4.6)% 1.1% 2.7%Personal Property $509.7 $516.5 $496.0 $501.6 $515.1 $542.1Percent Change 0.3% 1.3% (4.0)% 1.2% 2.7% 5.3%Sales Tax $160.9 $153.9 $149.5 $154.8 $158.4 $163.2Percent Change 1.0% (4.4)% (2.8)% 3.5% 2.4% 3.0%BPOL $138.3 $139.9 $138.5 $145.1 $150.9 $156.9Percent Change 4.4% 1.2% (1.0)% 4.7% 4.0% 4.0%Recordation & Deeds $29.9 $25.0 $24.9 $26.4 $26.2 $25.6Percent Change (28.2)% (16.4)% (0.7)% 6.1% (0.6)% (2.3)%Investment Interest $78.2 $36.5 $16.8 $14.9 $15.6 $13.1Yield 4.5% 2.0% 0.8% 0.8% 0.7% 0.6%Total General Fund 1.8% 1.1% 0.6% (0.9)% 0.7% 2.8% *Projections. FY 2012 represents revised estimates as of the fall 2011. 24
    25. 25. Disbursements 25
    26. 26. FY 2012 General Fund Disbursements (“Where It Goes”) TRANSFERS(subcategories in millions) $137,601,577 PUBLIC SAFETY County Transit $34.5 $412,712,715 Capital $15.8 Fire $161.0 PARKS/LIBRARIES PUBLIC WORKS Metro $11.3 Police $160.6 $47,735,700 $65,552,269 Information Technology $5.3 Sheriff $42.5 Library $26.0 Facilities Mgt. $50.2 Other $70.7 E-911 $14.1 Parks $21.7 Other $15.4 Other $34.5 JUDICIAL COMMUNITY DEVELOPMENT ADMINISTRATION $43,846,569 $31,582,238 12.2% Land Development Services $12.6 Sheriff $16.9 Planning & Zoning $ 9.3 Circuit Court $10.0 2.0% 1.4% Transportation $ 6.8 Other $4.7 Other $15.1 4.1% 0.9% 1.3% NONDEPARTMENTAL HEALTH AND WELFARE $267,849,511 $381,285,456 11.3% 8.0% Employee Benefits $264.0 Family Services $187.5 Other $3.8 Community Services Board $95.7 Health $50.9 2.1% Neighborhood & CENTRAL SERVICES Community Services $25.9 $71,617,469 Other $21.3 3.5% 0.7% Information Technology $27.9 Tax Administration $21.8 Finance $8.5 Other $13.4 COUNTY DEBT $119,373,864 LEGISLATIVE-EXECUTIVE FUNCTIONS 52.5% $24,016,730 County Attorney $6.0 County Executive $6.0 Board of Supervisors $4.9 SCHOOLS Other $7.1 $1,774,305,286 Transfer $1,610.8 Debt Service $163.5 FY 2012 GENERAL FUND DISBURSEMENTS = $3,377,479,384 26
    27. 27. County Disbursements Perspective Since FY 2009, General Fund disbursements have increased only $24.9 million or 0.7% During the past three years, the County has:  Eliminated 499 positions  Maintained the contribution to Schools at 53% of total budget (including debt service)  Funded required increases in debt service ($15.0 million) and benefits (health care/retirement/OPEB) ($79.6 million)  After no compensation increases in FY 2010 and FY 2011, a 2.0% market rate adjustment was approved for all employees as part of the FY 2011 Carryover Review 27
    28. 28. Projected FY 2013 Disbursement RequirementsRequirement FY 2013 Cost IncreaseSchools $80.5 millionFY 2013 increase assumes a 5% increase in the transfer for School Operating.Compensation $49.9 millionFY 2013 increase includes a 3% increase for all employees in FY 2013 at a cost of $30.5million. In addition, the full-year impact of the 2% increased approved as part of theFY 2011 Carryover Review, which was not included in the FY 2012 Adopted Budgetbaseline, is included at a cost of $19.4 million.Debt Service $16.6 millionBased on current debt service commitments and the forecasted debt service as identified inthe FY 2012-FY 2016 Adopted Capital Improvement Program. This increase is primarilydue to a higher anticipated bond sale amount and a higher interest rate projected for the2012 sale than in the previous year. 28
    29. 29. Projected FY 2013 Disbursement RequirementsRequirement FY 2013 Cost IncreaseOPEB Retirements $6.0 millionFY 2013 increase brings General Fund OPEB (Other Post-Employment Benefits)contribution to $26 million. Increases in the Annual Required Contribution (ARC) of 5% areassumed each year. With this increase, it is projected that the County will fully fund theARC in FY 2013. Based on the latest actuarial valuation (July 1, 2010), the County’s totalOPEB liability is $489.2 million with an ARC of $35.4 million.Health Insurance & Retirement $5.8 millionFY 2013 increase assumes a 10% health insurance premium increase in CY 2013 and reflectsanticipated changes to retirement employer contribution rates.Metro/CONNECTOR $8.1 millionAssumes a 5% increase in the General Fund transfer for Metro at a cost of $0.6 million.Additionally, includes $2.9 million for estimated 5% increase in CONNECTOR operatingbudget as well as $4.6 million for an estimated 20 bus replacements required in FY 2013. 29
    30. 30. Projected FY 2013 Disbursement RequirementsRequirement FY 2013 Cost IncreaseFuel/DVS Maintenance & Operating $5.0 millionAssumes a 5% increase over current fuel prices at a cost of $4 million. Another $1 millionincluded for DVS maintenance and operating expenses.Contract Rate Increases $3.0 millionBased on estimates from Human Services agencies, driven primarily by personnel costs.Nov. 2012 Presidential Election $0.5 millionFunding included for presidential election. More funding may be needed for replacementvoting equipment. 30
    31. 31. Projected Disbursement Increases (in millions) FY 2012 Base FY 2013 Schools $80.5 Compensation (FY 2013) $30.5 Compensation (FY 2012) $19.4 Debt Service $16.6 Benefits $11.8 Metro/CONNECTOR $8.1 Fuel/DVS Maintenance $5.0 Contract Rate Increases $3.0 Nov. 2012 Presidential Election $0.5 Managed Reserve Impact $3.4 TOTAL $178.8 31
    32. 32. Reserves Used for FY 2012 AmountReserve (in millions)Reserve for FY 2012 $23.9Retirement Reserve $15.0Third Quarter Reductions $14.2Additional FY 2011 Revenue $7.4Other Balances $6.0Total $66.5 32
    33. 33. FY 2013 Shortfall Amount (in millions)Additional Revenue $130.9Disbursement Increases ($178.8)Balances used in FY 2012 ($66.5)Total ($114.4) 33
    34. 34. County Budget Actions In order to address the projected shortfall, the County is taking several actions:  Analyzing proposed agency reductions for 1%, 3%, and 5% of their FY 2012 expenditure level  Examining possible fee increases  Utilizing reserves ($28.7 million reserve available for FY 2013 as of the FY 2011 Carryover Review)  Maximizing savings and increased revenue in the current fiscal year  Critically reviewing new funding requirements 34

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