Schools’ funding request nearly fulfilled
The key elements of Rappahannock County’s next budget are settled: Barring a last-minute reversal, increases in property taxes won’t happen, personal property tax payments will remain level, and the schools will receive $9.95 million in local funds, 98% of the funding they requested.
The emerging compromise, hammered out over the past month, avoids two outcomes decision-makers and residents had feared: An increase in property taxes and deep reductions carved from the Rappahannock County Public Schools’ request for the fiscal year starting in July. The plan follows what Hampton Supervisor Keir Whitson had described as “a mad scramble” for funds as supervisors worked with County Administrator Garrey Curry and budget specialist Bonnie Jewell to locate savings and reallocations within the $30 million county budget.
At its work session Monday night, the Board of Supervisors paused any formal adoption of the budget for fiscal year 2025 to accommodate Piedmont Supervisor Christine Smith’s request for more detailed explanations from working departments on certain expenditure increases.
Because the spending items in question amount to about half a percentage point of the budget, changes that might arise from the discussions wouldn’t involve a restructuring of the plan hammered out over the past month, which is supported by a majority of the supervisors. Formal adoption is expected in the next two to three weeks.
Donehey finds an ‘Easter egg’
The budget saga started with a March shock when the General Assembly backed away from about $1 million in financial support the schools had counted on. Initially the proposed budget carried a property tax increase, but supervisors soon began looking for other ways to address the shortfall.
According to Whitson, a turning point came earlier this month when Board Chair and Wakefield Supervisor Debbie Donehey identified “an Easter egg” within the columns of spending and revenue projections.
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Inflation, generally considered an economic scourge, was persisting in ways that actually relieved Rappahannock’s budget woes: When the Federal Reserve Board updated its Summary of Economic Projections this year, it pointed to stronger growth and more persistent inflation; markets quickly understood that the central bank’s policy of lowering interest rates would proceed much more cautiously than assumed.
The upshot: Higher than expected interest rates throughout the banking system, and higher interest revenue for Rappahannock’s reserve funds.
Donehey’s inflation Easter egg turned out to be significant: the higher than anticipated interest will add an estimated $369,956 to the county’s revenue in the current fiscal year, plus an additional $68,000 in the next. In the budget blueprint for the next fiscal year, interest income is budgeted at $568,000, rather than the $500,000 in the initial budget proposal. The more robust flow of interest income will help relieve funding strains at the schools without requiring residents to pay higher taxes at a time inflation has driven up other living expenses.
Finding other painless revenue increases
Meanwhile, the budgeteers calculated that even if real estate tax rates remain at 55 cents per $100 of assessed property value, real estate tax revenue for the county would rise because of fresh investments and higher values in homes and land. According to the latest calculations, the county expects to bring in $10,822,918 from its real estate taxes next year, or $158,928 more than this year. That calculation brought the county one step closer to offsetting the General Assembly’s funding reversal.
Personal property taxes, levied on vehicles, would see a rise in the rates under the compromise plan, but residents’ actual payments will be unchanged from the current year. Without the rate increase, the cars, trucks and motorcycles— all a year older— would carry lower valuations and would generate less tax revenue for the county. By not allowing tax revenues from this source to decline, the move generates $162,300 the county wouldn’t otherwise have taken in.
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Another important element arrived when supervisors suggested pulling money from the county’s general fund to make the final debt-service payment on $3.7 million in bonds issued a decade ago to cover a slew of physical improvements at the schools, such as new roofs and HVAC systems. This move effectively frees up $190,255 in the next fiscal year, when no further debt service payments are needed.
Whitson meets Mills
The final shift in the FY 2025 budget drama turned on a key meeting between Whitson and School Board Chair Wes Mills. Whitson began the budget debate suggesting local funding of $8.9 million for the schools, well below the $10.1 million the schools were seeking. As the process unfolded, Whitson showed flexibility on the schools’ spending plan, even as he probed for additional information on how the school was managing tax dollars. In his meeting with Mills, Whitson recalled, the school board chair made a convincing pitch: “He said, ‘We need to recruit and retain the best teachers we can. The market is tight, and the competition is fierce. We continue to lose great teachers.’”
Whitson was struck by the implications of losing “great teachers,” and came away far more sympathetic to the schools’ request. As the new compromise took shape, he indicated he would go along with a county contribution of $9,950,551 to the schools’ budget— 98% of what they had asked for, including state-mandated pay increases for the teachers.
There may yet be surprises from Richmond, where the state budget is locked in a tug-of-war between a Republican governor and a Democratic-controlled assembly. “It’s completely conjecture until the (state) budget is passed in June,” said RCPS Superintendent Shannon Grimsley.
Within the county, an exhausting hunt for savings and reallocations managed to generate results that different factions found they could support. “This back and forth is healthy,” Whitson concluded.
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