Virginia’s Budget Woes Hit Local Taxpayers the Hardest

The News & Advance
Published: August 30, 2008

Lynchburg’s refund to the state in lieu of cuts in state services comes as the latest blow to Virginia’s financially stressed localities. While the move was prompted in part by deep cuts to the state budget, it should also alert legislators again that the state is failing to provide for its share of local services.

City officials had to surrender nearly $500,000 to the state to preserve funding for programs ranging from law enforcement to children’s services. Virginia communities are losing some $50 million as a result of state budget cuts made necessary by a weakened economy. Lynchburg’s share of that comes to $485,892.

Agencies that would have been affected by the cuts include social services, police and the office of the commonwealth’s attorney.

Fortunately, the city had prepared for the possibility of such cuts by taking local money to establish a special reserve in its annual budget. That reserve contains $800,000, with the leftover amount being held for the possibility that the regional jail will need additional money to offset its own loss of state aid.

The state’s budget shortfall may run as high as $1 billion, according to reports from Richmond. And that means other services to localities could be put on the chopping block — including education and health care services for the elderly, poor and disabled. Those services have been historically immune from budget cuts.

The cuts raise the important questions of whether the governor’s revenue forecasts were too rosy to begin with or whether the lawmakers put up enough revenues to meet basic needs in the state’s localities.

In giving up the refund to the state, City Council took note of the state’s failure to meet needs and passed a resolution asking that its refund check be recorded as local aid to the commonwealth’s deficit. That was a small slap at legislators who seemed to agree it would be more prudent to cut programs — even for those who need them desperately — rather than increase taxes or revenues to pay for the services.

The resolution was based on a statement circulated by the Virginia Municipal League. A majority of the council said the state was unfairly pushing its own responsibility off onto the cities and counties.

“If we just take it and roll over,” said Vice Mayor Bert Dodson, “maybe they’ll come back for more.”

The city changed the name from its special reserve fund from “Reserve for General Assembly Action” to “Reserve for FY2009 Local Aid to the Commonwealth.”

While that’s merely a symbolic act, it does serve to show the city’s frustration with financial promises from the state. Furthermore, it’s one more step in the Assembly’s pattern of passing off the possibility of tax increases to the localities rather than increasing state taxes to boost revenues at that level.

That way, legislators — particularly the Republican majority in the tax-averse House of Delegates — can run for re-election in 2009 claiming they did not vote for any tax increases. They escape the fact that the localities may have to increase their taxes to meet budget needs mandated by the state.

If further budget cuts get passed along to the localities, local taxpayers will be asked to pick up the tab for additional aid to the state. This is an alarming trend that allows the state — with its mandates for services — to keep squeezing localities. Local taxpayers, as usual, are the ones caught in the crossfire. When will it stop?