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Commonwealth Revenues and Arlington’s Budget

Virginia ended FY 2008 on June 30 with “a small surplus (+$5.4 million),” reports the August 1 issue of County Connections, the newsletter of the Virginia Association of Counties, which relied on a memo from Jody Wagner, secretary of Finance, that reported on “2008 (fiscal) year-end revenue data.”

In passing the budget this year, the General Assembly required “a $50 million reduction in state aid to local governments in both FY 2009 and FY 2010.” The budget also requires the Department of Planning and Budget to provide Virginia’s local governments with “a list of the state aid to local government programs which serve as the basis for calculating each locality’s share of the $50 million reduction.” Local governments have until August 30 to tell the state which of three methods is selected for the reductions.

VACO also wrote, “the economic indicators for fiscal year 2008 revenues reflect a slowing economy.” In addition, they reported that:

“Wagner believes that we must begin discussing the actions that should be taken to prudently manage a continued decline in general fund revenue growth based upon the circumstances of the current economy, recent revenue performance, and the implications of both on future revenues for the current biennium.”

The newsletter went on to report:

“The two general fund revenue sources most closely tied to current economic activity -- payroll withholding and retail sales taxes -- experienced a meaningful slowdown in the rate of growth during the second half of fiscal year 2008. As a result, significant downward adjustments to the revenue forecast for the current biennial budget cycle that started July 1 are to be expected . . . .

“State agencies are being advised to expect further adjustments . . . .”

In Arlington County’s FY 2009 Adopted Budget, the county expects to receive $64.2 million from the Commonwealth -- about 7% of General Fund revenue. And based upon the formulas used to divvy-up that $50 million, the county is not likely to take that much of a hit. That doesn’t mean, however, that the panjandrums on the Arlington County Board should be trying to start new programs or to expand existing ones.

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