Goochland supervisors voted this week to advertise possible increases to the county’s tax and utility rates.

Revenue generated from higher rates would prevent the county from making deeper cuts to a recommended budget for 2011, one that, at $40.5 million, is already 7.3 percent lower than the current year’s plan.

Contributing to the budget’s decline is the county’s falling revenues: Real estate taxes, which are the county’s largest source of income, fell 8.2 percent in 2010 and are anticipated to fall an additional four percent in 2011.  There is little to no growth expected in the county’s other sources of income, such as personal property taxes, recordation taxes, business license taxes, building permits and investment income.

In response to a request from County Administrator Rebecca Dickson, supervisors voted 4-1 in favor of advertising a real estate tax increase of up to 4 cents.

Dickson had offered supervisors four options to balance the budget: Further reductions, two- or –three cent tax rate increases combined with the use of fund balance, or a 4-cent tax rate increase.

District 4 Supervisor Malvern “Rudy” Butler dissented, saying he felt the board should wait to find out how much the state planned to cut or contribute next year.

The state is expected to reduce aid to localities, especially in public education and in compensation board reimbursements for constitutional officers such as the sheriff, treasurer and commissioner of the revenue.

“I have a hard time voting on advertising anything if we don’t have figures,” said Butler. “If they cut the schools more, if they cut the sheriff’s office or the constitutional officers, things could entirely change.”

Goochland’s current tax rate is 53 cents per $100 in assessed value. Tax rates in surrounding counties include 62 cents in Louisa, 71 cents in Powhatan, 87 cents in Henrico and 95 cents in Chesterfield.

In addition to balancing the 2011 budget, a 4-cent increase would restore about $800,000 in 2010 revenue to fund balance and establish a higher revenue baseline for the 2012 budget, which is already facing a net challenge of $1.7 million.

A public hearing will be held before any final decisions will be made regarding the rate increase, said Board Chairman William E. Quarles Jr.

Supervisors also unanimously approved advertising increased utility rates for both the county and the Tuckahoe Creek Service District. 

Dickson said that the county’s general fund has been supporting the water and sewer systems, a trend which is projected to continue for the next few years.

“I don’t think it’s any secret that utilities was a huge piece of community development focus in the past year,” said Community Development Don Charles of a department that, according to forensic audit results released last summer, had previously been subject to considerable mismanagement.

“A significant dedication of staff resources went to the utilities department’s recovery and redirection,” said Charles, “including the hiring of a new county engineer and setting operations and budgets in motion to wean utilities from annual general fund subsidy to a free-standing, self-supporting enterprise operation.”

Dickson presented three rate options to the supervisors:

Option 1, recommended by the county
Pros: 2011 revenues are enough to support expenses; future year rate increases will allow the restoration of a utility inspector in 2012 and would mean that by 2015 the county’s general fund will no longer be supporting county and TCSD utilities.
Cons: Highest rate increase for customers in 2011 and in future years.
Rate increases: 2011, 25 % for the county, 15% for TCSD water, 45% for TCSD sewer; 2012, 20% for the county, 5% for TCSD w, 19% TCSD s; 2013 , 20% for the county, 3% TCSD w and s; 2014 and 2015, 15% for the county, 3% for TCSD w and s

Option 2
Pros: Lower rate increases in 2011
Cons: Both county and TCSD utilities expected to lose money in 2011 and 2012; utility inspector not restored; the county’s general fund will continue to support utilities
Rate increases: 2011, 15% for the county, 8% for TCSD water, 38% for TCSD sewer; 2012, 15% for the county, 8 % for TCSD w, 22% for TCSD s; 2013 - 2015, 15% for the county, 8 % for TCSD w and s.

Option 3
Pros: Lower rate increases in 2011; consolidation of rates to create a unified county system; elimination of growing disparity between rates
Cons: Both utilities expected to lose money in 2011; TCSD increases much higher in 2012; may involve legal challenges related to debt financing
Rate increases: 2011, 20% for the county, 15% for TCSD water, 40% for TCSD sewer; 2012, 5% for county water, 34% for county sewer 24% for TCSD water, 30% for county sewer; 2013-2015, to be determined.

Supervisors also voted to advertise a possible four cent increase in the additional tax rate for Tuckahoe Creek Service District users and an increase in connection fees for residential water and sewer customers.

Higher rates in the TCSD would help pay off the county’s debt for the $63 million water and sewer system. Right now, neither the principal nor the interest on $27.54 million capital appreciation bonds is being paid, and incremental debt service starts in 2012.

“The growing liability of unpaid debt is looming,” said County Engineer Gary DuVal of TCSD debt.

Increases in TCSD water and sewer rates will also address money owed to Richmond for wastewater agreements.

The current tax rate is 23 cents per $100 of assessed value. Dickson said that that rate would be evaluated annually, taking fluctuating property values into account.

“If there is growth, if it is generating more volume, the recommendation is that every year we come back and evaluate the need for rate increases,” said Dickson.

“Growth in any system would assist at this point,” she added.

Raising residential connection fees could generate revenue that would take pressure off rate increases, said Butler. 

The board voted unanimously to advertise connection fee increases for residential water, from $3000 to $4000, and connection fee increases for residential sewer, from $4000 to $6000. These fees are the same for both county and TCSD customers

A public hearing on the school board’s approved budget, the proposed county budget, the proposed pro forma capital improvement program, and tax rates and utility rates will be held March 30. The Board of Supervisors is scheduled to make its final decisions regarding the budget on April 6.