In the latest forecast of gloom and doom, Loudoun County officials now say the FY 2011 budget shortfall has grown to $192 million and a $1.51 tax rate will be needed to close the gap.  If residential assessments decline by an estimated 5% in 2010, then that would represent a $745 property tax hike for the average homeowner!

Included in the $192 million is $96.5 million in new spending - a fiscally irresponsible proposal at a time when housing values are expected to fall for the fourth straight year and there is little indication of an economic recovery.  About another $35 million is because the unequalized tax rate of $1.245 is used in the calculation.

Not factored into the shortfall is the state revenue picture.  A lower composite index and the population gains from the 2008 school census will likely mean more money from the state for the school system, even if there are some spending reductions in the new state biennium budget.

Don’t believe for a second that this misleading “shortfall” leaves the Board of Supervisors with no other option but to raise taxes.  Remember that the Board erased the FY 2010 shortfall of $176 million and actually lowered the average homeowner tax bill a few hundred dollars by cutting spending.  They can do the same this year, if they wish, but not without strong taxpayer support.  Both the general county budget and the schools operating budget are still very well funded by historical standards (thanks to the housing bubble revenue bonanza!) and should be able to absorb more spending cuts, as well as increased demand from higher student enrollment.