By William J. Des Rochers, Fluvanna Field Officer
Just when one thought it could not get any more confusing, Fluvanna supervisors have discovered that they ran afoul of their own stated policy goals when they crafted the proposed budget on March 10th. They agreed to allocate some $600,000 to cover the operating expense shortfall.
But it seems that previous Boards established a policy to prevent raids of the undesignated fund balance – the county’s savings account — for operational expenses.
The policy is quite clear. It states:
no appropriation from unreserved-undesignated fund balance for recurring operational expenditures shall be made unless a plan for permanent funding of such expenditures is also approved at the time of appropriation.
The operative words here are “operational expenditures”.
But now here is some “inside baseball”. Should the supervisors tap this fund source for the planned $600,000, they will be obligated to raise taxes by about 1.7 cents in FY 2012, just to cover the shortfall in operating expenses in FY 2011. Moreover, supervisors would be expected to allocate funds to restore the fund balance – another 1.7 cents.
The policy also requires the supervisors to maintain an undesignated fund balance at a minimum of 12 percent of local spending. Currently it stands at about 10.8 percent. However supervisors will have to draw down approximately $450,000 to cover current fiscal year shortfalls, which would lower the percentage to 9.5 percent.
To meet policy guidelines and restore the savings account to the twelve percent level would require an additional $860,000, or another tax increase of about 2.5 cents. So collectively, supervisors would have to raise taxes by an additional 6 cents, just to borrow from the undesignated fund balance, and restore it to its minimum level.
In the current budget, the Board has made no provision to restore any of the savings account shortfall. And, the supervisors simply could change the policy. But that would no doubt be traumatic for those Board members who have consistently advocated fiscal responsibility on the Board.
Discussions will continue on March 18th.