After dealing with spending cuts, rising costs and tax increases, local governments are moving into the start of another fiscal year as the economy continues to recover at a sluggish pace and real estate assessments decline.

City and county budgets for fiscal year 2013 went into effect Sunday, with some localities faring better than others. New funding requirements for the Virginia Retirement System were among the major drivers shaping local budgets. The VRS changes raised employer contributions from localities and implemented a new 5 percent contribution from local government and school division employees, but the General Assembly mandated that be offset with a 5 percent raise paid for by the localities and school divisions. Localities and school districts had the option of giving employees the mandated VRS raise all at once, or incrementally over five years.

Declining property assessments and flat or shrinking tax revenues were also major issues for local governments.

A tug of war over the use of tax payer dollars also played out between many local governments and school divisions in the wake of state and federal funding cuts in education. Those struggles led to tax increases to cover the funding gaps or job cuts for teachers and other school personnel.


Despite facing a loss of about $3 million in tax revenue due to the closing of two large businesses and a 4 percent drop in property assessments, York County's 2013 operating budget rose $4.2 million, from the 2012 budget of $123 million to $127.2 million.

The Board of Supervisors cut $2.7 million from the county administrator's proposed budget of $129.9 million to avoid a steep increase in the real estate tax rate, originally proposed to rise 11.75 cents. The Supervisors cut 10 county jobs, the bulk of which were in the county's General Services department. Another 22 jobs were slated to remain vacant for a savings of $1 million.

The Supervisors approved a tax rate increase of 8.4 cents, raising the real estate tax rate from 65.75 cents per $100 of assessed value to 74.15 cents. In an attempt to cut $800,000 from the general fund, the Supervisors voted to shift the cost of the county's curbside recycling program out of the operating budget to the county's enterprise funds and proposed paying for it with a new recycling fee. After citizens protested the new fee, the Supervisors killed it before it went into effect. The county will instead cover the cost of the recycling program with money from the county's undesignated fund balance.

York increased its contribution to the school division by $3.86 million, for a total contribution of $48.8 million. The York County School Division's budget went up $1.7 million, from $118 million to $119.7 million. The Schools budget cut around 30 jobs, including nine teachers, six teacher's aides and six custodians. The school division opted not to continue another nine teachers and one teacher's aide position funded by federal money that will not carry over into 2013.

York County gave its employees the 5 percent VRS mandated raise, while the school division gave its employees a 1.1 percent raise.

"It was the worst time trying to figure out a budget that I've ever seen in my nine years on the board," said York Supervisor Don Wiggins. "It was really rough."

Wiggins said the Supervisors faced balancing declining revenues, increased costs, and the citizens demands not to raise taxes while not cutting services like education, police and fire and EMS.

"I was amazed at the amount of money we had to increase the tax rate," he said. "But there was nothing else we could do to provide the services the people of York County demanded. The thing people don't realize is we had been cutting (the budget) for the past four years until it got to the point that now we weren't able to cut anything else without really decreasing the services we have."


The City of Williamsburg had a small increase in its 2013 budget of $700,000 from $31.6 million to $32.3 million. The city's contribution to the Williamsburg-James City County Public Schools went up $415,000 to $7.74 million.

Williamsburg's 2013 budget included hikes in the real estate and cigarette tax rates. The real estate tax went up 3 cents from 54 cents per $100 of assessed value to 57 cents. The cigarette tax went up 5 cents to 30 cents per pack. The city also raised the EMS fees which is estimated to net an additional $100,000 in revenue.

City Council gave employees a 5.7 percent raise which included the 5 percent 5 VRS mandated raise and an additional .7 to cover the taxes on the raise which ensures employee take home pay is not reduced after the VRS contribution is deducted from their pay checks. The raise cost the city $175,000. The increased in employer contributions cost the city another $430,000. 

Like York, Williamsburg Mayor Clyde Haulman said that City Councils priorities were to balance city services with the costs associated with them. Haulman said the need to raise taxes was a convergence of two major factors that the meals tax revenues in the city were relatively flat while assessments went down. The city had not raised its real estate tax rate since 1991.

Adding to the flat revenues, Haulman said were the increased VRS costs and contribution to the school system. Under its contract with WJCC schools, the city's contribution is based in part on enrollment and for the first time in several years the number of students from the city enrolled in school went up 10 percent.

"The major driving force (in balancing the budget) is continually looking at the range and quality of services being provided and can we keep doing the same or better on less and less," he said.