2011 Local Government Fiscal Survey Results

VML/VACOOctober 2011

2

More Localities Fear the Future

Meet Financial Needs? Better Same Less Able

All Localities (118)

FY 2012 Compared to FY 2011 23% 57% 20%

FY 2013 Compared to FY 2012 4% 55% 36%

Cities (31)

FY 2012 Compared to FY 2011 25% 50% 25%

FY 2013 Compared to FY 2012 3% 53% 38%

Counties (87)

FY 2012 Compared to FY 2011 22% 60% 18%

FY 2013 Compared to FY 2012 5% 56% 36%

3

Real Property Tax Revenues Expected to Be Flat in FY 2012

Source: 1990-2010, Auditor of Public AccountsFY 11 & 12 estimates from VML/VACO Fiscal Survey

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 est.

2012 est.

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Growth in Real Property Tax Revenues

Fiscal Year

4

Very Modest Growth in Local Revenues Expected in FY 2012 After Two Years of Declines

Source: 1990-2010, Auditor of Public AccountsFY 11 & 12 estimates from VML/VACO Fiscal Survey

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 est.

2012 est.

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Total Local General Fund Revenues

Fiscal Year

5

Local Government Budgets Trying to Hold On Until Better Days Arrive

In Top 3 FY 12 Budget Balancing Actions

Delay or cancellation of capital outlay/infrastructure 40Draw down reserves 29Salary Freeze 26Increase tax rates 21Eliminate vacant positions and reductions in force 20Targeted cuts in other services and programs 19Delay of annual equip. replacement programs 12Fee increases 12Reducing staff health care benefits 11Targeted cuts in public education 10Hiring freeze 7Reduced contributions to civic/cultural 6Renegotiate debt 5

Replacing local general funds with special funds 4Across the board service cut 3Early retirement incentives 2Targeted cuts in public safety services 2Other 4

* 88 localities responding

6

Number of Localities Citing Budget Balancing Actions

6

Delay or cancellation of capital outlay/infrastructure projects 58

Delay of annual equipment replacement programs (IT equipment or software, vehicles, etc.) 45

Salary freeze 44

Reduced contributions to civic and cultural organizations 41

Draw down reserves 40

Fee Increases (new or existing) 37

Elimination of vacant positions 35

Hiring freeze 30

Targeted cuts in other services and programs (parks, libraries, street operations, leaf pick-up, etc.) 23

Reducing staff health care benefits (such as raising co-pays, increasing premiums, reducing benefits) 23

Increase tax rates 22

Targeted cuts in public education 18

77

… Locality Budget Balancing Actions, Continued

Across the board services cut 14

Targeted cuts in human/social services 12

Renegotiate debt 12

Personnel layoffs or Reductions-in-Force 11

Increasing use of inter-local and regional agreements to deliver services/share costs 11

Increasing privatization/contracting out 9

Replacing local general funds with special funds 9

Targeted cuts in public safety services (police, fire, EMS) 8

No spending or service adjustments) 7

Early retirement incentives 6

Establishment of a new contingency fund 6

Sale of assets 5

Reducing retiree benefits (such as health care credits, insurance and other post employment benefits) 3

Carryforward balances 3

Consolidate services with schools, authorities 1

Change business practices 1

Use transportation funds for GF 1

8

37 Localities Responding Reduced or Unfunded Positions in FY 12

8

Full-time Positions Eliminated Full-time Positions Unfunded

Law Enforcement 6 Law Enforcement 42

K-12 Instruction 102 K-12 Instruction 38

K-12 Non-Instruction 67 K-12 Non-Instruction 24

Parks & Rec 19 Parks & Rec 36.5

Libraries 5 Libraries 5

Health & Human Services 18 Health & Human Services 100

Public Works 32 Public Works 71

Fie/EMS 3 Fie/EMS 23

Inspection/Planners 9 Inspection/Planners 16

Other 48 Other 167

Total 309 Total 522.5

999999

Local Government Employment at 2007 Levels

Average Monthly Government Employment in VA

Fiscal Year Local State Federal

2007 370,067 153,175 156,308

2008 377,008 153,217 157,367

2009 382,300 153,517 163,142

2010 369,858 154,242 171,108

2011 371,083 156,217 173,525

Source: VEC Current Employment Statistics (CES); Compiled by Fiscal Analytics, Ltd.

10

Biggest Locality Revenue Concerns121 Localities Responding to 2011 VML/VACO Survey

# Citing

Reductions in State Funding 62

Lack of local revenue growth/real estate assessment reductions 55

Loss of federal funding (CDBG, federal grants) 15

Concerns about overall economic growth 12

State actions that impede local revenue collection 8

Shifting of state responsibilities to localities 6

Lack of new debt capacity * 2

* In addition, 23 localities had concern about their overall level of debt

11

Biggest Locality Expenditure Concerns121 Localities Responding - 2011 VML/VACO Survey

# Citing

Deferred capital outlay/infrastructure/maintenance needs 34

Rising costs of personnel benefits and retirement costs 34

Need to increase employee compensation 28

Demands for education funding 25

New and unfunded mandate expenditures, such as LODA, schools 24

Public safety expenditure needs 12

Increasing costs for utilities, replacing equipment, service demands, etc. 11

Environmental/storm/waste water mandate costs 4

Increased CSA expenses 3

State cost shift for secondary road maintenance 1

State cost shifts for local constitutional officers 1

12

Employee Retirement

• 33 localities indicated 5% Plan 2 employee retirement contribution.

• 3 localities indicated Plan 2 employee retirement contributions less than 5%.