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09-17-09 Local Economic Outlook Presents Continued Challenges
 
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2009 News Releases

For Immediate Release

Local Economic Outlook Presents Continued Challenges

September 17, 2009
Public Affairs

CHESTERFIELD COUNTY, VA—Chesterfield County’s Board of Supervisors and School Board were briefed on the local economic forecast at their joint meeting Monday afternoon at the Meadowdale library. While there may be some signs of a national recovery, the county is not planning for a quick return to normalcy. County Budget Director Allan Carmody told board members that in past recessions unemployment levels peaked as much as 18 months after the end of a recession. Continued high unemployment rates, low consumer confidence and weakness in the housing market are having a significant negative impact on state and local revenues.

Carmody noted that real property taxes, sales taxes and state revenues are all projected to decline. With uncertainty in employment comes constrained consumer spending, evidenced by the 8 percent decline in local sales tax receipts from one year ago. Expected continued declines in many home values, combined with consumers’ resistance to purchase goods while assessing their employment status, continue to put downward pressure on already reduced revenues. Carmody stated that the county’s share of Governor Tim Kaine’s recently announced new state budget reductions are projected to be between $3.8 million and $4.0 million in fiscal 2010 and likely higher in fiscal 2011.

When analyzing the impact of the recession on the county and assessing the anticipated expenditures for fiscal 2011, Carmody stated current forecasts project an approximately $18 million decline in revenues compared to the current budget, $20 million less than planned for fiscal 2011 one year ago. The county is already operating with a budget in which, when adjusted for inflation, per capita costs are on par with that of 1995, a time when the county had 6 fewer fire stations, 7 fewer schools and a police department with 210 fewer positions than today.
Likewise, expected increases in healthcare costs and funding for large vehicles, such as replacement fire engines, combined with other operating adjustments, are estimated to result in increases in expenditures of approximately $18 million, creating a gap of up to $36 million compared to fiscal 2010 for the county leadership to resolve as they begin the 2011 budget process.

Already what the Richmond Times-Dispatch has called “one of the leanest local governments in Virginia,” Chesterfield County reduced its general fund budget from $749 million in fiscal 2009 to $715 million in fiscal 2010, a 4.6% reduction, one of the deepest among large local governments in Virginia. With fiscal 2011, which begins July 1, 2010, promising to be even more of a challenge than fiscal 2010, the Board of Supervisors and the School Board have started the fiscal 2011 budget process earlier than previous years. Carmody presented a plan that includes working closely with the community to meet the fiscal challenge. 



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