28% and $251 Million

At 10am tomorrow morning, Loudoun's new Board of Supervisors gets sworn in, and with it a new government begins. This new Board is eminently qualified, with a great mix of experience, new ideas, proven results and genuine concern for the people of Loudoun. It is a very good thing that the new Board is as qualified as it is.

This is because Loudoun faces some serious challenges. In 2008, the county government faces a $251 million revenue shortfall.

The news came immediately following the Dec. 12 briefing on the dismal budget outlook, presented by budget manager Ari Sky, who warned of a projected $251 million shortfall if the tax rate were to remain at the current rate of 96 cents.

In his presentation, Sky told supervisors that the county's revenue this year is expected to come in $18 million under budget. The county's largest revenue source is from real estate property taxes, which in a slowing housing market, have dropped significantly over the past year and a decline in property values is expected to continue over the next two years. Also the anticipated fund balance for fiscal year 2009, while thought to be around $87 million, will in fact be approximately $38 million, creating a $49 million deficit. - Leesburg Today

The basic reason for this is the collapse of real estate here in Loudoun. Loudoun Stats has done a great job of cataloging and tracking this recent history.

We conducted a poll last week to test your knowledge of Loudoun County foreclosures, REOs and short-sales. The poll asked the question "What percentage of properties for sale in Loudoun County are foreclosures/REOs or short-sales?"
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The answer? 28 percent. - Loudoun Stats

28% of the homes sold are foreclosure or short sales. We have been concerned about the impact of foreclosures here in Loudoun for a long time, but 28% means that 1 in 4 sales are distressed. This is far worse than might have been expected. Between the long-term negative pressure on county income from declining home prices and the needs of county residents that result from being foreclosed upon the next four years are gong to be among the most challenging any recent Board of Supervisors has faced.

It is for this reason that we need to patient with the new board this coming year. The solutions to the challenges faced by Loudoun will be difficult and involve many choices that the citizens of Loudoun will find unpleasant. This is often the case when enormous messes left by those who have gone before must be cleaned up. But don't take my word for it, here's what Leesburg Today has to say.

The whole discussion Tuesday was indicative of the problems this board has had in dealing with budget issues. Too much time was spent on battles over small-ticket items that had little impact on the size of the bill mailed to property owners twice every year.

Meanwhile, little was done to prepare for more challenging times. It is as if the supervisors were hoping the strong economy would hold long enough for the fiscal house of cards to be deeded over to the next group before the collapse. They almost made it. - Leesburg Today

In the case of Loudoun County, 2007-2008, it most assuredly will mean significant cuts in services (including the School Budget), and may mean increases in taxes. Only time and study will tell. It is important to remember that the Board we elected in November is taking office to fix the massive problems left by the current Board, so the options they have are limited and difficult.

Let us all give them the benefit of the doubt. They will do their best by us.