The calamity that wasn’t brings year-end sigh of relief
County budget-keepers are breathing an end-of-year sigh of relief that the financial quicksand they feared last spring didn’t materialize — at least not yet. Last March, a meticulously prepared county budget collided with the shock force of a global pandemic that would derail the world economy, reset the national political calculus and, by year’s end, take the lives of more than 300,000 Americans.
Rappahannock County formally entered a State of Emergency and planners ratcheted back their assumptions about tax revenues derived from tourism and trade. Anxieties ran high as county officials read national predictions of general economic ruin. They fretted that tax in-flows wouldn’t fund the $26 million budget they had just embraced for the fiscal year beginning in July. The gloom scenario pictured populations in extended lockdown and innkeepers, restaurants and shops withering away, along with the tax revenues they generated. Even property taxes, the single largest contributor to local revenue, could falter as residents’ livelihoods were getting hammered.
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“It’s fair to say there was great apprehension about what was coming,” said County Administrator Garrey Curry following a review of the first five months of the fiscal year that began in July. “A lot of that apprehension has been lifted — but not all of it.”
The big surprise was the robust influx of sales taxes and meals and lodging levies due to COVID pandemic responses policymakers hadn’t anticipated. Two trends made the difference: First, short-term rental operations filled up with city dwellers who decided to sit out the shutdown season in the county; second, homeowning weekenders shifted to fulltime from part-time. Safely ensconced in the county, both groups started buying online and enjoying take-out and outdoor dining. Consequently, sales taxes started to flow and meals and lodging taxes revved up.
Meanwhile, a number of farmers welcomed new customers seeking to avoid supermarkets in favor of farm stores and outdoor markets. The Inn at Little Washington, whose meals and lodging taxes are critical to the Town of Washington, was filling its rooms one weekend after another, while mannequins provided esprit de corps in its socially-distanced dining areas.
Another factor was a double infusion of federal pandemic-relief money allocated through the CARES Act. Adding up to nearly $1.3 million, the funds helped Rappahannock’s schools and many of its businesses and agencies weather the crisis.
Had the county’s revenue streams dried up as feared, policymakers would have been forced to make painful cutbacks, since raising taxes on residents during an economic downturn would be a nonstarter. Practicing scrupulous expenditure management, the county fenced off some monies in contingency status, meaning the funds could only be spent once it was clear that the supporting revenues were actually coming in. Supervisors say the added review forced a useful level of discipline.
The Commonwealth of Virginia, which contributes significantly to the schools and an array of other programs, was another source of uncertainty. Whipsawed by added expenses and lost revenue from COVID, Virginia at one point “unallotted” $143,000 of previously committed support for Rappahannock County. But over time the changes got smoothed out and critical injections of state support came through.
Tax figures covering the period of July through November explain the current sense of confidence. The county budget envisioned $10.7 million from property taxes, and as of Nov. 30 it took in $7.5 million. December is the deadline month when many residents pay these taxes, so the numbers will likely rise by New Year’s Day. The budget anticipated $507,813 from sales taxes, and on Nov. 30 the county had taken in $323,455, with seven months left in the fiscal year. Meals and lodging taxes, budgeted to bring in $243,750, had generated $136,504 through November.
The Rappahannock County Public Schools represent the largest single spending category, and the aspect of county life most affected by the pandemic. New schedules, travel patterns, precautionary infrastructures, teaching methods, outreach and nutrition all went into effect last spring, upending spending plans. The budget adopted in May had envisioned school spending of $12.9 million, including state and federal support, but an updated budget sets the likely outlays at $13.9 million. However, infusions from the federal CARES Act, plus state assistance and grants, will mostly cover the outlays occasioned by the pandemic and will likely save the county from an unanticipated bite out of general revenues.
WHAT’S NEXT?
Winter will take some of the glow away. Though vaccines are coming, COVID cases are multiplying in Virginia, and doctors are urging stay-at-home precautions. And while glorious fall weekends brought droves of “leaf peepers” and hikers to the Shenandoah National Park, winter walks are less inviting. Restaurant picnic tables, even those flanked by gas heaters, are emptying.
“There are many, many unknowns right now,“said Curry, adding that these will continue as the second half of the fiscal year plays out.
One question mark involves further federal pandemic relief. Anticipating some additional federal help, Supervisor Keir Whitson (Hampton District) said he has “this nagging feeling that we need to get more money into the hands of people that need it.”
A pressing special case is the Fire & Rescue budget. This critical service rests on a separate levy which is inching higher to address added costs brought on by the recruitment of paid emergency medical workers and firefighters to replace volunteers who are retiring. COVID worsened the pressures because some volunteer drivers stepped back until infection risks abated. Now the Fire & Rescue Association is working on issues of longer-term sustainability, to be discussed with the Board of Supervisors early in 2021.