By Callie Hietala
The Henry County Board of Supervisors will have some difficult decisions to make when it comes to this year’s budget, including whether to raise taxes.
“We all need to understand there are some tough decisions that are going to have to be made this year,” Henry County Administrator Tim Hall told the board. “There’s no way around it.”
Hall presented a number of budgeting and financial challenges to the board during its annual planning session held Feb. 8 at the new Henry County Jail. Within those challenges, he identified several funding gaps that the supervisors and county officials will need to close to help balance the budget.
“We think you will need new revenue,” Hall told the board. Though county officials do not know yet what sources they will recommend, Hall spent a good deal of time discussing the county’s tax rates.
One challenge facing the county is the ongoing COVID-19 pandemic.
“We’ve spent probably over $1 million from our self-insurance pool to address healthcare costs for our employees,” Hall told the board.
However, “Our building has been open every day that it was supposed to be open … we show up and we work,” he said, but that comes with both a fiscal and physical cost. Hall said that many employees, including those in the sheriff’s office, public safety, and others, are exhausted.
Inflation was another issue, Hall said, noting the rising price of materials. “The routine costs more than the routine used to cost,” he said.
Unfunded mandates, including the 5 percent pay raise for teachers included in former Gov. Ralph Northam’s budget, presents a challenge to the county as well. “They deserve it,” Hall said, “they need it, they have to have it, but part of that is the money that the locality has to put in to match that by law. We don’t get any extra money to do that, that’s got to come from our own pocket. We had no vote on whether that was implemented, we had no input on whether that was implemented, but we have to do it.”
The costs of the Children’s Services Act (CSA) have “skyrocketed,” Hall said. County Attorney George Lyle said before the pandemic, the county had 47 children in foster care. Now there are 97, and, Hall noted, “all those are locally borne costs.”
Hall said the county spent approximately $175,000 on CSA in 2010, and by 2020, that amount spiked to $1 million. “I don’t see it getting any better,” Hall said. “Those are costs we have to pay.”
“We have some challenges as gradual minimum wage increases are put into play – if they remain in play. We have a certain number of employees that will be affected” at additional cost to the county, he said, including 28 full-time, 56 part-time, and numerous temporary employees.
A number of bills still alive in the General Assembly also could present fiscal challenges to the county, if they become law, including one to eliminate the grocery tax. “That’s fine, I think that’s a good idea,” said Hall. However, “there’s no provision to pay us for what we would lose by eliminating the grocery tax” which “is significant money” to the tune of possibly $1 million annually.
Another bill would require localities to hold a referendum if real estate growth exceeds 1 percent of the previous amount. Currently, Hall said, if that situation occurs and the board chooses to keep the money, it must hold public hearings and declare it a tax increase. At the end of that process, board members can choose to keep the money or not or roll the rate back. The bill would eliminate the board’s ability to choose, putting the issue instead to the voters.
Meeting future obligations is yet another issue Hall brought to the attention of the board, including potential reversion costs.
The board’s legislative package included a request for one-time funding to address reversion expenses, but those issues “did not get a lot of play,” Hall said, mostly because the county’s representatives spent a good deal of time and social capital on the bills calling for a voter referendum in the city on reversion.
The board previously approved pay increases for the Henry County Sheriff’s Office, using funds from the American Rescue Plan Act (ARPA) to cover the costs for the remainder of the current fiscal year. However, now other revenue sources must be identified to continue the ongoing obligation.
Funding the operations of the new jail also will come with a hefty price tag, Hall said. “Clearly we will save the money that we are spending to outsource inmates,” which he said was roughly $1 million per year, which will help but not cover all the operational costs.
School funding, Hall said, is another financial obligation to consider. While he has not received formal information from the school division, Hall said he saw a local media report indicating the system would be requesting $947,842 in additional local money.
Tax hikes or budget cuts?
“Last year, for the first time in my time here, we dipped into fund balance to do a one-time balancing. I don’t want to do that anymore,” Hall said. “It makes all of us on staff nervous to do that, so you either generate the revenue to cover the expenses or you find a pot of money somewhere or you raise revenue.”
He illustrated the fiscal impact of some of the county’s new funding obligations using the county’s real estate tax, where, he said, one penny equals approximately $300,000.
Addressing the school board’s request for additional local money equates to a 3-cents increase in the county’s real estate tax.
The pay increases for police and public safety, totaling $1,170,804, equates to 4-cents on the real estate tax.
The estimated cost of reversion, Hall said, equates to 8-cents on real estate taxes.
All told, those funding obligations equate to a 15-cents increase in the real estate tax to bring in an equivalent amount of revenue to cover the expenses. “It’s startling,” Hall said.
“We are not advocating for all of this, or any of it, to go on real estate,” he clarified, “I’m just trying to put it in simple terms that we can all understand.”
However, he noted that adding an additional 15 cents to real estate would bring the county’s rate to 70 cents (currently 55.5), which is still well below Martinsville’s rate and the rates of several neighboring counties.
In terms of personal property taxes, Hall said the county’s $1.55 is “significantly better than most surrounding counties” and the city of Martinsville.
Besides real estate and personal property taxes, Hall said the board also could opt to raise the meals tax. Increasing that tax from 4 cents to 6 cents could, he estimated, generate approximately $1 million.
“The three biggest parts of our budget—law enforcement, public safety, and education—any significant cuts that you wish to make to avoid any (tax) increases, those significant cuts have to come from the areas that you significantly fund.”
Garrett Dillard, of the Iriswood District, asked Hall about delinquent tax collections, and how much revenue the county might be missing out on by not being more aggressive in collecting delinquent taxes.
“Our percentage of rate collection is fairly impressive,” Hall said, “but there’s still a chunk of money that’s sitting out there.”
Paired into groups of two, Hall challenged the supervisors to work within their groups to “list what they think we need to do and where we need to be in the next 5 years” and to “tell us as a staff what you’re willing to bite off. Do you want to bite off the full funding ask of the school board? We need to know that. Do you want to bite off the full funding mechanism of staffing this facility? We need to know that … We need to know what you want to see.”
Chairman Jim Adams, of the Blackberry District, and Debra Buchanan, of the Horsepasture District, said they wanted to focus on continuing to support the Blue Ridge Airport and its expansion because it is an economic driver.
Also noted was the need to identify space for a new shell building (the previous one was purchased by the German company Shock in 2021), and space for a new industrial park to continue attracting and recruiting industry to the area.
The expansion of utilities up U.S. 58 West also was on the list, along with broadband expansion, and continuing to support and encourage educational partners.
Ryan Zehr, of the Ridgeway District, and Vice Chairman Joe Bryant, of the Collinsville District, also noted delinquent tax collection efforts and asked county staff to explore how those taxes are collected.
“There’s no telling how much money we’ve got in unpaid taxes in this county,” Bryant said. “Someone’s got to be held responsible for collecting those. Somebody’s not doing their job.”
“I know some of the heavy hitters are businesses,” Zehr added.
County Treasurer Scott Grindstaff presents reports on delinquent tax collection efforts to the board during its regular monthly meetings.
Zehr said he and Bryant “don’t really see a way we can do all of what the schools are asking for” while recommitting to the board’s promise to deliver permanent pay raises to police and public safety staff.
Dillard and Tommy Slaughter, of the Reed Creek District, told Hall they would like to explore a Healthy Henry County initiative to promote healthy lifestyles.
The board’s list included score boards for basketball games, PSA in Iriswood on Horsepasture Price Road, recognizing Parks and Recreation League champions, and completing a sheriff’s salary study.
Dillard broached the idea of streaming board meetings via Facebook live so more people could watch, and potentially upgrading technology in the board room itself to ensure high-quality live streaming and audio.
Meetings of the Henry County School Board, he said, are streamed on Facebook via cell phone and often it is difficult to hear clearly.
Bryant raised the issue of pay received by the board members themselves. “Everyone has had a pay increase other than the supervisors,” he said.
He said that supervisor pay was previously decreased and was never restored to its original, full amount. Hall recalled that the board decreased its pay by 10 percent in the early 2000s.
The chairman is paid $8,635 per year. Other board members are paid $8,181 each, according to county records.
“Don’t you think that supervisors deserve some type of pay increase?” Bryant asked.
Slaughter said constituents often ask him to come look at something, which leads to a great deal of driving. “Gas prices definitely haven’t gotten cheaper,” he said.
“Sometimes a person needs, I don’t want to say a pat on the back, but an incentive to keep going,” Bryant said.
Hall said there are code requirements governing when supervisors can vote on pay raises for themselves. Lyle said it has to occur in a year when there is an election, but he would have to research other requirements.
The county and school will hold a joint budget work session at 5 p.m. on Feb. 22, with the school budget request due April 1.
The total county budget will be presented to the Board of Supervisors at 5 p.m. on April 7, and public hearings on school and county budgets will be held on April 8 at 7 p.m.
Adoption of school and county budgets is scheduled for April 26.