Now that the Prince William Board of County Supervisors has advertised a tax rate of $1.158 per $100 of assessed value for the Fiscal 2015 Budget, matters concerning that budget will be at the forefront of Board discussions over the coming weeks.
Among other things, there will be a lot of talk about tax rates, tax bills, property taxes, the general fund, levies, fees, recordation taxes and the revenue sharing agreement with the Prince William County School System.
Prince William County receives a number of inquiries about the budget, and a lot of them have to do with receiving clarification about some of the terminology being used. So, this list has been developed to provide a brief explanation of some of the most common terms you may hear during budget deliberations.
- Budget – Guiding document that provides a road map for how revenues and expenditures will be used to meet the objectives identified by the Board of County Supervisors. It is revised by the Board through the course of the year as revenues, expenditures and priorities change.
- Proposed Budget — Budget the County Executive submits for the Board of County Supervisors’ consideration. This is a proposal, based upon the Board’s tax guidance that provides a starting point for the Board as they move toward an adopted budget.
- Adopted Budget — Budget adopted by the Board of County Supervisors after holding public hearings and meetings to discuss the needs of the community. The adopted budget establishes tax rates, fees, and levy rates for the fiscal year. It also establishes where revenues will be budgeted and appropriated and where expenditures will be permitted within the organization.
- Revised Budget — Budget that reflects changes made by the Board of County Supervisors during the course of the fiscal year. The adopted budget is based upon projected revenues and expenses for the entire fiscal year. As actual revenues and expenditures become available, the budget is adjusted to reflect these changes. Also, when agencies receive revenues that were not foreseen (i.e. new federal or state funds, grant monies, etc.) those must be budgeted and appropriated by the Board before the funds can be spent. All of these changes are reflected in the Revised Budget.
- Capital Improvement Projects — Projects such as building facilities, parks and recreation construction, road construction, technology equipment and infrastructure, and other infrastructure costs.
- Fiscal Year — Timeframe by which organization accounts for all revenues and expenditures. In Prince William County, the fiscal year runs from July 1 of one calendar year to June 30 of the following calendar year. Because the fiscal year runs through two calendar years, the fiscal year is named based upon the year it is concluded (e.g. fiscal year 2015 runs from July 1, 2014 through June 30, 2015).
- General Revenue — Those revenues received by the county that may be used for any purpose at the discretion of the Board of County Supervisors.
- Revenues – Any money received by an organization. For government, these are typically taxes, levies, grants and fees.
- Taxes – sum of money paid to the government for specific facilities, products or services. In Virginia, localities only have taxing authority as specifically granted by the state. The following taxes constitute the majority of the General Revenues received by Prince William County:
- Real Estate Taxes — Tax that Prince William County residents/businesses are required to pay based upon assessment of their real estate. The real estate tax is assessed on real property such as houses, buildings and land. The rate is charged per $100 of assessed value of the property.
- Personal Property Tax — Tax assessed on personal property such as vehicles. The rate is set annually. The total tax is based upon assessed value of the property less any depreciation depending upon the type of personal property being taxed.
- Recordation Tax — Generally collected when one buys and sells real estate. Recordation Tax revenues go to the county’s General Fund, and are General Revenues. However, they are excluded from the revenue sharing agreement with the school system because, as directed by the agreement, they are used to fund transportation related costs. Currently the recordation tax is used to partially offset existing transportation debt service.
- Transient and Occupancy (TOT) Tax – Tax charged to hotel/motel stays in Prince William County. Forty percent of the tax goes to the General Fund. The remaining 60 percent is budgeted for tourism-related purposes such as the Convention Visitors’ Bureau (CVB) and the County’s historic properties.
- Business and Professional Occupancy License (BPOL) – This is a tax on businesses with gross earnings of more than $200,000. These revenues are part of the General Revenue for the County.
- Sales Tax – One percent in Prince William County. The tax is placed on top of the state sales tax of five percent.
- 2. Levies — A tax authorized by the Board of County Supervisors to allow collection of revenues for a specified use. The levy rate is charged per $100 of real estate value. Revenues collected from levies are not part of the General Fund. They may only be used as designated by the local ordinance that created the levy.
- Fire Levy, which provides revenue that may only be used to support capital expenditures for Fire and Rescue; and the
- Mosquito/Forest Pest Control Levy, which funds capital and operational costs for our gypsy moth and forest pest control operations.
3. Grants — Revenue received from third parties (i.e. federal government, state government, non-profit organizations), which typically come with restrictions on how the funds may be used. Most grants are included in the General Fund but they are never included in the calculation of General Revenues.
4. Fees — An amount charged to an individual or a business for a specific service. Fees are typically collected to support a particular function of government. Many departments have specified fees for service that is only paid by those receiving the service (i.e. permit fees). However, there are two fees that every property owner must pay:
- Solid Waste Fee, which supports the maintenance and operation of the County Landfill, and the
- Storm Water Management Fee, which supports the County’s obligations under federal and state regulations to manage storm water run-off.
- Residential Tax Bill — Bill sent to homeowners which includes the real estate tax amount plus: fire levy, mosquito and forest pest levy, solid waste fee, and storm water management fee. Because the fees are set independently from the assessed value of the home, and the levies are established at a separate rate from the real estate tax rate, these are excluded from the Board’s policy of considering impact on the real estate tax bill for residents.
- Revenue Sharing Agreement — A long standing agreement between the Prince William Board of County Supervisors and the Prince William County Public Schools School Board where the county allocates 57.23 percent of General Revenue (with the exception of the recordation tax, which is earmarked for transportation) to the school system.
- Contingency – A line item in the annual budget. Provides limited funding for service delivery costs and unanticipated agency revenue shortfalls. It is Board policy to budget at least $500,000 each year in contingency funds. Contingency funds can only be spent by a resolution of the Board of County Supervisors.
- General Fund – Where General Revenues are designated and from which general fund expenditures are budgeted and allocated.
- Capital Reserves – Maintained at 2% of appropriated capital funds to cover unanticipated costs associated with existing projects in the Capital Improvement Program.
- General Fund Balance —General revenues that are maintained for local and regional emergencies. Funds are invested and earn interest, which is used as general revenue.
- Unassigned Fund Balance – Maintained to provide the County with sufficient working capital and enough money to provide a margin of safety to address local and regional emergencies without having to borrow. The Unassigned Fund Balance is kept at not less than 7.5 percent of the year’s General Fund revenues in every fiscal year. Fund balance can only be spent by a resolution of the Board of County Supervisors.
- Revenue Stabilization Fund – A portion of the General Fund the Board put in place to provide the County with sufficient capital to provide a margin of safety to withstand local and regional economic shocks and unexpected declines in revenue without borrowing. Revenue stabilization funds can only be spent by a resolution of the Board of County Supervisors.
For more budget terminology, see the glossary section of the fiscal 2015 Proposed Budget: http://www.pwcgov.org/government/dept/budget/Documents/70-Glossary.pdf
If you want information on how to understand the county budget, visit: http://www.pwcgov.org/government/dept/budget/Documents/08–Understanding%20the%20Budget.pdf
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