April 3, 2020 (Updated: April 8)
Every county, municipality, state and our federal government’s budget expectations have been completely derailed due to the sudden onset of an unexpected and unprecedented event.
Government’s response demands constituent support as well as our alert attention. Consider that some analysts anticipate unemployment as high as 33% (Jeffrey Gundlach, founder of Double Line LP and former head of TCW Total Return Fund, March 30, 2020). Morgan Stanley suggests that 2nd quarter unemployment may reach 17%. These would be unprecedented levels. With unemployment comes inability to pay mortgages, rents, and property taxes. Coupled with businesses losing revenues and so many facing the prospect of closing, the anticipated revenues for New Kent County and literally all government entities will be under extreme duress.
Oil prices this past week bottomed at $20 per barrel (+/-). Commodities are precursors to economic activity and we may indeed be entering a period of deflation. This indicates a potential under-demand for goods and services. If this is the case, Americans will find that their property values will decline due to buyer’s inability to qualify thus putting additional pressure on our county’s taxing authority. I hope I’m wrong.
New Kent County’s revenues are already highly dependent upon residential properties accounting for nearly 88% of all property taxes. (12% commercial.)
Taxes must not and cannot be increased. According to 2020 tax-rates.org, NK residents already pay property tax equaling 2.26% of median household income. (King William 1.80%, King & Queen 1.64%, Charles City 1.68%) As household incomes decline, these respective percentages will increase causing further hardship for families.
How can you and I, the citizens of New Kent County, help our elected officials, county administrator and county staff?
What services are considered non-essential and must be cut because we simply can’t afford them?
Longer term, how can we continue to attract stable enterprise to New Kent to ameliorate the county’s dependency on residential real estate revenue?
President Trump signed the bi-partisan CARES Act that promises to deliver much-needed funds for all levels of government. These funds are not intended to be a panacea, merely a temporary lifeline. As a debt hawk, I trust the county will allocate these funds in a circumspect fashion focusing on essential services like police, fire and education.
As Governor Northam has told us, be prepared for a painful time with personal sacrifices. (On Friday, April 3, the governor put a hiring freeze on all state employees and has directed the general assembly to reconsider some recently passed legislation such as pay raises for teacher’s and state employees.)
We are so fortunate to live in such a wonderful community. Stay safe, stay distant and stay attentive to our county leadership. They need our help and support now more than ever.
Please join me and others in volunteering not only our opinions but also our time and resources to our local government.
William M Francavilla, CFP®