1. 2011 Local Government Fiscal Survey Results VML/VACO October 2011

2. More Localities Fear the Future 2 Meet Financial Needs?BetterSameLess Able All Localities (118) FY 2012 Compared to FY 201123%57%20% FY 2013 Compared to FY 20124%55%36% Cities (31) FY 2012 Compared to FY 201125%50%25% FY 2013 Compared to FY 20123%53%38% Counties (87) FY 2012 Compared to FY 201122%60%18% FY 2013 Compared to FY 20125%56%36%

3. Real Property Tax Revenues Expected to Be Flat in FY 2012 3 Source: 1990-2010, Auditor of Public Accounts FY 11 & 12 estimates from VML/VACO Fiscal Survey

4. Very Modest Growth in Local Revenues Expected in FY 2012 After Two Years of Declines 4 Source: 1990-2010, Auditor of Public Accounts FY 11 & 12 estimates from VML/VACO Fiscal Survey

5. Local Government Budgets Trying to Hold On Until Better Days Arrive In Top 3 FY 12 Budget Balancing Actions Delay or cancellation of capital outlay/infrastructure40 Draw down reserves29 Salary Freeze26 Increase tax rates21 Eliminate vacant positions and reductions in force20 Targeted cuts in other services and programs19 Delay of annual equip. replacement programs12 Fee increases12 Reducing staff health care benefits11 Targeted cuts in public education10 Hiring freeze7 Reduced contributions to civic/cultural6 Renegotiate debt5 Replacing local general funds with special funds4 Across the board service cut3 Early retirement incentives2 Targeted cuts in public safety services2 Other4 * 88 localities responding 5

6. 6 Number of Localities Citing Budget Balancing Actions 6 Delay or cancellation of capital outlay/infrastructure projects58 Delay of annual equipment replacement programs (IT equipment or software, vehicles, etc.)45 Salary freeze44 Reduced contributions to civic and cultural organizations41 Draw down reserves40 Fee Increases (new or existing)37 Elimination of vacant positions35 Hiring freeze30 Targeted cuts in other services and programs (parks, libraries, street operations, leaf pick-up, etc.)23 Reducing staff health care benefits (such as raising co-pays, increasing premiums, reducing benefits)23 Increase tax rates22 Targeted cuts in public education18

7. 77 … Locality Budget Balancing Actions, Continued Across the board services cut14 Targeted cuts in human/social services12 Renegotiate debt12 Personnel layoffs or Reductions-in-Force11 Increasing use of inter-local and regional agreements to deliver services/share costs11 Increasing privatization/contracting out9 Replacing local general funds with special funds9 Targeted cuts in public safety services (police, fire, EMS)8 No spending or service adjustments)7 Early retirement incentives6 Establishment of a new contingency fund6 Sale of assets5 Reducing retiree benefits (such as health care credits, insurance and other post employment benefits)3 Carryforward balances3 Consolidate services with schools, authorities1 Change business practices1 Use transportation funds for GF1

8. 8 37 Localities Responding Reduced or Unfunded Positions in FY 12 8 Full-time Positions EliminatedFull-time Positions Unfunded Law Enforcement6 42 K-12 Instruction102K-12 Instruction38 K-12 Non-Instruction67K-12 Non-Instruction24 Parks & Rec19Parks & Rec36.5 Libraries5 5 Health & Human Services18Health & Human Services100 Public Works32Public Works71 Fie/EMS3 23 Inspection/Planners9 16 Other48Other167 Total309Total522.5

9. 999999 Local Government Employment at 2007 Levels Average Monthly Government Employment in VA Fiscal YearLocalStateFederal 2007370,067153,175156,308 2008377,008153,217157,367 2009382,300153,517163,142 2010 369,858 154,242 171,108 2011 371,083 156,217 173,525 Source: VEC Current Employment Statistics (CES); Compiled by Fiscal Analytics, Ltd.

10. Biggest Locality Revenue Concerns 10 121 Localities Responding to 2011 VML/VACO Survey # Citing Reductions in State Funding62 Lack of local revenue growth/real estate assessment reductions55 Loss of federal funding (CDBG, federal grants)15 Concerns about overall economic growth12 State actions that impede local revenue collection8 Shifting of state responsibilities to localities6 Lack of new debt capacity *2 * In addition, 23 localities had concern about their overall level of debt

11. Biggest Locality Expenditure Concerns 11 121 Localities Responding - 2011 VML/VACO Survey # Citing Deferred capital outlay/infrastructure/maintenance needs34 Rising costs of personnel benefits and retirement costs34 Need to increase employee compensation28 Demands for education funding25 New and unfunded mandate expenditures, such as LODA, schools24 Public safety expenditure needs12 Increasing costs for utilities, replacing equipment, service demands, etc.11 Environmental/storm/waste water mandate costs4 Increased CSA expenses3 State cost shift for secondary road maintenance1 State cost shifts for local constitutional officers1

12. Employee Retirement 33 localities indicated 5% Plan 2 employee retirement contribution. 3 localities indicated Plan 2 employee retirement contributions less than 5%. 12