IOW set to slash spending

Published 9:37 am Saturday, November 7, 2009

ISLE OF WIGHT—Just weeks ago, Isle of Wight County’s Board of Supervisors was comfortable with its budget: Revenue was steady and the county wasn’t facing the deep shortfalls that other governments have during the recession.

However, that all changed when International Paper announced its plans to close the Franklin paper mill. Now the Board of Supervisors is pumping the brakes on spending as it tries to determine the impact of the closure on its budget.

“We have no idea down the road what the financial impacts are going to be,” said Carrsville District Supervisor Phillip Bradshaw. “We’re going to have to make the hard decisions.”

Bradshaw, who serves on the board’s finance committee, said that the committee would likely recommend that most items in the county’s 5-year capital improvement plan—and even some projects in the current budget—be delayed.

“The only thing that will be presented in the CIP budget is anything that we’ve been committed and obligated to,” he said during the board’s meeting Thursday night. “Everything is under review.”

Bradshaw added that the finance committee would have to be inflexible in dealing with budgets for any projects that are already in the works.

“The finance committee is not going to accept budget overruns on any project that comes forward,” he said.

The county’s volunteer rescue squads and fire departments were also asked to review and adjust their CIP requests. Newport District Supervisor Stan Clark said he didn’t think the board had ever said no to a request from emergency services during his 10-year tenure.

“We’re having to say no to things that we’ve never said no to before,” he said. “It pains us all to do it, but we have no choice.”

Supervisors said that they would consider requests that are vital to the well-being or safety of county residents.

According to Gerald Gwaltney, the county’s commissioner of the revenue, taxes paid by IP and its related industries account for about 6.4 percent of the county’s budget. While there will be minimal impact this fiscal year, the county stands to lose between $5.2 and $6.2 million in revenue by the 2012 fiscal year.

Another potential side effect of the mill’s closure is lower real estate assessment values, which could cost the county even more revenue.

“We will be watching the sales of real estate in the area to see how the closure will effect the reassessment values,” Gwaltney said. At this point, there is no way to tell whether the closure will affect values countywide, or whether it will be localized to the southern end.

In addition to IP and related businesses including ATC Panels, Specialty Minerals and Franklin Equipment Co., Bradshaw said there are “at least another dozen businesses that are directly tied” to the mill.

“The unknown that we’re dealing with is what we call the ‘ripple effect,’ other businesses are going to be affected,” he said.

Another factor that needs to be considered, according to Bradshaw, is the effect of budget cuts from the state.

“We know we’re going to have reductions from the state … we’re going to lose several hundred thousand (dollars) or more,” Bradshaw said. He said the board would look at financial matters and make decisions regarding the budget at its Dec. 17 meeting.

Lisa Perry, the county’s director of economic development, told the board it’s important to make sure that all of the families affected by IP’s closure are taken care of, but the county must look forward.

“We do need to put our minds toward economic recovery, and it’s important that we do that quickly and that we stay focused,” she said.

Perry said she and John Smolak, president of Franklin Southampton Economic Development, had requested that Gov. Tim Kaine designate the IP campus as an Enterprise Zone, which would provide local and state incentives for businesses that move into the area.

“It certainly perks up a perspective company’s interest when we say Enterprise Zone and that would be a sure sign to the site consultants and other companies that we’re looking to do business with that we’re serious about this, that we have the full support of the state behind us,” she said.

The county is also continuing the development of the Shirley T. Holland Intermodal Park, which is the county’s “primary asset in terms of moving forward,” according to Perry.