MATT GENTRY The Roanoke Times

Helen Pack, the laboratory supervisor of Christiansburg's wastewater treatment plant, conducts tests in the plant's laboratory in Montgomery County. Wastewater treatment is a government service that Town Manager Lance Terpenny describes as a necessity.

These are some of the words leaders in Montgomery County, Blacksburg and Christiansburg use when talking about challenges they face in planning their next fiscal year's budgets.

And there is a reason for their dismal descriptions.

County officials are considering raising the real estate tax rate, cutting positions and reducing funding to outside agencies as options to offset an expected $3.4 million shortfall.

In the towns, officials are looking at delaying some capital projects or freezing vacant positions to help cope with decreases in revenue from the local and state level.

Officials with all three localities have started preparing their budgets for the 2010-11 fiscal year, which starts July 1. The county and Blacksburg will begin talking about proposed budgets this month, while Christiansburg officials are planning April work sessions.

This marks another budget year in which officials must deal with less revenue coming in -- be it from consumers not shopping or eating out as much or from state funding cuts -- while still maintaining the services residents expect.

"There's just not enough money to do everything that needs to be done," said Christiansburg Town Manager Lance Terpenny.

That has prompted county and town leaders to focus first on funding core services, such as education, public safety and infrastructure needs, and to think of ways to do business more efficiently.

What are the challenges?

County Administrator Craig Meadows said the big challenge for the county is state cuts and how those affect schools and funding for constitutional offices.

In the fall, more than $424,000 in state cuts were made to the budgets of the sheriff, treasurer, commissioner of revenue, clerk of the circuit court and commonwealth's attorney. The county helped offset the cuts with its own funds, and all the offices receive a combination of state and county funding.

County officials said last week that the state could make further cuts to some of those offices.

Meadows said the core services for the county are public safety and education. If the state continues to decrease funding to both, "the challenge then becomes what other areas of county government can we look to find reductions in order to support the core services."

State cuts have also hit Blacksburg and Christiansburg in the money that the state sends to localities to help fund police services.

In Blacksburg, for example, the town received about $1 million in 2007 to help offset the cost for police services. That number dropped to $994,000 in the current budget year and is expected to decrease again to $869,000 for the upcoming budget, said Blacksburg Town Manager Marc Verniel.

Verniel said town officials are planning to make up the difference from the general fund.

Blacksburg also uses state highway maintenance funds to maintain and pave roads and maintain traffic signals.

This fiscal year, the town received $2.6 million of that maintenance money, but town officials expect that number will decrease by 3.3 percent for the upcoming year.

Officials in the towns also anticipate that sales and meals taxes will take a hit in the next budget year with residents not shopping or eating out as much.

What are financial fixes?

Tight budgets call for some tough choices, officials say. And some of those choices could impact residents' wallets or employees' salaries.

Montgomery County property owners could see a 4 cent increase in the real estate tax rate. The rate is now 71 cents per $100 of assessed value.

Meadows said he will present a proposed budget March 8 to the board of supervisors and has said county officials see the 4 cent increase as the maximum increase needed to maintain most of the county services and provide additional support to the county schools.

The county's current funding for the school system is $35.1 million.

However, even with a 4 cent increase, the county would still have to freeze 12 full-time positions that are vacant, while also reducing nine full-time positions through layoffs or retirement to offset the budget shortfall.

The county now has 393 full-time and part-time employees.

Meadows said it's a difficult decision to lay off people and the county has worked to make layoffs a last resort.

"The employees of the county are the biggest asset that the county government has," he said.

Meadows has also said there will be no salary increases and no new positions in the next fiscal year.

In Blacksburg, there will be no raises for employees and no new personnel, Verniel said.

"We're freezing at least one vacant position now and may freeze more in the future going forward."

Verniel will present the town's proposed budget March 9 to the town council.

He said the core services for the town are public safety and keeping up the infrastructure, such as water and sewer lines and road maintenance.

Verniel also said there are other services that are valuable to residents, such as parks and recreation opportunities.

"We look at the things that we have to do and we also try to keep in mind the things that add to our quality of life, and those are important, as well," he said.

In Christiansburg, Terpenny said employee layoffs are "not on my agenda."

Officials are not yet certain whether the town will be able to give raises or hire new employees, said Barry Helms, assistant town manager.

The town has 240 full-time employees and a little more than 100 part-time employees.

Terpenny said with the upcoming budget the town will have to hold off on equipment replacement and maybe some capital projects, such as delaying the purchase of a front-end loader and delaying the painting and rehabilitation of a town water tank.

Terpenny said the town's vital services are funding public safety and taking care of the town's infrastructure needs.

What's next?

Officials in the towns and the county are also looking beyond the next fiscal year and trying to figure out how much longer they can maintain services if the economy doesn't rebound quickly.

Meadows said county leaders will need to look at the county's staffing levels in comparison to jurisdictions of similar size. If more state cuts are made, "we'll have to take a harder look at how we're staffed and structured."

Meadows adds, "I think many of the responsibilities and services that the county has provided in the past are going to be called into question as the funding from the state continues to be reduced. And citizens really need to let their board members know what's important to them."

Verniel said if economic conditions don't improve within the next couple of years, "people are going to start feeling it more," such as with service cuts or tax increases.

He said tight budget times also can bring about some positive changes, such as motivating town staff to be creative in how they approach problems, issues and services.

"This forces your focus back on can you do a better job at what you're doing," Verniel said.