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County leaders are again bracing for a challenging budget season, with both the county school system and county government working to offset anticipated deficits in the coming fiscal year.

Fairfax County Public Schools is facing the greater challenge, with a projected budget shortfall of $98 million in fiscal 2015.

The Fairfax County government is facing a smaller budget deficit for the next two fiscal years than it has in recent years, but County Executive Ed Long is still entering into the budget process with a financial gap to close.

Factoring in planned increases in schools funding and employee salaries, Long is projecting a $39 million shortfall for fiscal 2015 and a $58 million shortfall for fiscal 2016.

This gap is “much, much more manageable than the hundreds of millions we were showing last year, but still no small task,” Long said.

While the residential real estate market is continuing to rebound from the recession, the uncertainty surrounding the federal budget and anticipated federal spending cuts are continuing to drag on the county's revenues.

The county's office vacancy rate is at highs last seen in the early 1990s, Long said, and the county has started seeing declines in sales taxes, hotel taxes and other revenues linked to more discretionary spending.

“It's really stagnated investment in our local economy,” he said.

Despite the air of uncertainty, Long said he hopes to increase county spending in areas that have been identified as priorities, including a $34 million increase in schools spending, $25 million to provide pay increases for county employees and $15 million to support major maintenance needed at county facilities.

In all, Long is projecting a $142.5 million increase in spending in the next fiscal year and is basing revenue projections on maintaining the county real estate tax rate.

Despite the planned 2 percent increase in schools funding, Superintendent Karen Garza said she is struggling to figure out how to close the nearly $100 million shortfall without affecting the quality of instruction.

“I don't want to be melodramatic, but if our increase is just 2 percent, it will be devastating for our system,” she said.

One large chunk of the school system's projected deficit comes from continued growth in enrollment, which is expected to jump by almost 3,000 students. That comes as the county sees a higher percentage of its students qualifying for free and reduced lunches, a measure often used to gauge the poverty level of schools.

The budget shortfall also includes an increase in funds to put toward teacher retirement, as this year the state Department of Education has moved a larger percentage of that cost to local school districts.

Most of the school system's budget consists of such necessary increases, according to Garza. She noted that a state efficiency review of the school system earlier this year found little room for reductions in an already lean budget.

Already, the budget does not include an increase in employee compensation, which Garza called a “division-wide priority.”

The school system has only been able to provide a step increase for teacher salaries once in the last five years. School Board member Sandy Evans (Mason District) expressed concern that if employees did not receive compensation, the system would lose teachers to other local school districts with more competitive salaries.

School Board member Megan McLaughlin (Braddock District) expressed concern over whether education in the county could improve with such a dire budget situation.

“How do we find $100 million and also improve and increase services to students?” asked McLaughlin. “Unless we find $100 million between now and April, we can't even provide what we do now to students … I've never seen a more difficult challenge in front of us.”