Editorial: F.C. Taxpayers Paid Too Much

September 20, 2012 12:30 AM0 comments

Some avid News-Press readers may have overlooked the report in last week’s edition about the implications for City of Falls Church taxpayers of the combined excess revenues and underspending in the Fiscal Year 2012 budget that ended June 30.

The revenues collected in excess of the educated guesses used to calculate the budget amounted to $3.4 million. The underspending, not counting money that was budgeted to be spent but for technical reasons not actually utilized by June 30, was $1.6 million. Combined, the $3.4 million revenue surplus and the $1.6 million left over due to underspending added up to $5 million.

That $5 million amounts to a gross miscalculation of the estimates the Falls Church City Council utilized to set the real estate and other tax rates for that year. The sum is almost a month’s worth of the annual $67 million budget.

But more importantly, it meant that the City Council significantly overcharged the Falls Church taxpayers for the cost of running the government and schools.

The $5 million overcharge amounts to a full 15 cents on the real estate tax rate, meaning that instead of charging taxpayers $1.27 per $100 of assessed real estate valuation, it should have charged $1.13.

As a result of the gross overcharging, the City’s fund balance swelled to over 23 percent of annual revenues, a grotesque number by anyone’s calculation. With a 17 percent policy goal for fund balance, Falls Church already has one of the most conservative, money hoarding fund balance policies anywhere. It used to be, when the City first adopted a formal policy on this matter, 8 to 12 percent. It somehow more recently jumped from 12 to 17 percent, and then to 17 percent.

Now it’s ballooned to 23 percent, and only by a hair-thin 4-3 vote last week did the Council deploy the $3.4 million revenue surplus in a three-way split between uses by the City’s government, the schools and a modest rebate to taxpayers ($933,000. equaling about 3 cents on the tax rate). Taxpayers will realize that rebate in lower bills due in this December.

It needs to be pointed out that the three Council members who voted against that three-way split solution – Mayor Nader Baroukh and Council members Johannah Barry and Ira Kaylin – by so doing voted against returning any of the $5 million tax overcharge to taxpayers.

Moreover, at its annual long-range strategy retreat earlier this month, the Council was presented projections for the coming fiscal year – the one beginning next July 1 – that called for not a tax cut, based on FY12 actual results, but a three-cent rise from the present $1.27 level to $1.30, and a boost to $1.37 in four years. That, Council members were told, was the “best case scenario” from the City’s Financial Planning Department.

To be clear, excess taxes are not being used for the schools, but to pad the City’s fund balance for dubious reasons.

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