As the Falls Church City Council edges toward taking on directly the shaping of its next fiscal year budget, a full house of major challenges loom.
It’s one time when the City is in exactly the same boat as its larger regional neighbors. All are confronted with the imminent prospect of a federal budget sequester coming next Friday, March 1, unless Congress acts.
In a statement issued yesterday, U.S. Rep. Jim Moran warned the sequestration cuts “will impact every federal employee, agency and program,” adding, “With nearly 40 percent of our local economy tied to the federal government, the Washington metropolitan region will be the hardest hit in the country.”
Moran went on, “Federal agencies are required to cut $85 billion from their budgets, but are being forced to do it nearly halfway through the fiscal year, amplifying the pain. These cuts are across the board, meaning every program will be reduced, with no priority given to even the most sensitive and important government functions, from FBI investigations to air traffic control.”
In her State of the County address unveiled yesterday, Fairfax County Board Chair Sharon Bulova did not mention the sequester impact, per se, but did note that commercial real estate values have gone flat in the county, and will contribute to the County manager’s proposed Fiscal Year 2013 budget that he will introduce next Tuesday.
In the case of the City of Falls Church, Chief Financial Officer Richard La Condre told the City Council Tuesday night that earlier growth trends in the City’s sales and meals tax revenues had also flattened off for January, and that the tepid growth of real estate values in the City, as reflected in assessments that were sent out last week, have already been confirmed by an outside auditor as “96 to 98 percent accurate.”
The next big moment for the Falls Church Council will come in two weeks when the School Board formally adopts the amount it will request as a transfer of funds from the City. The School Board received a recommendation from Superintendent Dr. Toni Jones for a whopping 16.52 percent increase in the transfer request, mostly driven by robust enrollment growth.
That increase, if the School Board goes along with it, would require a 10 cent increase in the real estate tax rate (from $1.27 per $100 assessed valuation to $1.37), in and of itself, the Council determined Tuesday. That would be with only a 3.88 percent increase in the City’s operations budget, driven entirely by new state or federal mandates and increases in the cost of regional contracts.
Over the top of that, it was determined that, for the average single family home of $600,000, a $274 annual increase in storm water fees would also apply. The 10 cent increase for that average home would be $600 and added to the new storm water fee, the owner of such an average home would be hit with a whopping $874 tax increase.
At Tuesday’s work session, Mayor Nader Baroukh, who said in light of all the factors involved that the Superintendent’s recommendation was exorbitant, suggested that Council members follow up on a school board idea of interacting one-on-one with their school board counterparts prior to March 5.
It was noted that if the schools lowered their request from 16.52 percent growth to 6.5 percent growth that the City could maintain its current real estate tax rate without an increase (except for the storm water fees).
Other factors loom, as well, however, including the future of requirements from the Virginia Retirement Fund, with contributions going up by over 50 percent immediately. “It is going to be wicked going forward,” said Councilman Ira Kaylin.
So, the list of challenges ranges from stagnant revenue growth to heighten educational demands, heightened outside monetary demands, to real, unforseen problems that could accrue from the sequestration.
After the school board adopts its budget request on March 5, City Manager Wyatt Shields will present his recommended overall budget (including the amount of the request from the schools) on March 11.
Right after that, the Council, School Board and Planning Commission will hold a joint work session on Thursday, March 14, to assess the budget process in the context of an updated financial overview.
The first town hall meeting will be held Saturday, March 16, followed by a second one on April 13. The final adoption is slated for April 22.