As Grocery Store’s Patience Wanes, An Uncommon Vote in Work Session
Falls Church City Manager Wyatt Shields advertised a new City real estate tax rate of $1.41 in a legal notification published in Thursday’s News-Press, even though neither he nor anyone on the F.C. City Council thinks it will eventually wind up nearly that high.
However, the number, up from the current rate of $1.27 per $100 assessed valuation, was agreed to by all parties at a work session this Monday because there remain so many as-yet-unresolved facets to the now on-going Fiscal Year 2014 budget deliberations.
Realistically, they contend, the final number will be closer to $1.33, only a six cent increase, as recommended by Shields in his plan issued earlier this month. But it has yet to be determined if the Council will, in fact, establish a separate Storm Water Enterprise Fund (see story, elsewhere this issue). If they don’t, fully funding the stuff in that plan will add 5.5 cents to the real estate tax rate.
Then there is the matter of fully funding of the City schools – including a record enrollment-growth-driven 12.9 percent increase in their request from the City – and other matters, such as whether the Falls Church Cable TV channel will continue to remain in business to broadcast City government meetings.
But the difference between a $1.33 budget and a $1.41 figure may be more semantic than anything. If the Storm Water fund goes through, the impact will be that citizens will, on average, pay the equivalent to 5.5 cents on the tax rate.
So, if they do it through a separate fund, where it is called a “fee,” or through the general operating fund, the impact is the same on the average Falls Church wallet.
It may be easier for politicians to obfuscate such obvious realities when out campaigning about holding down taxes, but it is a head-scratcher to most who do not live in the rarefied political atmospheres of City Hall on a regular basis.
At a Town Hall meeting on the budget at the Community Center Saturday morning, the usual three paid City staff, electeds and key board and commission volunteers for every one uninitiated citizen held as with past events of a similar nature.
But the discussion ran to the matter of the City’s fund balance, which officials proudly tout as now at 17 percent of the annual $70+ million budget. That’s almost $12 million. With the City hard-pressed to fund its schools and other needs, while trying to hold down the tax rate, the question was asked why all that money is held apart to earn almost nothing in a savings account.
Even if the City maintained a full month’s worth of expenses in such an account, that would free up about $6 million to make a big difference in tax rates, school funding and other needs.
The point was further underscored when Shields tried to defend the policy noting that a few years ago, water litigation and the Great Recession drew the City’s reserves down to almost zero. “We almost went out of business,” he declared.
However, he was called out on that when it was noted that the City, unlike a cash-strapped individual, can always raise new taxes, borrow new money, and even sell land to replenish its reserves if needed.
So, given that’s the case, it was argued, why still cling to $12 million stuck in a bank account?
The City’s Chief Financial Officer Richard LeCondre also defended the fund balance level, presented a “Best Practice” fact sheet on fund balance matters from the Government Finance Officers Association (GFOA) which stated that “unrestricted fund balance in general funds be no less than two months of regular general fund operating expenditures.”
However, it acknowledged that such matters “should be assessed based upon a government’s specific circumstances,” and that it is in deference to appeasing the expectations of Wall Street credit rating agencies, and not to the community’s needs.
At the first work session the new budget last week, there was, as advertised, no shortage of loud and emphatic rhetoric as the City Council, School Board and Planning Commission engaged over Shields recommended $74,986,375 budget March 11.
On one side of the tables in the cramped City Hall conference room members of the School Board, most emphatically Chair Susan Kearney and Greg Rasnake, were in unison arguing for the enrollment growth-driven 12.9 percent increase in the amount of their request for a transfer from the City. On the other side, with a one exception, the Council stood its ground on needing to attend to the needs of the entire City and, coming loudest from Ira Kaylin, not to tinker with its 17 percent fund balance reserve.
A crux of the matter for the schools being funding for capital expansion needs, Kaylin surprised everyone when late in the meeting he called for a public referendum in November to decide the matter. If voters were to approve the funds for the expansions needed, then all the Council and School Board wrestling over such priorities would be removed. But the idea came too suddenly for any thought-through responses from others present.
School Superintendent Dr. Toni Jones reported that enrollment at the City’s four public schools will soon top 2,291, up from 1,191 in 1989 and 1,682 in 1999. Rasnake argued that mitigating the impact of a tax rate hike to fund the increased school needs with some of City’s fund balance reserve was needed because the schools face “a real crisis, an enrollment crisis with dire consequences.” He asked the Council, “What kind of community are we if our schools degenerate. There can be no line in the sand drawn on this.”
But Kaylin blew up at the talk of tapping the reserve, saying if anything, 17 percent is too low. He said the City cannot seek bonding for its capital improvements if it goes to Wall Street and its reserves are deemed to be too low. He gave a very foreboding, unforgiving picture of how Wall Street operates.
Other Council members, however, focused on making it through to the brighter future that on-going large-scale commercial development holds. David Tarter said that the projections of net revenue contributions to the City from five projects at one or another stage of fruition now — the Northgate, Hilton Garden Inn, Rushmark (Harris Teeter), Reserve at Tinner Hill and 400 N. Washington projects — will be contributing an enormous percentage to the City’s revenue base in the next five years. “We can get out of our problems through economic growth,” he said. “It is crystal clear.”
Councilman Phil Duncan added about the potential for economic development that could come from “the City’s first direct gateway to Metro” if voters decide to sell the City’s water system this November. “That will become the large elephant in the room,” he said.
He also tossed a jibe at Kaylin’s “17 percent is too low” fund balance remark, saying citizens ask him if they’ve got nothing in reserve in the bank because of the rough economy, why the City has 17 percent just sitting there, equivalent for a $70 million budget to almost $12 million.
School Board member Justin Castillo decried the “divide” between the Council and School Board. “Can we sit here and say this (funding the schools–ed.) is a business proposition? We’re better than that. This divide is ludicrous,” he said.
“It’s unfortunate that the tone I’m hearing in this conversation about the schools is ‘aren’t there too many kids?’”, Kearney said. “Our schools are one of the most important assets of our City. What we do uniquely here is maintain the highest quality education system, and we get a lot of value for what we pay.”
She noted that traditionally in Falls Church, the schools have gotten 46 percent of the general fund revenues,. but that through the recession, that fell back to 40-42 percent. “We have been defunded the last few years despite record enrollment growth,” she said. “Now there is revenue growth to help the City recover nicely, but the schools have not.”