F.C. Council Defines Budget Parameter Preferences With School Cuts, Tax Hikes

April 8, 2013 11:33 PM12 comments

Falls Church City Council members, six of the seven there, sounded off on their budget preferences tonight, although still short of any final decisions before they have to do such a final thing in two weeks. The range of options they preferred added up to some hefty increases in tax burdens to Falls Church citizens and undoubtedly some cuts in the Falls Church school board’s funding request.

In a surprising declaration, read out as a written statement, Councilman Phil Duncan called for holding the tax rate at its current $1.27 level by calling for reducations on all main pillars of the budget, including the schools. Among the components of his plan, however, he called for eliminating the item to complete the fund balance restoration (at 17 percent) and collections deferral for the proposed Storm Water Management Fund fees until next year.

Other Council members decided to overuse the world “prudent,” however, to defend maintaining the 17 percent fund balance goal (far above the 5 and 6 percent numbers maintained by neighboring jurisdictions Arlington and Fairfax) in defense of, as Councilman Ira Kaylin put it, “knowing what investors are looking for” in the event of future bond issuance.

The best that Vice Mayor David Snyder could project was “some number below” the advertised tax rate of $1.41, saying that the Schools’ needs are “irrefutable” while the “adequate capitalization of the fund balance” also seemed necessary.

Council member Johannah Barry said it is still premature to project a desire tax rate, since new numbers from the third quarter of the current fiscal year will not be available until this Thursday’s Council work session.

Mayor Nader Baroukh said that holding the tax rate at $1.27 would require “draconian cuts,” including “imprudent” cuts in the fund balance, and Kaylin settled for generalities, such as “it is not a rosy outlook even with economic development” and citing the “mismatch between expected new revenues and expenses.”

School Superintendent Dr. Toni Jones was present to witness Council discussion, and was not encouraged. Two members of the school community, a teacher at Mt. Daniel and the head of the Schools’ Business in Education (BIE) alliance, Marybeth Connelly, both with children in the local school system that is experiencing unprecedented enrollment growth, spoke in favor of the schools’ budget request.

Connelly offered a plan that involved a slight reduction in the City’s fund balance goal that could permit the Council to meet the full School Board budget request with no tax rate increase.

But later, a majority on the Council used the term “imprudent” to dash the idea, with deference to the desires of the “investment community.”

  • FallsChurchCitizen

    “…in the EVENT of future bond issuance.” Come on, now. I’m sure that both the editor and the school board are acutely aware that the primary reason the fund balance is so important is because of an upcoming, whopping $100 million bond issuance to build a — wait for it — new high school! I think we all recognize the need for a new George Mason facility, but in order to minimize the interest costs and the resulting burden on taxpayers as that financing is repaid, we have to demonstrate that we do not treat the fund balance as our cookie jar in non-emergency situations in advance of seeking that funding.

  • http://www.facebook.com/people/Mike-Smith/100002309640996 Mike Smith

    So the sense I am getting is that the fund balance will be used to buy down the tax rate. And what will the Little City do next year or the year after when the fund balance is depleted? And just in time to borrow a pile of money for the Schools.

  • philduncan

    My sense of Monday’s Council meeting was not at all what’s suggested by the comments from “FallsChurchCitizen” and “Mike Smith.” To the contrary, it appears that the course being set for the budget vote April 22 will result in the average homeowner paying the City more than $1000 in taxes and “fees” above what he/she paid last year. (e.g., at least $8400 in 2013. compared to $7377 in 2012, for a typical property valued at $610,800).

    Instead, I asked at the Council meeting that we consider holding the tax rate at the current $1.27, and I outlined suggestions for priorities and process in budgeting and economic development that would: 1. Keep our schools and City services excellent. 2. Hold a City fund balance that is sufficiently robust to obtain fair terms on the bonds we will float in FY 14-15 for schools and City infrastructure needs. 3. Provide compensation for City and schools employees that is reasonable in current economic conditions.

    If citizens are interested in an alternative budget approach, I would be pleased to discuss this further with my Council colleagues and with schools and City staff, to get their ideas on how to refine and implement a plan built around a more reasonable tax rate.

    • http://twitter.com/poseidonguy1 PoseidonGuy

      Keep up the good fight. I’ve had it with the insane taxes and fees in FC, coupled with older residents’ opposition to every single commercial development proposal. I’ll be relocating soon.

    • andyrankin

      Phil, there is a lot of debate out there about how much fund balance is enough fund balance. I know I lack the experience with that kind of thing to take a particularly valid stance – seems like the sort of thing we need expert advice on. Who is advising the City and City Council on this and what are their credentials? In theory the current policy (17%?) was established based on expert opinion – is there reason to think the current policy is misguided?

      I wasn’t able to catch last night’s meeting so I didn’t see your full proposal. What would be the impact on the tax rate if we kept the 17% fund balance but otherwise went with your plan? I guess my question is, how much of the fund balance would we use in exchange for not raising the tax rate by how much?

      • philduncan

        Hi Andy. I’ll send you a copy of the statement on the budget that I made at last night’s Council meeting. Can the City retain a robust Fund Balance and keep the tax rate stable? I believe the answer is “yes.” Let me send you a couple of background documents to study first, and then let’s re-engage on this question, so we can be sure that the information being posted is completely factual.

  • cory851@earthlink.net

    If my memory is correct, when the economy tanked, several condo projects requested and received permission to convert to rentals and were granted a reduced tax. If correct, this is a major part of today’s problem. Enrollment increases not so much by home owners, but renters who aren’t bearing an equitable share of the cost of education. If city goes back and recalculates what would / SHOULD have been paid, then subsequent fees could be placed so to remove an undue burden on home owners. Just a thought toward keeping the story straight.

    • andyrankin

      Cory, as far as I know the only project that was originally approved as condos but later converted to apartments was Pearson Square. It doesn’t directly result in reduced tax – although apartments an condos are assessed differently and I think generally condos get assessed at a higher value so there is lower tax revenue as a result of the change.

      The bigger impact is probably the fact that apartment rentals generally attract more school children than condos – so Pearson Square ended up producing more students as an apartment building than it would have as a condo building. This doesn’t impact revenue but does impact the costs to the City.

      I’m not sure how we would figure out how much the taxes would be different if Pearson Square were a condo instead of an apartment – and it would be even harder to guess how much the project would have cost the City in services as a condo. Also, we can’t ignore the possibility that if the City hadn’t allowed the development to convert to apartments the developer may have stopped construction and we’d have a partially finished building in that spot right now.

      On the plus side, the building was designed and built to be condos and on the tax records the units are already described as condos – so at some point the operator can (and probably will) decide to convert to condos. At that point, the original benefits we anticipated will come to pass.

      One thing should be clarified, most of the enrollment increase (70%) the schools have seen is coming from single family homes, not apartments or condos.

    • D_Wayne_Jones

      Cory,

      1. Pearson Square is assessed as condos not rental properties.
      2. They pay the same real estate tax as anyone else
      3. Pearson Square is assessed a approximately $165 Million which means that they pay just over $2 Million per year in real estate tax at the current rate
      4. The school says that there are 90 school children there, so that means that they pay $22,222.22 per child in real estate taxes.
      5. By comparison, a single family house with 3 school children that is assessed at $1 Million pays $12,700 in real estate taxes or $4233.33 per child.
      6. According to the current school board request, they are asking for $15,130.08 per child
      I like the contribution that Pearson pays much better that a single family home, I hope you do too.

      • vseidita

        Interesting analysis, but in my single family home that we moved into in 1994 we have had two children in the city schools for 13 years each but not that they have graduated we will have no children in the schools until we die which is hopefully not for a long time. I expect that as the Pearson Square kids graduate their parents are more likely to move out of the city. This is all fascinating conjecture. I wonder if actual data is available.

        • D_Wayne_Jones

          That’s why schools, like fire and police, are “public goods”. These are things that everyone wants to have but no one wants to pay for. You got to use the schools while others helped pay for it. Now, it’s your turn.

  • vseidita

    It seems as though at least one member of the council is convinced that having 17% of our budget sitting in our checking account is the only way to ensure low rates for our future borrowing. This is quite contrary to the techniques used by ratings agencies and lenders when determining the likelihood of a municipality defaulting on its debt. Can someone offer some verifiable facts to support this strange contention or are we being guided by people who store their savings in their mattresses?

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