The $10-$13 million that the City of Falls Church will net in cash from the sale of its water system to Fairfax County this year could, with good financial management, offset the need for any tax rate increase on City property owners in the coming fiscal year, F.C. City Councilman Ira Kaylin told his Council colleagues in a work session Monday night aimed at offering guidance for the upcoming budget cycle.
The comment came late in the meeting, at it approached the 11 p.m. hour Monday as Council members took turns weighing in on ideas for the next budget, the season fast upon them that will result in the adoption of a Fiscal Year 2015 budget next April.
Projected continued explosive school enrollment growth will again be the main driver of the next budget, as laid out last Thursday at a joint City Council/School Board work session. On the revenue side, however, real estate assessment growth is expected to be a mediocre 2.9 percent (despite last week’s report that Falls Church residential real estate has risen to the highest level of any jurisdiction in the D.C. Metro area) and overall revenue growth at 3.8 percent.
Among other things tonight, the Council spent a lot of time talking about the merits of moving the twice-annual tax payments into the same year as the budget, ending much confusion around carryover “surpluses” and their restrictive uses. The cost of the move, not a real cost but an accounting adjustment only, would be about $400,000, and could be accomplished by tapping the City’s fund balance, currently over 20 percent of annual expenditures. A benefit to tax payers would be the postponement of one tax payment six months, and the Council’s budget deliberations would be relieved of a lot of confusion.
However, the discussion reopened the ongoing debate about the use of fund balance. It was pointed out that the City policy is to maintain a rate of 17 percent of annual expenditures (and that the current balance is significantly higher than that.) However, Council member Phil Duncan pointed out that the adopted City policy is to maintain a balance in the range of 12 to 17 percent, not 17 percent as a minimum, an observation that Kaylin and Chief Financial Officer Richard LaCondre took strong issue with.