Thursday’s work session of the Falls Church City Council could be the decisive one in the arduous march to complete the $80 million City of Falls Church Fiscal Year 2015 budget by the April 28 deadline.
Late in this Monday’s Council meeting, at the initiative of Mayor David Tarter, the Council developed an unofficial consensus to task City Manager Wyatt Shields with revising his original budget recommendation calling for a 4.5 cent tax rate increase to produce one with a “flat rate,” or no increase in the tax rate above its current $1.305 per $100 of assessed real estate valuation.
Without spelling out specifics, except for the admonition from Council member Dan Sze that he “not sacrifice the things you’ve heard us say we like” and Vice Mayor David Snyder’s call to “not cut either City or the schools’ budget requests,” the Council put it on Shields to propose finding $1.6 million in cuts to lower the proposed tax rate from his original recommendation of $1.35 to the current rate of $1.305.
Options that are apparently available to Shields are a surplus that may manifest itself from the current fiscal year budget that should become evident with the release of third quarter numbers in the next week, and a reduction in the undesignated fund balance from the 17 percent of annual expenditures level currently proposed to something somewhat less.
The fund balance issue – that is, how much should the City keep sitting in the bank earning very low interest as a reserve, or “rainy day fund” – took center stage in comments from citizens at two well-attended town hall meetings on the budget in the last week.
The concern is that, following the guidance of Shields and Chief Financial Officer Richard LaCondre, the fund balance is simply too high, too conservative, and as a result millions that could go to funding the schools and lowering the tax rate at the same time will simply sit in a non-productive bank account.
For example, Shields proposed (with LaCondre’s adamant backing) that the fund rate be 17 percent of annual operating expenditures. In a budget of $80 million, that amounts to $13,600,000. With the cost of a penny on the tax rate being about $300,000, the taxpayers are being asked to expend 45 cents on their tax rate solely for this purpose. That is a huge percentage of a $1.35 tax rate.
It was noted that the City’s actual fund rate policy, as adopted by the City Council within the last decade, is to keep between 12 and 17 percent of annual expenditures in the bank. So, it was argued, if the budget included a fund balance of 12 percent of annual expenditures, instead of 17 but still within the range of approved policy, then that would amount to a savings of $4,000,000, which would lower the tax rate from $1.35 to $1.22 without touching anything else, including the schools, in the budget.
Shields argued that it would be the equivalent to using “one time money to fund the operating budget,” which is a bad idea because that money will not be there the next year. But, it was countered, it will be there as long as the fund balance is maintained at 12 percent, or something between 12 and 17 percent.
Thursday night’s forum, sponsored by the Falls Church Issues Forum involving the City’s Democratic and Republican committees and the Citizens for a Better City, saw a rare appearance by venerable City father Lou Olom, who because of health issues has seldom been seen in public the last couple years after decades of strident activism.
Olom, eloquent as always, spoke passionately for the schools’ budget request, which has become the target of concern by many citizens because of its explosive growth driven by record levels of enrollment increases.
“Let’s be more positive about our schools,” he said. “They’re worth everything they’re asking for,” noting that despite pressures, citizens have voted to sustain them over the years.
Council member Phil Duncan responded, “I agree with Lou. Public education is our highest priority, to send people into the world to make it a better place.” But, he added, “They are not our only priority. There needs to be a balance.”
School Board chair Susan Kearney chimed in, “We only ask for what we think we need.” That has made evident by yet another power-point presentation showing the pressures brought on by record enrollment growth, the maintenance of competitiveness for quality teaching personnel, and the focus on devoting resources to the classroom.
She said that 77 cents of every dollar in the school budget goes to the classroom. “We’re very proud of that,” she added.
In another Council development this week, the Council received a recommendation from the City’s Retirement Board on how to best deploy $11 million from the sale of the water system that, it claimed, would yield an annual $800,000 on average to the City for general uses. The board called for investing the money in an endowment component of the City’s pension fund to achieve this result.
That resource would not be available for the coming fiscal year budget, however.