One of the greatest threats to our way of life is a persistent attitude of disengagement from all matters affecting our self-government, so it is difficult to be critical of any citizen who speaks out on public issues. However, a recent Memorandum dated December 10, 2010, issued by the City’s “Long Range Financial Working Group” (“LRFWG Memo”) appears to be an effort to clothe political commentary in the guise of technical analysis, confirming the fear I expressed when the group was created last year. The members of the LRFWG have every individual and collective right to express themselves, but when they are appointed to a public body that is given the right to use the letterhead and seal of the City of Falls Church, there ought to be some boundary to the latitude assumed by the body.
Beyond matters of form, in my opinion the contents of the LRFWG Memo are without foundation, and can only serve to cast the City in a negative light and waste the resources and attention of the community in a needless distraction. While I was as critical as any member of the Council concerning the errors in the City’s FY10 budget that led to substantial mid-year corrections, and I remain interested in reforming our budget process, I feel compelled to address the central allegations of the Memo, that the City’s 2011 Budget was not balanced, and that the City is “rolling” budget deficits from one year to the next.
Cities, as most non-federal government bodies, are required to have a balanced budget. The LRFWG apparently reviewed City Manager (CM) Shields’ recent presentation describing the choices before the Council in setting the 2011 tax rate, showing a “gap” of $1.4M for FY11 if the tax rate were held at the present $1.24. As explained by the CM’s presentation, this number reflected changing the assumptions on which the budget was computed. Of course, it is well within the prerogative of the City Council to make such a change, but it is simply irresponsible to suggest, without any evidence or even reasonable suspicion, that the FY11 Budget was not balanced. The issue of assuming higher tax revenue in the second half of the year was criticized by me and others at the time we debated (and debated) this budget last year, but it is an artifact of the system of budgeting for a fiscal year but assessing property and collecting taxes for a calendar year. I did raise the question whether tax rates could be set at a different level for the May and November billings (due in June and December); the answer was that this is not permissible.
“The second assertion of the Memo: that the City is ‘rolling’ deficits into succeeding fiscal years, demonstrates a shocking lack of local government financial expertise from the supposed expert body.”
The second assertion of the LRFWG Memo: that the City is “rolling” deficits into succeeding fiscal years, demonstrates a shocking lack of local government financial expertise from the supposed expert body. This issue also is an apparent artifact of the Fiscal/Calendar mismatch, which requires the second Fiscal Year tax billing to be estimated, subject to Council action in the following April when the budget is passed and the CALENDAR year tax rate is set. While I am no expert, I was able to quickly find the rule (GASB #33) that requires the City to recognize real property tax revenue during the period in which it is billed. Approximately 98% of the billings due in June are collected in June, and over 99% are considered revenue under the applicable accounting rule.
I am sure that this arcane discussion is fascinating to readers, but seriously why are we not discussing the real strategic issues facing the City of Falls Church? What our City needs now is a clarity of purpose and an informed public debate about the challenges facing us, to develop a plan of action designed to bring about the changes required. Single-family homeowners are the primary beneficiaries and financiers of the present system, but the risk is that ever-increasing taxes will negatively impact property values, causing a downward spiral. The answer is to bring commercial development, which to support the needs of the community needs to be on the order of $150 Million annually, which is 5% of our tax base (or equivalents like sales taxes generated by retail like BJs). The important work of the LRFWG provides the analytical context to test ideas, but the efforts of the members will be wasted if there are no new policy ideas to test.
Last week the ZOAC unanimously approved a new Zoning blueprint which will be presented to the Council in January, which together with the ongoing comprehensive and area planning efforts will provide the tools and framework to take full advantage of the building momentum coming out of this recession. Here’s hoping that we see ideas other than a downward spiral of budget cutting that will result in undermining all of the reasons for the Little City to exist.
Dan Maller is a City of Falls Church resident and former member of the Falls Church City Council.