There is good news and bad news in the City of Falls Church budget situation this year. The good news is that things are getting better. The cost-savings measures we’ve taken have worked, and revenues are projected to increase modestly.
To get a handle on our situation, we have made changes to our budget process, like moving to multi-year financial projections for the City rather than the single-year planning previously used. We have also provided the City Manager with clear budget guidance earlier in the process, which has allowed for better decision-making. And to enhance our commercial areas in the future, we have begun the process of “area planning.” These area plans, once adopted, will serve as the City’s official policy guide for future redevelopment in key commercial areas of the City. These are not flashy things, but they are important to putting the City back on a sound financial track. We have stopped bleeding red ink and have stabilized our finances.
The bad news is that it has been painful to get here. We had to make tough choices to maintain the level of services the City provides to our residents. Given the sharp fall in revenues due to the economy, water litigation, and other issues, we had to institute measures that included cutting spending, freezing employee pay, reducing staff levels, raising taxes, and working to bring our reserve fund to a sustainable and needed level. We outsourced some services, like curbside trash pickup, and we increased various fees on things like bulk trash pickup, in order to be as cost effective as possible.
We are not out of the woods yet. We have continuing issues like unfunded school pension liabilities and needed capital improvements. We are working towards the possible sale of the City’s water system, to turn an under-performing asset into one that will benefit the City. It is too early to predict how that will turn out. Though there are still some uncertainties, we are heading in the right direction.
While I am cautiously optimistic about the strengthening economy, it is important that we meet capital needs that were cut in response to revenue shortfalls over the last several years. As was set forth in the Council’s guidance to the City Manger, this year’s budget focuses on capital needs and infrastructure. The proposed budget provides for a moderate increase in general government operating expenditures and a significant increase in expenditures to meet long-term infrastructure and capital needs.
Going forward, we have to find a healthy balance between the City’s fund balance and the needs of City employees, schools, and services. The restoration of the City’s fund balance is extremely important because it is a critical element of our fiscal health that bond rating agencies review – and will, in turn, have a significant impact on the cost of borrowing, that will help us fund core maintenance and building needs for the community over the next several years. Restoration of the City’s fund balance will also help the City’s financial situation by providing a cushion to address any downturns in the economy, as well as any unforeseen liabilities. A healthy fund balance ensures that resources for critical infrastructure needs, such as stormwater management and school facilities, are available.
At the same time, we recognize the sacrifice which residents have made in very real ways. Bearing a cut is a tough thing, especially when taxpayers must pay out of pocket for services the City used to provide, and especially for employees with families to support, mortgages to pay, and obligations to fulfill. We will never be able to step back in time and reverse the sacrifices people have made, but as we move forward we will do everything we can to achieve a balance that is as fair as possible to as many residents as possible.
But for now, before we complete this year’s budget and move to the next budget cycle, I just want to express a sincere “thank you” to all of our residents. I greatly appreciate how the community has worked together with a sense of positive resolve. Our teachers, school employees, and City employees have worked hard to maintain high standards under difficult circumstances, and our residents have persevered through service reductions with understanding and grace. It has made me feel very privileged to serve as mayor of such an extraordinary City.
I am very optimistic about the City’s future. I look forward to being a part of that future and working with all of you again as we plan next year’s budget. I am confident that we can regain our financial footing, support our education system, advance our infrastructure, and embark on an approach to real estate development that improves our finances and the lives of our residents.