On the eve of Tuesday's Council election, the Falls Church City Council voted 5-1 to lower the tax rate by five cents from $1.13 to $1.08, loping a final penny off the lowered number it had approved two weeks before.
The drop of five cents in the rate in a single year is the biggest one-year drop in two decades, and lowers the rate to a level not seen since 1997. Further, City Manager Dan McKeever indicated that the rate could go down even further in the next few years.
The rate cut was, in part, in response to a sharp increase in real estate assessments resulting from a complete review of all City properties by an outside assessing firm last winter. The increase resulted in a significant increase in anticipated revenues for the coming fiscal year, completely reversing the projected direction of the tax rate.
Last summer, the Council notified the public that if it passed a referendum last November to approve the sale of $25 million in bonds for the construction of a new middle school that the tax rate would jump from $1.13 to $1.26 per $100 in assessed valuation.
The public approved the referendum by a 3-to-1 margin in November and the budget season began in February with expectations of a stiff rate hike.
But two factors contributed in the surprise reduction finalized by the Council's vote this Monday. First, the assessments came in far higher than projected. Second, the City was able to sell its bonds in March at an interest rate far lower than forecast. This was in part due to an upgrading of the City's bond rating by Standard and Poor's, the result of the City's recent track record on economic development and adoption of formal debt limit and fund balance policies.
According to the City's chief financial officer, Shirley Hughes, the lower interest rate on the bond sale saved the City $1.7 million in the first year of debt repayment.
Mayor Dan Gardner noted the five-cent drop in the tax rate was the largest drop in the region, even though soaring real estate values is the norm throughout the area. Arlington County dropped its rate only two cents, while increasing some fees, Gardner noted, while Fairfax County dropped its rate three cents.
Voting for the $55,593,555 annual operating budget with the $1.08 tax rate Monday were Mayor Gardner, Vice Mayor Marty Meserve and Council members Robin Gardner, Lindy Hockenberry and Ron Parson. Gardner and Hockenberry are seeking re-election to second four-year terms on the Council next Tuesday.
Voting against the budget and the tax rate was Councilman Sam Mabry, who contended the rate could have been lowered further, as far as to $1.02, "if there was a political dynamic on the Council to wish it to happen." But Vice Mayor Meserve, citing the Standard and Poor's letter announcing an upgrade in the City's bond rating, cautioned against an "artificial tax reduction" that could "put the City in a deficit position in the future."
Vice MayorCouncil David Snyder was out of the country on business and could not attend the meeting. In a statement that Mayor Gardner read, Snyder said he supported a "prudent" tax rate reduction.
In some last-minute moves Monday night, the Council modified the budget to include one-time contributions from the City's fund balance surplus of $250,000 to the Falls Church Housing Authority's Affordable Housing Fund and $250,000 to a special fund to acquire open space. These one-time contributions came from the portion of the current fund balance in excess of the 12% of the annual operating budget that the City's fund balance policy stipulates shall remain in reserve.
Gardner and Hockenberry took turns moving and seconding the passage of the two one-time contributions.
Last minute additions of $10,000 to the Mary Riley Styles Public Library and $14,000 to the City Clerk's office were also approved.
Mayor Gardner noted that the finalized budget included full funding of the School Board's request (an enrollment-increase driven 5% increase) and an increase on the City side of the budget of only 3.5%. It accommodated a $550,000 increase in the City's state-mandated contribution to the Virginia Retirement Fund, and neither cut nor added any significant new programs.
The Council saved $232,000 by scaling back the GEORGE bus service, eliminating weekend, late night and midday service (except for lunch hour). Low ridership numbers simply did not warrant a stiff taxpayer subsidy of maintaining service at those times.
The Council also found some additional revenue by doubling the cigarette tax from 25 to 50 cents a pack, the maximum allowed by the state. Along with pre-announced water and sewer rate increases, however, this was the only tax increase contained in the entire budget. More last minute revenue was found when it was determined that City health insurance costs would be lower than expected.
Hockenberry also noted that should the Virginia State Legislature, once it finalized a budget, provide more funding to the City than currently anticipated, that the Council would reconvene at a later date to lower the tax rate even further.
Following Monday's budget adoption, Hockenberry and Gardner hit the campaign trail with their colleague, also endorsed by the Citizens for a Better City, David Chavern. There, they were joined by challengers Lou Mauro, Greg Brown and Joseph Bodmer.
In addition to appearing at a Falls Church League of Women Voter's debate at Council chambers in City Hall Thursday night, five of the candidates participated in a roundtable at the offices of the Falls Church News-Press Saturday morning. Brown was unable to attend. A full transcript of that roundtable appears elsewhere in this edition.
On the ballot Tuesday in addition to the six City Council candidates are three School Board candidates running uncontested but with the endorsement of the Citizens for a Better City. They are Craig Cheney, Joan Wodiska and incumbent Kieran Sharpe.
All the Council and School Board candidates contributed robust, full-color advertisements to this edition of the News-Press, the final one to go to press prior to the election.
The City's five polling places will be open from 6 a.m. to 7 p.m. next Tuesday. Absentee balloting is currently underway at the City's Registrar of Voters office at City Hall. Special Saturday hours are provided this weekend for absentee balloting.
In other action by the City Council at its meeting Monday:
• The Council voted to consider a petition from Darcy Johnson, representing the Cherry Hill Townhouse community, concerning the need for a crosswalk and/or stop sign at the intersection of W. Annandale Rd. and Gundry Dr.
• City Manager Dan McKeever reported that 65 City residents have appealed their real estate assessments to date out of a total of 4,500 City parcels, a level "not out of the ordinary with other years." Four of the six Council members reported their assessments rose 33% and up (the Citywide average was 25%) and all said they felt the increases were warranted.
• McKeever also reported that Nova Habitat, developer of The Byron mixed use project approved for development at the old Red Lobster site, has increased the percentage of commercial use on the site to 20.3% of the total project size for a total of 22,527 square feet. That compares to 7,500 that was at the Red Lobster and 4,500 for a drive-through bank, which was the alternative plan for the site should The Byron not have been approved by the Council.