F.C. Council Braces for Grim Word on Big Budget Shortfall

Current Year’s Gap May Call for Cuts Now

Falls Church Vice Mayor Hal Lippman confirmed this week that the city faces a shortfall in its current fiscal year budget that is “greater than last year’s,” although he would not indicate by how much.

Others have thrown out figures significantly higher, and the News-Press has learned that City Manager Wyatt Shields is meeting with City Council members and School Superintendent Lois Berlin in a series of one-on-one meetings this week to report the actual shortfall number in preparation for what is expected to become public at next Monday’s City Council work session.

Last year at this time, the Council faced an $800,000 deficit in that year’s budget, from which $370,000 came out of the schools. But the cuts were made without an overly-serious impact on either City or school programs.

The same may not be the case this time around as the flagging national economy, even if considered less severe for Northern Virginia than elsewhere in the state and nation, takes its toll on property values, retail sales and personal incomes.

But Falls Church will be far from alone in the shortfall that is expected. In Fairfax County, for example, County Executive Anthony Griffin conceded something that has been off-limits for budget discussions until only recently – that there will have to be a hefty tax rate increase for the county’s next fiscal year budget.

In a meeting with county government and school leaders Tuesday, Griffin said, “In all candor, I’m going to have to put a number of things that were on the table last year back on the table this year.” That includes a potential 11-cent increase in real estate taxes and a vehicle registration fee to raise $27 million, as reported by Leah Fabel of the Washington Examiner yesterday.

The county is currently projecting a $316 million deficit in the coming fiscal year budget, and the county’s school system, which constitutes 54 percent of the total county budget, could face severe cuts resulting in larger class sizes and elimination of after school programs.

Falls Church received a sobering report in August of what the coming fiscal year budget, to be hammered out in the spring, may look like. The City’s Chief Financial Officer John Tuohy cautioned the Council about anticipated revenue shortfalls and an increased burden to make up for market losses in the value of retirement and pension funds for City and school employees.

While a joint meeting of Council and School Board members was penciled in for Nov. 30 to begin tackling next year’s budget problems, however, the troubles with the current year’s budget could eclipse that forward-looking conversation with a set of tough and immediate budget-cutting obligations.

Indeed, it is the generally hidden impact of market losses on the City’s requirement to make good on the value of retirement and pension plans that could take an enormous bite out of the current year budget, along with lower-than-expected revenues from normal business activity, and delinquencies in tax payments.

The news this week that, nationally, consumer confidence is down, according to the monthly report by the Conference Board, a private research group, will not help the financial picture.

The report reversed a recent-months trend toward cautious but marginally greater confidence by the nation’s consumers, dropping for September from August numbers.

That is considered an onerous signal to what the coming holiday shopping season could be like, driven by widespread reports that unemployment numbers will continue to grow this fall. Consumer spending makes up 70 percent of U.S. economic activity.

News of budget shortfalls, including prospects of layoffs of City and school employees as early as this fall, will serve only to deepen a lack of confidence in the future for consumers, feeding the pull-back in revenue generation that has already contributed to the shortfall.

According to Falls Church city officials, no official numbers about the extent of the current shortfall will be forthcoming before Monday’s City Council work session.