The news that has rocked the City of Falls Church in the last week, of a $4 million shortfall in the last fiscal year’s budget, should have come as no surprise to anyone. We’ve been warning about such things in this editorial space for months, and it’s not as though the wider political and economic realities have been exactly hidden. It’s just that having the hard realities of the current, on-going economic crisis actually hit home on the local level, is something folks aren’t used to.
Of course, the first and most vocal reaction in Falls Church was to blame some tangential glitches in the process at City Hall. In the case of both of those, it was the alarming drop in revenues regionally that is at their roots. In one case, the steep drop caught the finance office off guard, as the routine practice of basing revenues on previous year assessments suddenly didn’t work. The actual revenues were needed to calculate projections of future revenues, instead. In the other case, the decline in revenues caused Fairfax County to scour state taxation records to discover errors in Richmond that were corrected at the expense of Falls Church. These developments have led some to inappropriately call for City Hall to apologize to local citizens.
The reality is that the City is in exactly the same position now that it would have been had those other developments not occurred. It is correct only to say that some decisions about the current budget might have been different had the projected real estate revenue number been more accurate last spring, but the bottom line remains unchanged.
Now, the City Council and School Board are challenged with finding ways to bring the FY09 budget into balance, to keep the current FY10 budget that way, and to brace for even tougher times in the upcoming deliberations for FY11 next spring. The real issue in all of this is the maintenance of the City’s priorities in the face of such tough times.
At the center of this conundrum is the tussle between maintaining the City’s fund balance policy and providing essential capital improvements for the school system. The way the matter has been framed so far, one can be done only at the expense of the other. City Manager Wyatt Shields has stated that his goal between now and the end of the month is to resolve the current shortfall with no layoffs, and while maintaining a fund balance of eight percent of the annual operating budget. That is adopted City Council policy, and adhering to it, or not, impacts the City’s credit rating and what kind of interest it will have to pay on future bonds. But Shields’ way of getting to his goal is by postponing $700,000 in capital payments for the schools.
From the schools’ point of view, these funds are vital for maintaining the functioning of the system, involving elevator and other equipment and property repairs. To us, the City’s most vital asset is the quality of its schools, and that is what should be the most important to preserve.