‘We’re Not Broke,” She Says, But Tough Cuts Due
Surprisingly, just one week after the Falls Church City Council and School Board were introduced to the staggering $4.2 million shortfall in the City’s $66 million annual budget, not one citizen stepped forward to comment during the public petition period of this Tuesday’s City Council meeting.
On top of that, there was little finger pointing or heat among the Council members, who seemed resigned to the fact that the current economic recession is going to take perhaps the toughest budgetary toll in the City’s 60-year history. But no City or school employee is about to be laid off and there’s plenty of money in the bank to pay all the City’s bills.
“The situation is serious, but not dire,” said Falls Church Mayor Robin Gardner at Tuesday’s meeting. “We are not broke. We can pay all our bills and our credit rating remains intact.”
But she was quick to add, “I want to let the citizens know that we are not taking this lightly, and that we as a City need to address this.”
City Manager Wyatt Shields, who navigated the charged emotional and skeptical minefields of Council and School Board members in a series of meetings last week after the news of the shortfall first broke, laid out a schedule to Council members for decision making on closing the gap in less than a month.
“Obviously, we face very big challenges. These are big numbers. But we are working very closely with the schools, and think we have a plan to get through this and still preserve core City services. We are going to have to be innovative and find ways of doing things differently,” he said.
He said he’ll present his formal recommendations on how to make the cuts and close the gap at a Council work session next Monday, and that will be followed by a public hearing at the Council’s business meeting Oct. 26. The matters will be discussed at another work session on Nov. 2, and a resolution of formal action by the Council will come to a Council vote on Nov. 9.
But he cautioned that once the measures are adopted to deal with the current shortfall, a significantly more difficult process will commence on Nov. 30 at a joint Council and School Board work session when the launch of the next fiscal year budget decision-making process occurs.
In a memo sent by Falls Church Chief Financial Officer John Tuohy to Council members following the news of the shortfall last week, the ugly parameters of the current shortfall were spelled out in detail.
For the Fiscal Year 2009 budget period ending last June 30, he reported, property taxes came in $2,687,994 below the $41,144,936 number that was projected for the budget.
Other local taxes, such as sales tax revenues, came in another $2,641,609 below projections, but that was due in part to the City’s losing $1.5 million when an audit of state tax records in Richmond determined that the sum was incorrectly being placed in Falls Church’s account, when in fact it belonged in Fairfax County’s.
While numbers were below projections in a number of other areas, as well, the biggest dip below projections came in the area of “revenue from use of money and property,” which involves the City’s investments. Due to the collapse of the markets, the City’s investments returned only $76,788 compared to a projected $657,800.
Making up for the losses, and including almost $3 million in designated capital projects and land acquisitions, the City’s fund balance dropped from $11,325,382 to $4,304,126.
Touhy said, once the $4.2 million in cuts are adopted to close the budget gap from FY 09 next month, the next budget will assume that property values will drop by another 7.5 percent, amounting to $4.1 million less. This, plus an anticipated drop of another $1.5 million in projected sales tax revenues will leave the City $5.6 million in the hole going into the next year. That means that a combination of hefty tax rate hikes and probable personnel layoffs will be an inevitability by the time the next fiscal year budget goes into effect next July 1.
Vice Mayor Hal Lippman said Tuesday, “My two cents on this are discombobulated. Since first learning of this two weeks ago, this has been the most difficult two weeks since I’ve been on the Council. There are going to be consequences to what has happened, cuts in services, layoffs, pay cuts. It’s going to be a painful time for myself and others.”
Councilman David Snyder, serving on the Council since 1994 as its long-standing member, said, “This is a truly unprecedented shortfall,” noting that difficult decisions are ahead “that need price tags and clear ideas of where the money is coming from.”
He reiterated his call for a “blue ribbon panel” of citizens to assist in the City’s fiscal planning, a reference to the much-debated “Fiscal Advisory Council” concept debated in August. While Councilman Nader Baroukh echoed Snyder’s call, he went a further step, saying he will introduce a measure to create such a body at the next Council meeting.
But Councilman Dan Maller stressed again that it is the Council’s responsibility to make such policies and decisions, and said that this “serious situation” with the shortfalls “need to be dealt with in a transparent way.”
“If there remains plenty of liquidity, we need to see it,” he said.
Councilman Dan Sze said that “principles, integrity and transparency” must see the Council through the current crisis. He added that the economic development efforts of the City must be marshaled to “exert our influence to the wider area” to bring in new revenues. “Our situation would be so much more dire without the benefit of the mixed use projects that we have built in the past decade,” he said.
Baroukh stressed that “all the options need to be put on the table,” while acknowledging that “the schools are the economic driver of the City.” Councilman Lawrence Webb echoed Baroukh about putting “all options on the table.”
He challenged Mayor Gardner on the issue of whether or not, had the Council been better informed about the actual, as opposed to projected, real estate tax revenues last spring, policy and spending decisions would have been different.
“I disagree with the mayor. We may have made different choices had we known of this shortfall in the spring,” he said.
But Mayor Gardner retorted, saying to Baroukh, “Just as all the options were on the table then, they’re all on the table now, as you want them to be.”