Fund Balance Stabilization Key, Manager Insists

Falls Church City Manager Wyatt Shields unveiled his long-awaited recommended Fiscal Year 2012 budget to the F.C. City Council Monday, and while the balanced revenues and expenditures for $64,511,451 represent a modest 0.7 percent increase over the current year, they are achieved through a one-cent tax rate increase, salary cuts for all City employees and a net six layoffs.It also involves a five cent tax overlay on commercial properties.

Shields said that an important component of the budget will be to “rebuild the foundation” for stable future budgets in the City by beginning the restoration of the City’s fund balance to within a range set by City policy guidelines. That will be decisive, he said, for the City’s ability to move on needed capital improvement projects, such as school and City Hall renovations.

In his budget, the decline in debt service obligations by $1,162,652 will be applied entirely to restoring the fund balance, which, along with revenue generated from a penny on the real estate tax rate, would bring that fund balance up from $1,300,000 to $1,641,142. One cent on the tax rate, a hike from $1.24 to $1.25 per $100 of assessed valuation of real estate, amounts to an average $108 increase in annual tax bills.

Shields’ budget limits growth in the City’s operations budget to .4 percent, but with hefty increases in pension and retirement health obligations, grew to 1.9 percent, and taking into account the School Board’s request for a transfer from the City, the overall growth rate is 0.7. “This budget is in keeping with the guidelines set out by the City Council last fall, and should represent no real surprises,” Shields said.

However, despite some improved economic conditions since the fall, such as the shift from a projected 2.5 percent decline in real estate assessments to a 1.8 percent increase, it remains a “sobering” budget because of its impact on City employees to achieve $1.2 million in spending reductions.

The six positions that will be eliminated include the following:

• At the Mary Riley Styles Public Library, two part-time permanent positions will be lost, and one library page, while one full time position will not be filled following an impending retirement.

• In the Office of Communications at City Hall will have one senior graphics designer position eliminated, with work to be partially outsourced.

• At Housing and Human Services, merging with Court Services, the director position will be dropped. Since 2009, this division has dropped 3.2 positions and will now be brought down to five total positions.

• In Recreation and Parks, the deputy director position will be eliminated, as the current person in that post will soon be elevated to director with the retirement of Howard Herman.

• The Department of Public Safety will lose a currently-vacant dispatcher position.

• The Public Works Department will lose its Geographic Information System (GIS) manager, with the work being outsourced.

In terms of salaries, City employees will have an additional 3.6 percent bite taken out of their salaries as the percentage they must pay for the pension and retirement funds is being increased from 1.6 to 5 percent, and police are having a 4.8 percent bite taken by being required to increase the amount they must contribute from 2.2 percent to 7 percent.

In an effort to partly ameliorate some of this salary cut, Shields is proposing an across-the-board 2 percent salary increase, amounting to an even $1,300 increase for every employee. Still, the net effect is that this will mark the third straight year that City employees will take a salary cut.

The cuts this time, however, are to offset a whopping 50 percent increase in the City’s obligation for its pension and retirement funds.

“It is critical for the City to invest in its workforce,” Shields said, noting that while neighboring Fairfax County is planning no salary increases, Arlington and Alexandria both are.

But among fixed obligations the City is liable for are its inter-jurisdictional contracts that are up 10 percent, mostly due to increase obligations to the Arlington Detention Center for the average 13 prisoners a year from Falls Church that are jailed there. “It’s not the number of prisoners, but it’s the cost per prisoner that is going up so much,” Shields said.

Services to F.C. citizens most acutely impacted with be those offered at the library, where overall hours open in a week will scale back from 64 to 55. It will open at 10 instead of 9 each day, and be open only in the afternoons in Wednesdays under Shields’ plan.

Also built into Shields’ budget is a reorganization at City Hall that eliminates some middle-management positions. It reverts City Hall back to the organizational structure that existed before then-City Manager Hector Rivera reorganized it in the late 1990s.

Shields said that the 1 cent increase in the real estate tax rate, combined with just under a 2 percent increase in overall real estate values will mean the average tax bill for a City resident will go up by 1.8 percent, or an average $108. This is better than the 4 cent rate increase that was projected last fall, he noted.

Shields said the 5 cent “commercial overlay” he’s proposing will go to targeted improvements in the City’s commercial corridors, including for pedestrian, streetscape, regional transit and public parking upgrades. The added tax on commercial property will generate $320,000, part of which can be leveraged and the rest used for “pay as you go” projects.

“We have a million cars a month that pass through Falls Church,” Shields said. “It’s important how well we present ourselves. We couldn’t hope for that kind of traffic on our website.” He noted that Arlington has a 12.5 cent overlay, Fairfax 10 cent and Alexandria a 12.5 cent commercial overlay. Shields said there will no changes in any other City tax rates.

How will it go for Falls Church going forward? “We’ve built in a lot of stability into our basic operating budget,” Shields said. “We’re prepared for a worst-case scenario by a taking an ‘ant-versus-grasshopper’ approach to rebuilding our fund balance. But I have to admit there is a lot of macro-economic uncertainty still out there.”

The City Council will not begin its work with this recommended budget, having until April 25, including a number of work sessions and public hearings, to massage it and come up with the final package, including a funding level for the City’s transfer to the schools, to go into effect on July 1. Its first work session is tonight.