News

F.C. Council Mulls Bigger Tax Hike, Boosting Pay for City Employees

Countdown to FY12 Budget Deadline Is Now Underway

As the hour approached midnight Tuesday, the Falls Church City Council completed an exhaustive work session on the budget that set the stage for what it hopes will be completed at a definitive budget work session tonight. While the Council agreed that some effort be made to offset the net loss in take home pay for City employees under the current plan, it appeared the added compensation will be in the form of a one-time bonus and not at a level to equal the current year’s pay.

While the final vote on the budget will not come until April 25, and a town hall meeting has been set for this Saturday morning to receive more citizen input, the Council is angled toward tying most of its budget work tonight.

At Tuesday’s session, a number of areas of consensus among Council members were achieved, with final details in most cases awaiting further crunching of numbers based on some of those agreed-to matters.

The general agreements included the following:

• Improvements to City Hall be limited to “critical” needs and not to new construction,

• Some seriously-needed park maintenance improvements be funded, but not for new projects,

• City Manager Wyatt Shields’ recommendation to impose a five-cent commercial property tax overlay be ditched this year, pending more work with the City’s business community to arrive at some specific economic development-related uses for funds derived from such an overlay,

• Shields’ proposal for cuts in library services be dropped and funding be maintained at the current level,

• Increases in auto decal fees and the personal property tax rate by four percent provide added revenues (he claimed that the effect of a personal property increase on average city businesses would be $40 a year),

• City employees be compensated significantly above the level proposed by Shields, probably by converting Shields’ plan for a two-percent salary increase into a $1,300 bonus that would be supplemented up to another $700,

• Increase the real estate tax rate above the level of $1.25 (per $100 assessed valuation) proposed by Shields last month, but shy of the $1.28 he’s now proposing.

Monday night, Shields shocked tonight’s F.C. City Council meeting by announcing halfway through that he now recommends increasing the real estate tax rate not a single penny (from $1.24 to $1.25 per $100 assessed valuation) as he previously proposed, but now by four cents, from $1.24 to $1.28.

While Shields’ proposal is designed to restore the City’s fund balance to 12 percent and to even out expected expenditure obligations over the next three years, with a particular spike due in Fiscal Year 2013, it was met with solid opposition from Vice Mayor David Snyder in both Monday’s and Tuesday’s Council budget meetings.

“I want to put down a marker. There is no way I am going to $1.28,” Snyder said, and even more especially if the personal property tax hike goes into effect.

The sudden development set the stage for a budget work session of the Council tonight at City Hall, when the details of many of these matters will be hashed out. The Council hopes by this Thursday to set the initial parameters for the budget it is tasked to finally adopt in two weeks, on April 25.

Shields said his new proposal to increase the real estate tax rate by four, and not one, cents is based not on the needs of the coming Fiscal Year 2012 budget, but the major storm on the horizon that is Fiscal Year 2013. In that year, funds that the schools are receiving this coming year enabling them to reduce their demand on the City to only 76 percent of their total will evaporate, requiring a return to traditional funding levels from the City of more like 82 percent of its budget.

Then there is the uncertainty about the requirements of the Virginia Retirement System (VRS) to maintain the pension funds for school employees.

Mayor Nader Baroukh spoke sympathetically about Shields’ new proposal, based on projected numbers for the “outer years,” and said that raising the tax rate by four cents this year might “build in some cushioning to smooth out increases” in years to come. “I am open to going above $1.25,” he said.

The City Council learned that Tuesday morning, the board of the Falls Church Chamber of Commerce voted unanimously to forward a letter to the Council adamantly opposing the five cent commercial tax overlay.

The Chamber letter, in its words, “strongly urges the F.C. City Council to drop consideration of imposing a commercial transportation tax overlay (CTTO)” pending development of specific proposals for which the money would be used, state legislative requirements of a CTTO for matching funds, and an overall review of City taxes, including personal property and BPOL taxes, on City businesses.

The letter called the CTTO “unnecessarily burdensome on City businesses,” noting the “current combined tax burden on Falls Church businesses is already straining many of them to the breaking point in this economic climate.”

It concluded, “It is our belief that allowing businesses to retain more of their revenues will best promote business growth, development, and retention in the City, which will both strengthen our business community and ultimately increse the City’s revenue from the commercial tax base. We believe that imposing an additional business tax now would in fact create an opposite result.”
Also this week, the Council learned the City’s Public Works Department is proposing an increase in a number of fees related to solid waste and yard waste disposal. The latter caused Mayor Baroukh to comment that such fee increases could lead to “mass protests” by citizens if not explained carefully and thoroughly.

What’s needed, he said in comments echoed by Snyder, is a public education campaign that shows proper use of the new “single stream recycling” capability of the City, in which almost any household waste can be placed in a recycling bin now, can minimize citizen liability to increased waste disposal costs. However, Public Works Chief Bill Hicks noted that the City will be able to defer over 40 percent of the cost of its waste collections by increasing rates for yard waste from 50 cents per 30 gallon bag to $1, for special bulk rate collections from $65 per two cubic yards to $75, for major household appliance pickups from $25 per item to $30 and by imposing a new “excess refuse fee” of $1 per 30 gallon bag.