On April 19, 2011, I was among an enthusiastic crowd who attended President Obama’s first “whistle stop” tour in Annandale, Virginia in which he detailed his deficit reduction plan. It was an honor to join Mayor Baroukh, city staff, and a host of college students as we listened to the President’s plan to address what many acknowledge is an overwhelming political and economic challenge facing our nation.
The City’s Chief Financial Officer has provided data to Council, School Board, and residents which show a widening financial gap to fill. While scenarios aren’t predictions, they are critical to sound decision making. Mr. LaCondre’s numbers are sobering. At our current spending, even with a 2% revenue growth projected and all expenses flat, FY13 projects a $1MM gap. Unless there is a serious attempt to reign in spending, and at the same time look hard at available revenue, the gaps will grow larger in FY14 and beyond.
The President spoke of programs whose financial integrity could not be compromised, and needs which must be met and are expected to be met by government. Here in Falls Church, these same services must be examined. Citizens and their elected officials must continue to make hard decisions about the largest expense drivers in this City’s budget: schools and public safety.
I recall the President’s words as I think through the work that City Council, staff, and the School Board have undertaken in this FY 2012 budget process. This budget is the first of many budgets to be formulated over the next several years constructed under a new set of guidelines established last year and informed by valued citizen input. The budget process has also revealed sharp differences within Council as we seek to address the future sustainability of Falls Church.
This year’s budget was affected by requirements born of past decisions and past practices. Citizens have demanded, and Council has put in place, internal controls to assure that these surprises will not again be part of the budget or governance process. However, I remain deeply concerned that this year’s approved budget falls short of creating a sustainable and equitable financial path forward.
I remain deeply concerned that this year’s approved budget falls short of creating a sustainable and equitable financial path forward.
A budget based primarily on anticipated needs and desire (“what do we want”) is not sustainable. The reality is that revenue available to Falls Church is finite and largely depends on revenues generated by real estate property tax. While there are important efforts underway to diversify our revenue base, especially for commercial development, those opportunities will not come on line in any meaningful way for the next three to four years.
Future budgets must be based on predictable revenue streams. While all efforts need to be made to expand economic opportunities, our budgets need a solid base of real, likely income. We cannot continue to drive expenses upwards and expect that sheer optimism is going to cover those costs that will grow irrespective of the economic health of the city (such as pension costs). The regrettable increase in personal property taxes, voted at the April 25 Council meeting, is a direct consequence of expenses which, unless addressed in a deliberate and equitable manner, will have drastic consequences in FY13 and beyond. To maintain high quality city services and a top quality educational system, the tax rate will need to increase. At current levels our revenue-generating capability is inadequate to provide both. That being said, there is a very real point at which people cannot, or will not pay the price to live in Falls Church.
A budget is a relatively simple machine with only the basic sorts of levers to pull, notably income and expense. What becomes complex is how budget decisions reflect and enhance (or not) the City’s values and stability. The levers are easy to pull; it’s what happens after the machine is set in motion that’s important.
In all of these budget discussions, the focus must be on making those decisions which leave the City’s core values and services intact. Members of the School Board have asked for a process which jettisons unhelpful rhetoric and seeks a long-term solution to the annual budget debate. I look forward to working with School Board leadership in crafting new ways to assure maximum flexibility and planning for schools and city administration.
Finally, the President spoke of budget deliberations that needed to be fair, just, and equitable. Numbers are sterile and have no moral compass. It is what we as citizens bring to bear on those numbers that define us as a vibrant and sustainable City. Through our town meeting process, conversations in a range of public fora, conversations with neighbors, and advice to City Council, I ask that we redouble our efforts to bring vision and ingenuity to the table and build our future on sustainable footing.