We are appreciative of Falls Church City Councilman Ira Kaylin’s efforts to bring Falls Church into the big wide world, or vice versa, cautioning as he often does about the as-yet-very-unsettled state or the global economy and potentially catastrophic consequences of some bad turns in Europe or elsewhere on our local government.
He is also right to point to problems with the Virginia Retirement Fund in Richmond and the ageless propensity of Richmond politicians to push their problems onto localities. In our view, citizens should pay attention to Mr. Kaylin when he waxes on such subjects, with matters of banking, finance and investment being the subjects of his professional life for many years.
However important his observations and valid concerns, though, we do not share his approach to insulating the City from the possibilities of choppy waters ahead. He takes the banker’s approach, which is to squirrel away as much money as possible, pretty much no matter what.
But that’s not necessarily the wisest way for a government, as opposed to a bank, to operate. While things like adequate “rainy day funds,” plenty of dry powder in the City’s borrowing capacity and other prudent measures are always important, and contribute to top drawer ratings from New York credit score agencies that help keep borrowing rates low, it gets problematic when stashing money away is done at the expense of the legitimate, on-going needs of running the store.
There is one overriding power that the government has to insulate it from crises which, if it has otherwise been responsible in executing the public’s trust, it can always turn to if it must. That is, the power to tax. So, if some of Mr. Kaylin’s gloomiest forecasts were to materialize, and the City came up cash poor, then it could always make up the difference with an emergency tax increase.
So, Mr. Kaylin’s proposal aims minimizing future tax rate increases by withholding necessary government and school program spending now.
In recent years, the Great Recession’s impact and the cost of some major legal setbacks to the City’s operating policy for its water system left the City with almost nothing in the bank at one point. The tax rate had to jump considerably in the midst of all this to keep an even keel, and the City and its schools made it through admirably, maintaining the integrity of their basic services with considerable belt-tightening and delayed spending.
Now, the recent economic rebound left the City at the end of the last fiscal year with upwards of $3 million more than projected. Mr. Kaylin wants to salt almost all that away for a rainy tomorrow. But the stiff sacrifices made in the core capacities of the school system – the upgrade needs of its technology components – during the tough times are, justifiably, first in line for attention now. The remainder of the surplus should be rebated to taxpayers.