At its annual day-long strategic planning retreat today, the Falls Church City Council heard a report from the City’s Chief Financial Officer Richard LaCondre projecting a “best case scenario” for the coming year, and five years out, of 2 percent annual revenue growth that would require an increase for the current real estate tax rate from $1.27 per $100 assessed valuation to $1.30 next spring and to $1.37 in four years.

LaCondre‘s projections showed a much harsher scenario for the City with zero growth or negative growth. But he said he considered a 2 percent growth his “best case” despite the fact it grew 4 percent for the City in the last year, exceeding zero-growth projections used to build the FY12 and FY13 budgets that led to a $3.3 million surplus. (It came to light at today’s session that the City, in addition to $3.3 million in surplus revenue, also underspent in its FY12 fiscal year by $2.7 million, meaning there is a net surplus of $6 million. This number has not been publicly discussed in the lengthy debate in the past month over using some of the surplus to fund urgent technology upgrade needs in the Falls Church public schools).

LaCondre cited a decline in the rate of increase of meals and sales tax revenues as part of his justification for a low projected growth estimate. In addition, City Manager Wyatt Shields told the Council that while some new businesses are coming on line in the current fiscal year that will add some revenue, but “nothing real big” as occurred in the early 2000s, at least not until the following year, when some plans for $50-$75 million projects “will move the needle.”

It was noted that, with the current surplus deployed to fund balance, that fund balance (money sitting in a bank account) has ballooned to 23 percent of total annual expenditures. However, according to City policy, any amount higher than the City’s target of 17 percent for fund balance will be redeployed to use in drawing down capital expenditure debt.

Another concern, expressed by Councilman Ira Kaylin, dealt with the unknown future of the City’s obligation to the Virginia Retirement Fund. However, it was noted that the problem, in the hands of Richmond legislators, will continue to “be kicked down the road” until some “day of reckoning” that even Kaylin conceded may by 10 to 15 years down the road.

Today’s retreat was held at the Technology Learning Center on the George Mason High School campus. Representatives of the Schools and the Planning Commission were also present to observe the discussion.