Adding 1¢ to Fund Schools Will Cost Average $64 More

The difference between a zero tax rate growth for the City of Falls Church and the one-cent increase voted by the Falls Church City Council Monday night (up to $1.315 per $100 assessed valuation) amounts to $64 dollars for the median home tax bill, City Manager Wyatt Shields told the City Council before its vote.

Even with no tax rate increase, taxes on the median value home, which is $643,900, went up an average of $354 due to rises in assessments. But the one extra penny on the tax rate added only $64.

In his presentation Monday, Shields said the budget recommendations he introduced on March 9 called for a 1.5 percent increase in general government operations and a 5.3 percent increase in the School Board’s request, and an overall $1.4 million unfunded amount, requiring a 4-cent real estate tax rate increase.

But then “gap closing” measures were developed during the ensuing two months of deliberations, including a savings that was discovered of $597,881 in health care plan costs, yields from bond proceeds higher than expected ($305,000), limiting the City’s contribution to WMATA to 30 percent (due in part to low gas prices), putting $15 million of the City’s active accounts into the higher-yielding Virginia Investment Pool, increasing the Treasurer’s Office debt collection efforts with the retention of a formerly temporary specialist, and the shifting of two items from the Schools’ transfer request ($100,000 for a campus planning study, and $90,000 from cash purchase to the debt financing of a new bus).

Added to the budget was $585,000 through debt financing for the replacement of police radios, and other short, five-year term bonding totaling $1,104,000 at an annual debt service cost of $260,000, and long, 20-year bonding for $3,700,000 (including $1.4 million for transportation improvements and $2 million for a new HVAC system for the Thomas Jefferson Elementary School) with projected annual costs of $340,000 a year.

While the new budget would add debt service costs and residual WMATA costs of $1,580,000 to the following fiscal year’s budget, reductions in City pension costs, the new annual $640,000 yield from investing some of the City’s water sale funds into its pension plans and the impact of new development projects is expected to bring in $2,350,170, or a net positive impact of $770,170.

Unfunded needs in the current budget to be considered next year total almost $3 million, Shields noted, including money for facilities maintenance, fleet replacement, paving and sidewalk repairs and neighborhood traffic calming.

Overall, with its new $1.315 tax rate, Shields noted, the City of Falls Church has the second lowest tax rate for any smaller jurisdiction in the region (led by Manassas Park at $1.65, with only Fairfax City lower than Falls Church). A scatter graph Shields presented comparing tax rates and population levels confirmed that the Falls Church rate will remain among the lowest for smaller-sized jurisdictions.

With all this, he said, the City retains its AAA, AAA and Aa+ credit ratings on Wall Street because of its fund balance level, its strong capital reserves, its fully funded pensions, its significant new economic development and its record of strong financial management by the City Council and staff.