Local Commentary

Editorial: Channeling Wall Street Usury

Under that giant pile of drapery in the corner is the proverbial “elephant in the room.” It is that concerning which, in modern society, it is not polite to speak.

But for taxpayers and policy makers, alike, in the City of Falls Church, it is that which has otherwise affable and friendly people at each others’ throats fighting over seemingly scarce resources to pay for the City’s operating expenses and its schools in the coming fiscal year.

What is this stinking elephant of which we speak? It is the City’s ridiculous policy of stuffing almost $15 million of taxpayer dollars, out of a total annual budget of $87 million, or 17 percent of that, in a pillow and hiding it under the bed. It goes by the name of “unassigned fund balance.”

Other jurisdictions do not have this, at least to this level. The fund balance, also known as “rainy day fund,” for neighboring Fairfax County, for example, is five percent of annual operating expenses.

When Falls Church in the 1990s first adopted a fund balance policy, the City Council was advised that having one month’s worth of operating expenses in the bank for emergencies was prudent. So a fund balance policy was adopted with a minimum of eight percent of annual operating costs, and an upper limit of 12 percent.

That meant then that a policy of going above 12 percent was imprudent, a squandering, or squirreling away, of taxpayer money without justification.

That changed in the last decade, when some uber-conservative policies came into play and the policy was adjusted making 12 percent the low end of an acceptable policy range, and 17 percent the high end. Still, there was a high end established on the notion that holding above 17 percent was in violation of the public interest.

But now, while the fund balance grew above 20 percent in recent years, the current budget calls for keeping it at the high end limit of 17 percent.

Here’s what’s at stake with citizens’ tax dollars: if the fund balance was at 12 percent (within the official policy range), instead of $14.8 million held in the bank, there would be only $10.4 million, or a savings of $4.4 million. If that $4.4 million was returned to taxpayers, the real estate tax rate would go down by 13 cents overnight.

If only one percent was taken off the high end of 17 percent, $870,000 could be put to use to provide for vital City and School services that are at risk of being cut.

The Council is being told that Wall Street will not look kindly on lowering the fund balance. Really? This is damnable usury. Wall Street is demanding that 17 percent of citizen tax dollars be effectively extorted and held in reserve to assuage its concern for lending the City money, even though by far the best source of City collateral is its legal right to tax.