The adoption of a new fiscal policy for the City of Falls Church designed to enable the City Council to begin tacking on five cents per year on the real estate tax rate this coming year for the next three years was delayed Monday night when the complexities of the proposed policy began to overwhelm Council members. It will come back for consideration the next time the Council meets in January.
The plan is designed to provide the Council with the “policy” justification for having City taxpayers begin paying for the most expensive ($115 million) option for construction of a new high school at least three years prior to any actual construction, and that would also be prior to any citizen approval of a bond referendum for such an undertaking.
If approved the policy would enable the introduction of a five-cent (per $100 of assessed valuation) real estate tax increase for each of the next three years – for a total tax hike of 15 cents over three years – to build a reserve of $6 million which would be used to sit idly in the City’s unassigned fund balance solely for the purpose of convincing the New York bond markets that lending the $115 million for the new high school (should the voters approve the bond sale) will be a safe bet.
These rate hikes would be on top of an additional 2.5 cents that the City Hall renovation will cost taxpayers and the 1.5 cents that the library renovation, approved in a referendum last month, will cost, and that is before any consideration of additional needs of the City or its school system, with its exploding enrollment growth, are taken into account.
That adds up to a nine-cent rate increase above the current tax rate of $1.315 per $100 of assessed real estate valuation without any added resources to handle the City’s or schools’ operating costs. The Council last spring slashed the schools’ funding request by almost $1 million in a year when enrollment growth was less than the more robust 5.6 percent growth this year.
At Monday’s meeting, Councilman Dan Sze was the only one of the seven members (Councilman David Snyder was absent) who suggested that maybe some way of calculating how economic development might offset these projected tax rate hikes be factored in.
Councilman Phil Duncan echoed the sentiment when the Council considered its next item, a measure offering budget guidance to the city manager for the upcoming budget cycle. Council member Karen Oliver said she couldn’t see how such an inclusion was relevant, but voted yes with the majority, anyway.
It was Vice Mayor Marybeth Connelly who proposed delaying the vote on the fiscal policy revisions, even though Oliver cautioned that by doing so, the Council might not have time to include the new policy guidelines in the upcoming Fiscal Year 2018 budget that will be developed next spring.
The Council is currently lacking the benefit of the chief financial officer with the departure of Richard LaCondre last month, limiting its advisory options.
Oliver, who chairs the Council’s Budget and Finance Committee that worked over recent months to devise the plan, wrote in a commentary last week that “The City faces a fiscal winter. We have enormous capital investment needs in the next 10 years, and our current capital reserves are not enough to cover all of it. The needs for school facilities, as well as investments in the library, city hall and our transportation network are enormous. Like the ant (in the “Ant and the Grasshopper” fable—ed.) we have already started saving, but we need to do much more.”
But Robert LaJeunesse, a former City Council candidate who has often spoken before the Council on budget matters, challenged Oliver’s allusion to the fable, saying the choice is to either save or build. “Saving and borrowing at the same time is not good fiscal policy,” he cautioned, noting that the bond raters “recognize that the City can pay whether or not its unassigned fund balance is set higher.”
He asked why the City’s debt load is held at half the level allowed by state law, and said, “Too many taxes on one generation breaks the social contract.”
Sze said that “the public thinks that we already pay too much,” so “we need more time to sort this out.” He said that the tax rate “needs to have a revenue offset from economic development.”
In the Council’s budget guidance to the city manager adopted Monday, it noted that the capital improvement demands underscore the Council’s intention “to maintain appropriate discipline on operating budgets for general governments and schools,” that “reflects a concern about the capacity of taxpayers to afford both operating budgets that exceed revenues from economic growth as well as future debt service.”
At the same time, it calls for the manager to “present a budget that provides a level of employee compensation that is competitive within the regional labor market and sustainable over the long term, and that funds the City pension plan.”
Also, “the budget should provide options for funding improvements that will further the progress in making the City’s business districts vibrant, attractive and walkable, and options for funding the neighborhood traffic calming program on a sustained basis.”