Following on last week’s joint Falls Church City Council and School Board work session to mull early projections for the coming fiscal year budget, the Council met this Monday and formally adopted its “guidance” for the coming annual budget cycle. Not surprisingly, it called for no tax rate increase, to be achieved by constraining new spending to the two percent revenue growth that is projected.
As reported earlier, the tax rate will not be impacted going forward by the cost of constructing a new high school and renovating City Hall and the library. The heavy yields anticipated from the dense economic development of 10.3 acres at the Haycock and W. Broad intersection (location of the current George Mason High School) is the reason for that.
But holding the operating budgets of the school and City to a low growth projected for revenues in the Fiscal Year 2020 time frame will present the biggest challenge for the school system, as Superintendent Peter Noonan spelled out to the School Board this Tuesday night (see separate story).
The two-percent growth projection comes as three major new mixed-use projects moving forward in the City — the West End, Founders Row and Broad at Washington projects — will not yet be generating significant revenue.
There is also a growing nervousness expressed by the Council on the ability of growth in the wider economy to support the modest growth projections for the City. Chief Financial Officer Kiran Bawa and at least one Council member, Ross Litkenhous, have sounded cautionary notes about a new recessionary cycle hitting the national and global economies, throwing some cold water on the optimism generated by Amazon’s announcement of the location of its HQ2 campus, with its projected 25,000 new well-paying jobs just a few miles down the road in Crystal City.
Other Northern Virginia jurisdictions are also expecting the same level of low growth in their coming periods, as well.
One of the biggest constraints on the budget will be the anticipated $400,000 bill due to WMATA, much higher than the City was counting on, according to F.C. City Manager Wyatt Shields. “This number has come as a big surprise to us,” Shields told the Council. It was promised that growth in their request would be limited to three percent, but this is an 11.5 percent increase and will add the equivalent of a full penny on the real estate tax rate. As a result, it will have a serious impact on our educational system and general government, both.”
Other expense drivers in the City operating budget include $200,000 for health insurance, a one-percent salary increase for all City employees at $200,000 and added costs for the retirement fund, fire station upgrades and the Community Services Board (CSB) yet to be determined.
Last year, the real estate tax rate was increased by 2.5 cents (per $100 of assessed valuation) to $1.355. The rate has increased by 8.5 cents since 2011, and combined with modest real estate assessment growth over that time frame, the average tax bill for a City residence (the average home being valued at $676,000) has grown from $6,600 to $9,100.
The Council is expected to have in its hands the new annual real estate assessments by the end of January.
F.C. Vice Mayor Marybeth Connelly, who chairs the Council’s Budget Finance Committee, said she was “disappointed” that after years of trying, there is still no revenue sharing agreement between the Council and School Board that would eliminate a lot of budget tensions.
But Councilman Phil Duncan noted that while such an agreement would be helpful, it would not automatically prevent the inevitable knocking of heads over competing funding needs.
Councilman David Snyder said that “over the years, starting with budget guidance has worked.” He said that while he will support school funding, as he has in the past, “to start with a constrained guidance and building from there” has worked.
Council member Letty Hardi reiterated her preference for including $200,000 in the budget for traffic calming, and she also expressed concern for cuts in funding from the state for the CSB.
Shields intimated that he’ll be proposing a cost-of-living salary adjustment because the City was shocked by the loss of at least three highly qualified employees due to better salary offers from neighboring jurisdictions.
Shields told the Council that work on a sidewalk “missing link” on N. Virginia Ave. will be completed by the end of January. It will be for a five-foot width, handled as a “spot” improvement not needing an engineering study and that there are a number of other “missing link” sidewalk needs around the City that will be addressed similarly.
He said a joint infrastructure development team is being gathered to study the issues of a structured parking lot in the planned “good neighbor” zone between the new high school and economic development portion of the school site. If the decision is to go ahead with the lot, the EYA, PN Hoffman and Regency group will pay the City an extra $5.3 million to build it for shared use by the school and the adjacent businesses and residences in the 10.3 acre portion.
Shields reminded the Council of the ninth in the series of public Sunday Series forums on the West End project this Sunday, Dec. 16, at 2 p.m. at the Community Center.
Representatives of the economic development plan will be there to lay out their plans to date.