As expected, Falls Church City Manager Wyatt Shields Monday night presented his recommended Fiscal Year 2020 operating budget to the F.C. City Council that comes in just shy of $100 million. The budget marks a 7 percent increase over the current year, but is balanced with no tax rate changes, up or down, including no real estate tax changes. The increase to the $99.3 million budget, which the City Council now has until April 22 to modify or adopt, is funded with economic development and a better-than-expected 3.4 percent increase in assessed property values.
The biggest cause for the growth in the budget is in debt service, again as expected, with a 46.5 percent increase as the City issues the $120 million in bonds to build a new George Mason High School, construction of which is slated to begin this June. The parameters of the budget overall are in keeping with the best-case expectations of the City’s ambitious undertaking to build a new state-of-the-art high school and pay for it with proceeds from the long-term lease and dense economic development of 10.3 acres on the current high school site. If the plan continues according to expectations, in fact, the real estate tax rate in the City is projected to drop significantly in the next few years.
Against the new debt, the budget is buoyed by an initial payment of $6.5 million on a 99-year land lease on 10.3 acres of the high school site dedicated for dense economic development and the use of $2.875 million in City capital reserves. Eventually the lease will bring over $40 million to the City.
Shields’ proposed budget is expected to sail through in what should be one of the smoothest budget deliberations in decades, barring any unexpected developments. It fully funds the F.C. School Board’s request for a transfer of $43,383,277 and all employees on both the City side and schools will receive salary increases of 3 percent and up.
On the City side, there will be merit increases of 3.5 percent and for the police there will be 3 percent plus a 0.5 percent cost-of-living adjustment (COLA).
For the schools, whose budget request was presented to the Council Monday by new board chair Erin Gill, “step” increases of 2.95 percent will be augmented by a 1 percent COLA. It also calls for the elimination of four classroom positions, but in a manner that will not impact class sizes.
Shields’ budget also calls for the hiring of an additional police officer to accommodate population growth in the City (which has grown by a whopping 30 percent in less than a decade). It also calls for the hiring of two building inspectors and increasing the hours of the fire safety inspector to handle the significant economic development efforts in the works, and the reinstatement of a City human resources director.
Overall, if adopted, Shields’ budget will build the City’s employee base back to the level of 204 that it last had a decade ago prior to the impact of the Great Recession, which required the City to shrink its employee base to 179 in 2012. But the current level would still be supporting a City 30 percent more populous than a decade ago.
The Council was clearly pleased at Shields’ proposed budget unveiled Monday night, noting that the current real estate tax rate of $1.355 per $100 of assessed valuation is par for the course in the region, with commercial real estate tax rates in neighboring Fairfax County actually topping $1.47 with overlay taxes then added into its base rate. For Falls Church this is accomplished despite an increase in its debt service to 14 percent of the total operating budget, up from eight percent currently.
Another big impact item in the budget is the City’s annual obligation to WMATA, the Washington Metropolitan Area Transportation Alliance. The annual “bill” from WMATA for the City’s share of the regional rail and bus program has come in with a whopping $510,995 increase, but Shields’ budget stipulates that $400,000, the limit on the City’s obligation for annual growth, is included in the budget. The City’s contribution to the Northern Virginia Transportation Authority will make up the $110,995 difference, a bit of a technicality as City taxes will still pay for all of it.
The budget includes about $400,000 in revenues coming from higher-than-expected real estate assessments that came to light last month. Split between the City and the schools. Shields told the News-Press that the City’s added money was applied to adding a new police officer and some transportation improvements. The schools’ money was put into a reserve. The school budget was also buoyed by a significant annual savings coming from the relocation of the system’s central office from its current 800 West Broad location to a new S. Washington Street site. That savings included a reported rent-free move-in incentive.
With no changes in the tax rate, the median Falls Church home value of $695,500, increasing by an average of 2.7 percent in value according to the City assessor, the tax bill will rise by an average of $252 to $9,424.
“This is a great budget,” said Council member Dan Sze. “I anticipate a very smooth process.”
Council members Letty Hardi and Phil Duncan noted that there was not enough money devoted to addressing the issue of affordable and workforce housing. Duncan said the City should begin funding an ability to keep The Fields, one of its only affordable housing sites, affordable when its current agreement with the City lapses in the next few years.
Hardi also questioned the City’s cost for its recycling program.
Councilman Ross Litkenhous said that if there was not actual revenue sharing between the City and the schools, it was there in spirit this time. Councilman David Snyder called Monday “a very good beginning,” and said the City should continue to fight to bring down the cost of its share for WMATA, which with the latest increase amounts to $1.8 million annually.
“Economic development is the underlying story that makes this budget work,” Duncan said, cautioning that there are still unknowns, such as the cost overruns that are bedeviling the proposed library expansion project. Mayor David Tarter underscored the night’s positive mood by saying, “If a budget can be pleasant, this is one,” but adding “there is a lot of work ahead.”
The schedule going forward calls for a public town hall on the budget a week from Sunday, March 24, at 2 p.m. in the Community Center. A first reading including a preliminary tax rate ordinance on March 25, a public hearing on April 8, and a final budget adoption on April 22.