F.C. Council Cuts Tax Rate by 3¢ for Fiscal Year ‘22

By a series of unanimous votes to adopt the Fiscal Year 2022 budget Monday night, the Falls Church City Council voted to lower the City’s real estate tax rate by 3.5 cents to $1.32 per $100 assessed valuation. It marked the first time since 2006 that the F.C. Council voted for a reduction in the tax rate.

The cut, significantly below the modest one cent reduction originally proposed by City Manager Wyatt Shields in March, was realized without the benefit of some significant help due from the federal government this summer. But, as Councilman Phil Duncan put it, it has come “from hard work and prudent management by the Council” and, most of all, the benefits of the City’s robust economic development that have begun to bring major yields from a number of large scale mixed use projects to the City’s tax base.With the new rate, the Council unanimously adopted its Fiscal Year 2022 budget of $106 million, including the full sum requested by the City Schools. Components include $100,000 to the City’s Affordable Housing Fund, a first, and the full amount requested by the City’s School Board in February.

The 3.5 cent tax rate reduction comes as other jurisdictions in the region are also cutting their rate, Alexandria by 2 cents, Loudoun County by 5.5 cents and Fairfax County by a penny. Despite this last year’s Covid-19 pandemic, revenues from sales at supermarkets and on the Internet remained strong. In Falls Church’s case, the Mill Creek group did not scale back its development of the 4.3 acre Founder’s Row project at W. Broad and N. West Streets. This is despite the fact that, as Shields told the News-Press in an interview Wednesday, a lot of local businesses, including restaurants, continue to struggle with revenues “way below what they used to be” prior to the pandemic.

While preferring an even deeper cut, Councilman Ross Litkenhous said he supported the cut to $1.32 because it signals three things to City taxpayers and the wider region. First, it shows the Council’s willingness to give back to the taxpayers; second, it demonstrates the use of voluntary concessions by major mixed use developers to relieve the City’s debt burden; and third, the benefits of robust economic development as promised to the community.

He noted that even though we’ve endured a pandemic along with investing in major renovations for two of the City’s five schools and the construction of a new, state-of-the-art high school, the growing vibrancy of the City proves the Council’s “plan is working.” He predicted more tax cuts to come, lowering the rate to as little as $1.20 in five years, and $1.10 after ten years.

“This is an incredible achievement,” Litkenhous said. “It is an embarrassment of riches, a beautifully-designed perfect storm.”

He added that “We will have the courage to repeat the accomplishments of this year, to make this the norm and not the exception.”

Vice Mayor Marybeth Connelly noted that this marked the third straight year that the City and its school system operated “in the spirit of revenue sharing,” with the schools staying within the guidance provided by the Council yet again.

Mayor David Tarter said that “economic development and careful planning” have been key, and that there is a lot more to come. He cited the ability of the City to provide the revenue asked for by the schools, the prospects for a new mega-Whole Foods coming downtown, the 10-acre project coming at the West End, the Founders Row project approaching completion at W. Broad and N. West Streets, all driven by the Council’s “careful, thoughtful process” that has “turned the corner on the tax rate.”

Council member Debbie Hiscott said, “I am happy to have made it through my first budget session on the Council. I am really pleased we were able to lower the tax rate while continuing to support excellent schools and City services.”      
Components of the $106 million FY2022 budget includes the real estate tax of $1.32 for every $100 of assessed value, a decrease of 3.5 cents from the previous year, the general government operating budget of $41.3 million, which is a 2.3 percent growth over the previous year, and the City schools budget at $43.9 million, or 2.5 percent growth over the previous year.

According to the City, the tax rate decrease was made possible by eliminating a contingency fund, eliminating $450,000 of capital projects, and using $460,000 of voluntary concession funding from the Founder’s Row development project to pay down part of the high school construction debt. The capital projects that were cut are expected to be eligible for federal grant funding in the coming year.

The Council also set a new stormwater utility billing rate of $18.72 per 200 square feet of impervious surface, an increase of two percent from the current rate. The increase would result in an approximate $5 increase for the average homeowner.

The stormwater utility rate increase is needed to address increased investment in repairs and maintenance of the City’s stormwater system.

The new budget allocates $100,000 to the Affordable Housing Fund which will be used to accelerate the City’s affordable housing programs, supplement the Amazon REACH grant funds that have been awarded to the City, and leverage future developer contributions to the fund.

In addition to approving the operating budget for FY2022, the City Council approved the FY2022-FY2027 Capital Improvements Plan (CIP) as recommended by the Planning Commission. This is the first CIP to undergo the Equity Lens Diagnostic Assessment of the investments that are in the six-year plan. The process will continue to be refined over time to guide future project planning efforts.

The CIP will meet many critical needs, including:

Transportation: $3.3 million; projects include West Falls Transportation Project, Park Avenue Great Streets Project, and North Washington and Columbia Intersection Improvements;

Stormwater: $8.5 million; six major flood mitigation projects prioritized by the Stormwater Task Force;

Sanitary Sewer: $986,000 for Arlington and Alexandria wastewater treatment plant upgrades;

Parks: $150,000; trails and playground equipment; Fellows Park master plan project

Public Safety: Police body worn camera video storage.