Deepest Rate Cut In Region By Far

This Monday, May 2, the Falls Church City Council will vote to formally adopt the City’s Fiscal Year 2023 budget that will function for the operations of the City and its school for the year beginning this July 1.

This go-around, the Council is expected to have no difficulty quickly reaching a consensus on what should be a unanimous vote, given that the “mark up” of the proposed $112 million budget, which will increase if adopted according to plan over the current budget by 7.58 percent, with no visible dissent just this past Monday.

Unlike the City’s regional neighbors, the Council is poised to slash nine cents off its real estate tax rate, from $1.32 to $1.23 per $100 of assessed valuation.

That is in sharp contrast to Arlington, whose board last week voted to freeze its rate at its current level, Fairfax County, which will soon vote for a slight three cent reduction, and Alexandria, which is also poised to freeze its rate at its current level.

Normally, a much tinier jurisdiction, which is what Falls Church is in comparison to these neighbors, suffers from costlier burdens determined by scale, so for Falls Church to be making such a deep cut in its rate is little short of astounding. And it is being accomplished with the full funding of the School Board’s transfer request, significant wage and salary increases for both school and City employees, and the management of the debt on the construction of its new $120 million high school, and renovations and expansions of its public library and City Hall.

The result has to do with the impact on City coffers of a continuing boom of commercial and mixed use development, which will be marked by an important ground breaking at the City’s central intersection of Broad and Washington by the Insight Property Group’s of its 2.7 acre project that will include a 55,000 square foot Whole Foods market (see story, elsewhere this issue), even as a spate of other large scale projects are about to begin or be completed.

The commercial boom Falls Church has invited over the past two decades was given as the main reason the Council here has dashed the recommendation of City Manager Wyatt Shields to add a five-cent “commercial and industrial” tax as a surcharge on business properties in the City.

The tax, which the City would have levied for the first time since it was authorized by the General Assembly in 2013, even as all other neighboring jurisdictions have already applied it.

The measure, which would have added $420,000 in tax revenues to the budget, was deemed not worth it as the City continues to push aggressive economic development.

In a letter to the Council opposing the tax from the board of directors of the Falls Church Chamber of Commerce sent last week, the board echoed the sentiments of a number of Council members by saying, “Great strides have been made to improve the City’s business-friendly reputation in recent years, and the Chamber fears this proposal will place the City at a competitive disadvantage in attracting new business and retaining those existing at this time…the Chamber is concerned that the cumulative impact of this proposed tax, coupled with other existing imbalances in burdens, such as BPOL rates, will cripple the City’s ability to compete on a level playing field in attracting and retaining businesses.”

It concluded, “It is our position that this is not the time to bring new taxes into a realm that has faced significant challenges during the pandemic and attempts to make up their losses or simply stabilize.”

At Monday’s meeting it took significant energy from Council member Phil Duncan to achieve Council consensus to lop off a final half-cent from the real estate rate and bring it to an even $1.23. Even at this lower rate, it was noted however that the average tax bill will go up by $600 this year.

That lower rate was incorporated by Vice Mayor Letty Hardi in her summary remarks that included some earmarked funding for road paving and sidewalk improvements, additional tax relief for the elderly and infirm, affordable housing, some refugee resettlement funds and more that were then used to others on the Council as a deft summarization of how to craft the budget that will be voted on this Monday.

In addition to lowering the real estate rate against the 12 percent explosion of assessments released earlier this spring, the Council also moved to lower the car tax rate, given the unseasonal boom in car values at this moment, expanded eligibility for tax relief to seniors, and to eschew the commercial and industrial tax altogether.

Yet the schools will be getting every dime they requested, and robust wage and salary increases are built into both the school and City budgets.

With all this, it did not go unnoticed that the City has been advised to keep a whopping some of almost $40 million in sum form of reserve, including an unassigned fund balance and contingency fund, a huge number against an annual operating budget of just $112 million. This is in accordance with the recommendation of the City’s financial advisors, the Davenport group.

Mayor David Tarter seemed to think it was a good idea to keep so much in reserve. This is “prudent” for now, he said. “We have to be careful because a lot of money that’s being counted on has not yet actually been collected, and moreover, there may be a recession on the horizon,” he noted.

To that point, the Council approved a request from Shields Monday that the closing date on a payment of $4.5 million to the City by the West Falls Gateway Partners, be delayed for two weeks from this Friday to May 13.

The vote on the budget mark up this Monday was unanimous except for an abstention by Councilman David Snyder.