While revenue growth is projected to be a solid 4.3 percent in the coming year, expenses are rising at a far faster rate, Falls Church’s City Manager Wyatt Shields reported to a joint work session of the F.C. City Council and School Board Monday night at City Hall.
Greater expenses will be coming mainly in the areas of salaries and benefits needed to retain and develop the City’s workforce and that of its schools, Shields and F.C. Public Schools Superintendent Dr. Peter Noonan reported.
Overall, pressures that are causing the higher rates of expenditures are all coming from outside the jurisdiction, associated with global economic phenomena such as rising inflation and interest rates and the impact of those on supply chain issues, as well as the post-pandemic competitive pressures to meet critical wage hike demands of employees at all levels.In summary, Shields told the meeting, an annual gathering to set the tone for the next annual budget cycle, at this point the City and its schools can expect new revenues in the ballpark of $3.7 million, a 4.2 percent increase, but new expenditures of $9.4 million for a net gap of $5.7 million.
In a jurisdiction with an annual budget of just over $100 million in total, the gap is hardly an insignificant number.
It will be the task of the City Council at its last business meeting of 2022 this coming Monday to issue its “guidance” to all the City departments and schools on how much they can request to balance the coming year’s budget without a tax rate increase.
Once that “guidance” is given, then it will be up to the schools’ superintendent, Dr. Peter Noonan, to present a draft budget to his school board by January 10 for the board to consider and to adopt a proposed budget by the end of February, for the City Planning Commission to recommend a budget for capital improvements by March 1, and for the City Manager to fold both City and school board recommendations into a proposed Fiscal Year 2024 budget by March 27.
The City Council will then use all that to fashion its budget for the fiscal year beginning next July 1 with whatever programs, cuts and/or tax increases it will deem appropriate to come up with a balanced budget plan for final adoption by May 8, 2023.
Closing the projected $5,7 million gap will be no easy task minus a tax rate increase. Pressure to avoid a rate increase (if not to propose a cut) will be exacerbated by another expected healthy jump in residential real estate values, which the City Assessor will provide to every citizen by mid February.
Shields told the News-Press this week that the squeeze in the coming fiscal year is a temporary one, as revenues from the City’s two major new development projects now under construction, the 10-acre West End project and the Broad and Washington project, will begin weighing in with heavy revenue contributions to the City in about 12 to 18 months, not in time to impact the coming year’s fiscal picture, but those following it.
In addition, other big projects already approved and in the pipeline, including the Founders Row 2 at W. Broad and S. West St., and the One City Center project that will rise over the existing Ireland’s Four Provinces at Broad and Washington, are due to follow shortly.
An affable gathering of all members of the Falls Church School Board and City Council, albeit with one checking in remotely from Paris, France (David Snyder), ate together with food provided by a few local eateries in the long hallway of the new F.C. City Hall and its adjacent Dogwood meeting space Monday night.
The mood of conviviality was not deterred by the reports presented as the evening wore on of some significant fiscal uncertainty forecast for the two bodies who share the deployment of the jurisdiction’s tax revenues.
The net result will be the makeup of and funding levels for all the City’s programs, on the one hand, and the size of the tax bills to pay for them that will arrive in the mailboxes of all City residents and businesses over the next year. (The current second half billings for the current fiscal year were due last week).
In his report, Shields told the assembly that the main cost driver is employee compensation, to “maintain a highly competitive compensation system to reward and retain a high performing government workforce.”
Talk is, for example, that adjacent Fairfax County will be kicking in a 7.4 percent increase in that area and Arlington County a 4.5 percent increase including 10 percent for police.
In this context, core budget objectives, he said, are to “invest in our workforce” by implementing 2022 Compensation Study recommendations, sustaining workforce training and professional development, and conducting a staffing level study. Also required, he said, are fleet and IT equipment replacements, while maintaining the City’s core infrastructure.
“Ensuring building safety, enhancing roadway safety, expanding affordable housing, promoting social equity, reducing carbon emissions, improving stormwater infrastructure to reduce flooding and promoting a ‘small town character in an urban setting’ constitute the City’s strategic initiatives, he said.
Noonan told the gathering that rather than thinking of the City and its schools as separate components, “We are the City together. We all represent the City,” noting that for the last four years, despite all the growth and development that has occurred, “we have stayed within the budget guidance we have been provided.”
While property values have risen faster than tax rate reductions have been able to fully offset household tax bills, still prudent governing has enabled the City’s ability to lower its tax rate from $1.355 to $1.23 per $100 of assessed valuation in the last two years.
Noonan said that it is the goal of the public school system here, now offering International Baccalaureate level instruction at all grade levels, to be “a premier school division in the entire world, with a hallmark of being internationally minded.”
Here, Noonan said, the goal is that all students be empowered to reach their full potential. “Our guiding North Star is to be a student-centered community, to be responsible to the community, to focus on academic success, to promote inclusion and diversity among all our students, and to be connected to the wider community as partners in our success,” he said.
The schools have rebounded from the pandemic in its student performance and enrollment metrics, with a net increase of 32 students in the last two years, leading to a total current enrollment of 2,552.