Annual Budget Season Kick Off at Joint Meeting Monday

As the seven members each of the Falls Church City Council and the FCCPS School Board came together for their annual early December joint meeting as a prelude to the coming year’s budget cycle, this year the news of The Little City’s remarkable economic success dominated the discussions.

In summary, the intense economic growth the city is now enjoying, with construction of large scale projects well underway in numerous locations inside the city’s 2.2 square miles, has brought the forecast of its tax revenue generation far ahead of its regional rivals.

For example, while Falls Church is expected to enjoy a whopping 5.9 percent growth in tax revenues, the City of Alexandria is expected to come in a far more modest 2.4 percent growth, and Fairfax County at at an even slower 1.7 percent.

Three major projects currently under construction in Falls Church are combining to offer an estimated $2.1 million in net tax revenue in the coming year, and that’s $2.1 million that residential home owners will not have to pay.

The new construction includes the massive 10-acre West Falls complex inclusive of a medical building, advertising itself with big signs along Route 7 that will be completed by next spring, a hotel due next summer, and multi-family and condominium residences due by late next fall.

Then there is an Insight project at the corner of Broad and Washington, right in the center of downtown, that will be anchored by a massive 60,000 square foot Whole Foods flagship store under some 300 apartments, and a new home for the City’s premiere homegrown theater group, Creative Cauldron. The apartments will begin to be available next spring, and the Whole Foods by next fall.

Then there is Founders Row II, across the intersection at West Broad and West Street from its sister already functioning with top notch restaurants, senior living and apartment homes in advance of an expected multi-screen motion picture theater on site.

Those account for the $2.1 million in new revenue projected for the coming fiscal year, as participants in the joint meeting were told Monday night.

Overall, according to the City’s Chief Financial Officer Kiran Bawa in her presentation Monday, real estate taxes can expect to rise by 5.9 percent, all other taxes by 12.7 percent (largely due to whopping meals tax increases), such that, of the total $7.5 million increase in tax revenues, new construction accounts for $2.1 million.

The meals tax component is already shooting off the charts like a rocket, with the coming fiscal year total expected to go 27 percent higher than the current year, with a three-year average rising by 19 percent annually (compared to a five year pre-Covid average of 6.9 percent). Sales and business gross receipts taxes, owing to the new projects boom, are also proceeding skyward, upward by 6.1 percent in sales tax revenues, and by 11 percent for business (BPOL) taxes.

However, the $7.5 million in new revenue appears at this point to be offset by more than $10 million in new expenditures. Schools Superintendent Dr. Peter Noonan made a lengthy presentation Monday whose bottom line is that the schools will be needing an 8.6 percent funds increase (see story, elsewhere this edition).

While attention was not paid Monday on anything other than just generalities about how to bridge that gap, it begins to get serious at the Council’s next business meeting this Monday when official “guidance” will be provided to both the schools and the City operations side on how much growth in the expense side of things can be tolerated.

That discussion will include whether or not the real estate tax rate should be lowered, raised or kept the same, and that issue will come to the foreground as the various aspects of the City’s operations weigh in between next Monday’s Council “guidance” and next May 13 when the Council will formally adopt the FY25 budget inclusive of schools funding and any tax rate modifications.

So, even as new tax revenues are anticipated to rise by a far greater amount than what is expected elsewhere in this region, the pressure to meet the City’s and schools’ needs will still be there big time.

Two additional factors include $571,000 in tax revenues expected from the West End project, not included in the numbers for now, on the plus side. That is offset by the additional $1-$2 million WMATA is expected to hit The Little City up for, to make ends meet for its public transit system of buses and Metrorail services.

After the Council’s budget guidance is presented next Monday, there will a hiatus until Superintendent Noonan submits his budget proposal to the School Board on January 9, which will result in the board’s official ask of the Council on February 27, town meetings and public hearings and the adoption of the new budget May 13.