City Manager Discusses Taxes, Schools, GEORGE Bus in Budget Presentation

Wyatt Shields. . .

Here are notes from City Manager Wyatt Shields’ budget presentation yesterday at the Falls Church Community Center. 

Worsening Budget Situation  -  In November, City Chief Financial Officer John Tuohy estimated the budget gap for FY 2010 at $3.9 million.  Now the gap is projected at $4.3 million, prior to action by Shields and the City Council to balance the budget as required by Virginia law.

Biggest Revenue Drop: Sales Taxes  -  Sales taxes are anticipated to fall by $628,000, the greatest drop of any revenue category in absolute dollars.  Interfund transfers (e.g., money from water sales, state money for schools) are next, which anticipated to be $590,000 lower.  Building permits are expected to be $521,000 lower.  Property taxes, the City’s greatest source of revenue, are expected to drop by a relatively low $148,000.  All revenue categories combined, including some not mentioned here, are expected to drop by $1.7 million.

Increased Pension Costs  –  Due to the decline in the value of stocks and bonds, City employee pension funds are worth less.  The City will have to contribute $200,000 more per year to bring them back to full funding levels.

Budget Cuts  -  Schools have reduced their FY 2010 budget by $492,000.  Environmental services are to be cut $415,000, and Administration by $369,000.  Cuts also are on tap in other areas, including the reduction of seven positions, and the discontinuation of the GEORGE bus service.

Tax Increase  –  Mr. Shields proposes an increase in the City real estate tax from the current $1.03 per $100 of assessed value to $1.07.

FY 2011 and Beyond  –  The FY 2011 budget gap is projected to be $2.1 million, assuming a real estate tax of $1.13 per $100 of assessed value.  No numbers are available for FY 2012 or later.  On Monday March 30, Mr. Shields will discuss the budget situation for FY 2012-2016 with the City Council and Planning Commission.

Big Expenditures Coming  -  The city manager’s FY 2010 and 2011 budget numbers do not include major capital expenditures expected for Schools and City Hall.  For FY 2012-2013, school construction costs of $30.8 million are included. For City Hall, $14 million.

Are School Costs Underestimated?  –  School officials recently estimated the cost of construction of a new facility at around $70 million.  Mr. Shields frankly said the $30 million figure is used because a higher number would cause the City’s debt service to exceed the limit of 12% of revenues.

Why Does City Hall Need Renovation?  -  City officials say the court facilities must be upgraded to maintain safety and that police facilities are overcrowded, “with staff stacked on top of each other.” Discussion occurred around whether Falls Church should contract with Arlington for all court services, given that it hosts some such services now.

Comments and Questions From the Audience:

A parent of a kindergarten student raised concerns that new students from mixed use developments are adding to school construction costs, given that schools such as Mt. Daniel already are overcrowded. Another attendee said such developments are projected to add 107 students.

Lengthy discussion over discontinuing GEORGE bus service, with a variety of options suggested short of ending service.

A question regarding the implications of the affordable housing project, City Center South Apartments, prompted Councilman Dave Snyder to note that in addition to an initial $2 million city contribution, the Falls Church had agreed to a tax exemption arrangement that would cost at least $750,000 per year.  Mr. Shields confirmed that ballpark figure.  Vice Mayor Hal Lippman noted that there is more to the story and offered to talk to anyone interested.

Mr. Shields closed the meeting reminding attendees there would be a second such session on Saturday, April 4, and that new information would be presented, likely with longer term projections included.

The Council will act on final adoption of the FY 2010 budget on April 27.  Links to City budget documents appear in the article below.