GEORGE, Pay Equity Hot Topics at 2nd Budget Town Hall

Reflecting rising public concern, dozens of citizens and four members of the City Council attended City Manager Wyatt Shields’ Saturday morning briefing on Falls Church’s financial crisis.  

Mr. Shields, whose proposed budget calls for an increase in the tax rate, fielded numerous pointed questions from the audience.    Much of the discussion focused on the GEORGE bus service, which the city manager recommends eliminating, and the pay freeze for city workers, which does not extend to school employees.  Mayor Robin Gardner acknowledged these are the two biggest issues facing the Council in its deliberations over the FY 2010 budget.

Concern was expressed that if GEORGE were discontinued the City would not receive a substantial transit subsidy of as much as $350,000, in effect negating much of the potential savings.  The Monday, April 13, Council session will feature a public hearing on GEORGE.

Most City government workers face a pay freeze under the proposed budget, and 4 full-time and 3 part-time positions have been targetted for elimination.  However, the budget submitted by the School Board grants all school employees a modest increase in salary.   

Under the City charter the Council does not have a line-item veto over the school budget, so it cannot veto only the pay increases.  Its only option would to approve less than 100% of the school budget as presented and so force the Board to make more specific cuts. 

The School Board believes it is essential to keep teacher salaries in line with those offered by neighboring systems.  Councilman Dan Maller stated that teacher pay here currently is about 10 percent below Arlington, but comparable to salaries offered in Fairfax County.

Citizens also expressed concerns over the $21 million lawsuit filed against the City by Fairfax County over the water system.  If the Court finds against Falls Church, taxpayers would face considerably higher water rates and possibly a tax increase. 

Details on the case are sketchy and the officials attending the town hall were understandably hesitant to discuss pending litigation.  However, in response to a citizen’s suggestion, the Mayor hinted that the City may schedule a public meeting on the issue. 

The City has provided numerous documents on-line relating to the operating budget and the Capital Improvements Program.  Included is an interesting Northern Virginia Transportation Commission report on GEORGE which states the net cost to the City is $3 per ride, rather than the oft-quoted $8. The latest version of the report is available here.

Mr. Shields’ presentation was short on long term analysis, however.  Slides posted on the City website provide no updated information on the city’s projected budget gap beyond fiscal year 2011.  In November, Chief Financial Officer John Tuohy projected a rising budget gap, reaching $17 million by 2014.  At last week’s Council session the gap number was projected at $14 million, following short term budget balancing efforts.  Making up the $14 million gap through real estate taxes alone would require a $0.38 increase above the currently-proposed $1.07 per $100 of assessed value, or an increase of $1,900 per year on a home assessed at $500,000.  

Mr. Shields’ slides from his town hall presentations of March 28 and April 4 are available here.

City to Explain Budget Cuts, Tax Increases Saturday

Facing a projected 2010 budget deficit of $3.9 million as recently as November, Falls Church City Manager Wyatt Shields has proposed a balanced budget mixing a combination of tax increases and service cuts for the coming year.  He will explain the details to residents Saturday morning.     

In November, city Chief Financial Officer John Tuohy presented the Council with a “Gap” memo projecting a shortfall of $3.9 million for 2010, increasing to $17 million by 2013. 

But Shields presented a balanced 2010 budget proposal to the City Council earlier this month, as required, and a 2011 budget gap projection narrowed to $2.1 million from the $7.7 million Tuohy projected in November.   The publicly available version of Shields’ presentation does not explain all details, although some aspects, such as discontinuing the George bus service, have been widely discussed.  The information also does not extend past 2011, so further comparisons with the earlier gap projections are not available. 

Shields’ March numbers are at Slide 18 of

http://www.fallschurchva.gov/Content/Docs/FinancialUpdateWrkS031209.pdf

Tuohy’s November Gap memo is available at http://fallschurchtimes.com/?p=985

Making up $3.9 million strictly by raising the real estate tax would require an increase of 10.7 cents on the existing tax of $1.03 per hundred dollars of assessed value, according to Tuohy’s November memo.  Shields’ 2010 budget proposal anticipates raising the real estate tax to $1.07, with the rest to come from budget cuts.   Shields anticipates a further increase to $1.13 in 2011.   

Shields’ public presentation of the budget will occur Saturday, 10:00-11:30am at the Falls Church Community Center.

“One Dollar – One Person – One City” – Employees Voice Concerns on Cutbacks

Among those most affected by the current fiscal crisis and the proposed budget cuts are the City’s employees.  Many attended last Monday’s Council session where Ms. Tennille Parker of the City of Falls Church Government Employees Advisory Council spoke on their behalf as follows:

We consider public service a priviliege and it’s not to be taken lightly that we have the opportunity to work in a small city where we can have a big impact.  That being said, we know we are not immune to the City’s projected revenue shortfall.

The city manager has proposed a pay freeze for all government employees and the defunding and/or layoffs of seven government positions.  The proposed reductions mean the City will lose the expertise dedicated to affordable housing, emergency preparedness, and neighborhood green initiatives, among others. 

The services targeted for reduction and elimination have value to the community.  In fact, there was no effort to reduce them when the economy was much stronger.  The issue frankly is whether the city afford these services in today’s economic reality.

As you consider budget options, we ask you to keep these three things in mind:

One Dollar   -   One Person   -   One City

One tax dollar pays government AND school employees.  Value them equally in the process.

One person in every City household and every City business derives benefits from City government services.

One City with 350 government employees, dedicated to keeping it a special place. 

Mayor Robin Gardner briefly thanked Ms. Parker for her remarks and the city manager began a presentation.  The delegation of employees then started to leave the chamber, perhaps unsure of how much an impression her appeal for fairness and unity had made on the Council.

At that point Vice Mayor Hal Lippman suddenly spoke up and assured the employees how much he had appreciated their attending the meeting.   Characterizing himself as “a glass that’s being filled”, Mr. Lippman stated he had not come to closure on the difficult fiscal choices the City will have to make. 

The mayor and Councilmen Lawrence Webb and Dan Maller then each in turn concurred with Mr. Lippman’s sentiments.

Snyder Blasts Draft Budget; Council Approves 1st Reading

“I want nothing to do with the proposed budget.  I think it’s dead wrong.” 

With those words Councilman Dave Snyder began a blistering attack on the FY 2010 budget currently under review by the Falls Church City Council. 

Mr. Snyder, a former mayor and the longest serving member of the Council, criticized the proposed budget’s funding of public transportation and public safety, its treatment of City employees, and its approach to long-term planning.

Anticipating a counter-attack, he stated “I will not be forced to rely on information that has been supplied by others (i.e., City staff) in order to make [my] counter-proposals.  I want to bring the budget back to a reasonable balance fiscally and one which is consistent with the values of the community.”

Strong as they were, Mr. Snyder’s views were not shared by his colleagues who voted 6-1 to approve the first reading of the budget.  The second reading or approval will be held on April 27.

Councilman Nader Baroukh, though stating that he had serious misgivings about the budget as presented, voted for approval in the hope that the Council gradually could achieve some consensus.  However, he cautioned that his vote did not mean he approved the operating budget and Capital Improvements Plan as they currently stand.

Councilman Lawrence Webb cautioned the Council against potentially creating a divide in the community by “overly focusing on ‘hot button’ issues” such as the GEORGE bus system, and urged members to work together as a group toward a common goal.  Mayor Robin Gardner seconded Mr. Webb’s view.

The proposed budget advertises a tax rate of $1.09 on each $100 of assessed value.  However, the Council is expected to approve a rate of $1.07, an increase of four cents over the current rate.

City Manager Wyatt Shields announced public sessions on the budget Saturday, March 28, and Saturday, April 4, both at 10 a.m. at the Community Center.  Residents are encouraged to attend and express their concerns to council members and City staff. 

FY 2010 Budget Ordinance:
http://www.fallschurchva.gov/Content/Government/Council/Meetings/2009/March23/FY10BudgetOrdinance032309.pdf

Tax Rate Ordinance:
http://www.fallschurchva.gov/Content/Government/Council/Meetings/2009/March23/TaxRateOrdinance032309.pdf

City Proposal: Cut Budget, Raise Tax Rate, Kill GEORGE Bus

Last night City Manager Wyatt Shields presented the first draft of the FY 2010 budget to the City Council.  As proposed, the $66.6 million budget calls for a cut of nearly $4 million, a 5.65% reduction from the current fiscal year.

“Although constrained, the anticipated revenues available to the City government allow us to continue to provide most of the public services the community has come to expect,” Mr. Shields said.  “However, the story of this year’s budget is strongly influenced by continuing uncertainty and risk for future years, especially FY 2011.”

Mr. Shields said the long list of spending reductions is in response to the overall decline in revenues due to the recession.  The total value of all real estate in the City as of January 1 decreased 2.5 percent, sales tax receipts are down almost 14 percent, building permits 57 percent, and investment returns 67 percent.

If adopted, the budget’s primary casualty will be the GEORGE bus service, elimination of which will save  $450,000.  The City also plans to cut three part-time and four full-time positions and to freeze the pay of government employees.  Although the City anticipates a 2% increase in student enrollment, the school system will face a cut of 1.6%.

Library and Community Center hours will not be cut under the new budget.  However, it does not include funds for library expansion, which the Planning Commission had recommended unanimously.

Under the proposed tax rate of $1.07, a single-family detached home with a median assessment of $605,950 would see an annual increase of only $76, due to declining property values.  However, to allow for a range of budget options, Mr. Shields recommended the Council consider advertising a rate of up to $1.09 per $100 of assessed valuation.

New fees will be imposed for services such as mulch delivery, street closures for block parties, false alarms, and land development fees.  Restaurants that pay their meals tax early will not receive a discount.

Water and sewer commodity fees will remain unchanged for the fourth straight year.  The water rate will remain at $3.03 per 1,000 gallons in FY 2010 and the sewer rate will remain at $5.91 per 1,000 gallons. These rates are below average for the National Capital Region.

Mr. Shields pointed out that there are reasons to remain confident that Falls Church will overcome its financial challenges.  Its unemployment rate remains low and per capita income remains high.  Residential property values are bolstered by its strategic location, schools, and quality public services.  He also noted that the City’s credit ratings remain very strong:  AA from Moody’s, Aa2 from Standard and Poor’s, and AA+ from Fitch.  These ratings are the highest that a small jurisdiction can achieve.

Mr. Shields’ presentation represents only the beginning of the approval process.  The Council will hold three work sessions on the budget prior to the first public hearing on March 23.  Four work sessions will be held before the second public hearing on April 13.  The Council will hold two additional sessions prior to the final public hearing and formal adoption of the budget on April 27.   The 2010 fiscal year runs from July 1, 2009 through June 30, 2010.

The Proposed FY 2010 Budget (197 pages):

http://www.fallschurchva.gov/Content/Docs/FY2010ProposedBudget.pdf

The City Council’s Budget Schedule:

http://www.fallschurchva.gov/Content/Docs/FY10BudgetTimeline.pdf

Fiscal Impact of Development on Council Agenda Monday

The Falls Church City Council will look at the fiscal impact of recent real estate development as its first work session item Monday, March 2.  The Council will then also discuss federal stimulus legislation, followed by a closed session to discuss the City’s lawsuit with Fairfax County Water Authority. 

The work session starts at 7:30 p.m. in the Training Room (Level G), City Hall. 

AGENDA: 

 

1. Development Update and Fiscal Impact Analysis of Completed Projects

 

2. Federal Stimulus/State Legislation Update

 

3. Closed session pursuant to Section 2.2-3711 (A)(7) of the Code of Virginia for “[c]onsultation with legal counsel and briefings by staff members or consultants pertaining to actual or probable litigation, where such consultation or briefing in open meeting would adversely affect the negotiating or litigation posture of the public body; and consultation with legal counsel employed or retained by a public body regarding specific legal matters requiring the provision of legal advice by such counsel. (Fairfax County Water Authority v. City of Falls Church)

 

4. Council Comments and Schedule

Tax Increase? Service Cuts? “Gap” Debate Continues

The Town Hall meeting this Thursday, Feb. 12, at the Falls Church Community Center will be one of the most important city government meetings in months, as Falls Church residents hear details of an expected budget gap and the city’s plans to address it. The discussion will be the most visible acknowledgment yet of budget problems foreshadowed last November in a memo from city Chief Financial Officer John Tuohy — problems that could conceivably result in a tax increase of up to 50 percent by the year 2012.

Tuohy’s sobering November “Revenue/Expenditure Gap” memo to the Mayor and the City Council projected flat revenues amid increasing costs over a five-year period. “An unrestrained budget is not sustainable,” he concluded.

The scenario Tuohy envisioned indicated a shortfall of $3.9 million for the fiscal year beginning this July, which, if made up through revenue increases, would likely require an increase in the real estate tax rate from the current $1.03 to about $1.14. That would rise to $1.24 in July 2010, to $1.34 in July 2011, and to $1.51 in July 2012. Tuohy’s projection assumed that the total value of real estate in the city would neither increase nor decrease.

Many observers predict, however, that given the ongoing global deflation in property values, a more likely outcome is that property values will continue to decrease for a time. If, for example, property values decrease by 10 percent this year, in the absence of any new property added to the rolls, an additional $3.65 million deficit would arise, requiring a tax rate closer to $1.26 instead of $1.14.

On the other side of the ledger, the Tuohy memo assumed that city spending would continue to increase as usual, with a 5 percent per year increase in personnel costs, 8 percent increase in benefits, 3 percent increase in other operating expenses, and a 5 percent increase in the school budget. In a dire economic climate, at least some of these hypothetical increases likely would not occur.

Following the release of Tuohy’s memo, Assistant City Manager Cindy Mester told the City Council that the memo did not include some revenues the city can expect to receive. Some note, however, that likely expenditures also were not reflected in the memo. “The City’s shortfall numbers are not conservative” said Falls Church Economic Development Authority member and former Inter-American Development Bank Chief Risk Officer Ira Kaylin. He pointed out that school budget requirements needed to maintain the quality of City schools are not fully addressed in the City’s numbers and that the tax rate will have to increase just to maintain real estate revenues at constant levels, given that assessments will certainly decline. “When I look at the numbers I see a big hole,” said Kaylin. “I am concerned about our fiscal situation.”

Indeed, speculation is that the budget gap has widened since Tuohy prepared his November memo. On Thursday night, Tuohy is expected to provide more current projections, and City Manager Wyatt Shields will suggest budget cutbacks to at least partially reduce the budget gap. City insiders say his list will include non-essential items such as skate parks and streetscape improvements, but may also include more important areas such as storm water management. It is not known whether Shields will suggest cutbacks of sufficient size to completely address the budget gap.

School costs are a major aspect of the debate. One former school board official suggested as early as 2007 that future facility updates could run as high as $60 million, and a city resident who has studied school construction costs, speaking on the condition of anonymity, suggested that school construction costs could approach $70 million in the next few years — significantly more than the City government has anticipated. A big factor in school costs will be student enrollment growth, which became an issue in the May 2008 City Council elections when opponents of mixed-use real estate developments circulated school data indicating most city schools would soon reach enrollment capacity.

Another issue in the debate has been the proposed affordable housing project, City Center South Apartments (CCSA). A number of City officials, including members of the City Council, Planning Commission, and Economic Development Authority, have raised concerns over CCSA costs to the city during a period of projected budget shortfall.

The only certainty regarding the “Gap debate” seems to be that the debate will continue. “I’m afraid we’re going to be talking about this for some time,” said Kaylin.

To read the Tuohy memo from November, click HERE. Neither Tuohy’s updated financial projections nor Shields’ suggested budget cuts have been released at this time. They will be posted on Falls Church Times if released prior to the meeting.

(George Southern also contributed to this article.)

Calling All Citizens! A City Budget Town Hall Meeting

 

from www.fallschurchva.gov:

A City Budget Town Hall Meeting is scheduled for Thursday, Feb. 12, 6:30 – 9:30 pm at the Community Center gymnasium.  The Town Hall Meeting will begin with a one – hour Open House.  Each City government department and the Falls Church City Public Schools will have a table set up with information about programs and services and staff will be available to answer questions about City and school programs.  Beginning at 7:30 pm, City Manager Wyatt Shields and Chief Financial Officer John Tuohy will provide a preliminary snapshot of the City’s budgetary picture for FY2010.  Citizens will have an opportunity to ask questions and make budget suggestions at the Town Hall meeting or may send budget suggestions via email to budget@fallschurchva.gov.

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