Watchdog Finance Group: City Deficit May Violate Law

Falls Church Times Staff

December 21, 2010

The fiscal watchdog group appointed by Falls Church City Council has released a scathing memo alleging that the City’s current budget may violate both the Code of Virginia and the City’s own code, if it knowingly was drafted and passed as a deficit budget. State law requires local jurisdictions to assess a tax rate sufficient to meet expenses – in other words, to pass a balanced budget.

The volunteer Long-Range Financial Planning Working Group, which wrote the memo, was established by the City Council in October 2009 to analyze and advise on the City’s budget and financial condition. The chair is Richard Sommerfeld, whose career includes investment banking and advising governments on finance and economic policies.

In a December 10 memo to the City Council, the working group charges that “it does not appear that the City has been in compliance with its own financial policies.”

The crux of the issue is the timing of the City’s two real estate tax billings, due June 5 and December 5 each year. Because the City’s fiscal year ended June 30, tax income received by June 5 was used to balance the budget at the very end of the fiscal year.

But soon after the new fiscal year began, the City came up short. The memo notes that on September 24, only three months into the new fiscal year, the city manager reported a $1.4 million deficit to the City Council.

The memo quotes City Council member Lawrence Webb as stating October 18 that “We were doing a push-off. We told the public that there would be an increase . . . . We didn’t want such a high increase in June, to give folks time to prepare for an additional expense.”

In the absence of any further spending cuts, the City should have increased the real estate tax rate from $1.24 to $1.28 for the billing due December 5, the working group writes.

At a December 16 meeting, chairman Sommerfeld told the working group that “at the time the city manager knows he has a deficit, he must either ask for a tax increase or cut expenses. He said he would wait until June to do that.”

According to Sommerfeld, “the ball is now in Council’s court to correct the deficit. If not corrected, it rolls into [fiscal year] 2012.”

During the meeting, Sommerfeld also reported that the City missed the November 30 deadline for filing a financial statement with Richmond. A required audit was not completed on time.

Sommerfeld also stated that “the City auditor found a $4 million hole in the Schools pension fund,” which “was not accruing sufficient funds” and “appears to be substandard accounting.”

Sommerfeld was particularly critical of City Manager Wyatt Shields for “assuming a 3.3 percent increase in property receipts, while the City assessor was recommending a 3 percent decrease.”

Another serious problem is that only $140,000 is allocated for capital improvements. “We have all this expensive infrastructure and we’re not maintaining it,” Sommerfeld charged.

Additionally, the city manager’s proposals for next year are not sufficient to restore the City’s fund balance to 12 percent of General Fund revenue, as required by City statute, Sommerfeld said, because the proposals “leave out things like catching up on pension funds and paying back the water fund.”

The memo is available here.

Additionally, on December 20, Sommerfeld wrote a related comment in the Falls Church Times which may be read here.

December 21, 2010 


56 Responses to “Watchdog Finance Group: City Deficit May Violate Law”

  1. Mike Smith, Falls Church on December 30th, 2010 3:12 pm

    Mr. Thomas:

    Well spoken. As long as people are making points (whether you agree or not) they should keep on writing. I believe that was a huge part of the point of starting the Times. But the ad hominem attacks merely distract from the real and serious issues being discussed.

    And I say this as a guy that I am certain neither Mr. Mabry nor Mr. Clinton could pick out of a lineup.

    Oh, and by the way, I also agree that hiring a consultant to study efficiencies is a foolish waste of money we don’t have.

  2. Tom Clinton on December 30th, 2010 3:16 pm

    To set the record straight, I am not TEC, as my initails are TDC as mentioned earlier.

    Tom Clinton

  3. Linda Neighborgall on December 30th, 2010 6:33 pm

    I wasn’t accusing — just reporting that several people were speculating about the identity of TEC. I posted under my name, as I always do; and Tom had the opportunity to dispel the speculation, which he has taken.

    Which illustrates my point: anonymous posts, particularly as to controversial topics, can lead to speculation that is unfair and unwarranted. Anyone who wants to name people and ascribe motives to them ought to have the decency and the courage to identify themselves. Otherwise the FCT, which has served as a fair and open forum for constructive community discussion of important issues, becomes just another overly politicized recepticle for every cowardly crackpot who is unwilling to be accountable.

    As to the need for a comprehensive efficiency study of city hall, there reportedly are suggestions pending before the city manager as to how efficiencies might be achieved. Seems like a good place to start — might even help the audit process if a third party consultant is ultimately hired. You just have to wonder how there can be so much sturm und drang over the issue before any substantial effort has been made to see what can and/or should be done.

  4. THE EDITORS on December 30th, 2010 8:32 pm

    A reminder to all commenters — because the Falls Church Times is an online newspaper and not a blog, our comment policy is more closely tied to the old-fashion standard of letters to the editor.

    One big difference, however, is that we do allow comments to post immediately, before anyone has a chance to review them. We do this because the great majority of comments are responsibly and respectfully submitted. When we do notice an egregious comment, we delete it immediately.

    The other big difference is that, so far, we have allowed anonymous comments, but they are held to a “higher standard.” That means that if you want to criticize someone by name, you must provide your own (real) name.

    We have just removed a comment that made an interesting, critical point relevant to the topic being discussed above. The problem is that the commenter had no problem with referring to another commenter by name, but did have a problem with supplying his or her own real name.

    Please help the editors, who are not monitoring this site full-time, by policing your own comments, and think twice before posting an anonymous comment.

  5. Andy Rankin (Falls Church) on December 31st, 2010 11:09 am

    Hi Editors,

    I think your current approach to comments is fine – but I’m not sure I get the connection between your approach and how traditional newspapers manage comments. Newspapers have “letters to the editor” which are not anonymous. They’re also not a discussion, like comments on a web site are. Most newspapers now have web sites as well and from what I can tell those sites are full of anonymous, unmoderated comments.

    I think of the FCT not as a blog or a newspaper, it’s a moderated community discussion web site – which is fairly unique and great. I suggest you make your rules and policies based on what you think will work best for the community and not try to model them after newspapers.

  6. Mike Smith, Falls Church on January 3rd, 2011 8:45 am


    Your approach to comments is very reasonable. If someone want to voice an opinion and wants to use a nom de plume, so be it. If someone wants to mention someone else by name, especially in an accusatory way, then they should be named themselves (that whole constitutional right to face your accusers). Mere name calling and ad hominem attacks don’t belong in the public forum at all.

    Thanks for the service you provide. I have learned a lot from reading these discussion strings. I don’t know if I have added anything, that’s for others to decide.

Feel free to leave a comment. Please increase the credibility of your post by including your FULL NAME and CITY. All comments are subject to editing for courtesy and content.