Updates from Letty – March 15, 2019 – budget edition #1

Posted on by Letty Hardi

Blog posts are the personal views of Letty Hardi and not official statements or records on behalf of the Falls Church City Council 

Dear Friends,

Maybe the the proverb should be “fourth time’s a charm”? As anticipated, the start of this budget cycle (my fourth!) has been pleasant, a marked departure from previous years. The confluence of multiple factors (adherence to budget guidance + higher forecasted revenues + lower school enrollment + the spirit of “we’re all in this together” as we take on a big capital plan) has been important in setting a cooperative mood with the FY20 operating budget. So while we still have a lot of work ahead of us – this is one spring where we can expect more peace in the valley. Read on to get the highlights of the proposed budget and my early thoughts.

The West Falls Church Economic Development (aka, 10 acre project)’s board and commission meetings wrapped up this week, but it’s not too late to email us your questions and input. We have public comment opportunity at our regular meetings (schedule below), the next town hall on 3/24, or I’d love to see you at my office hours on 3/25. We have an aggressive schedule to finalize a comprehensive agreement and the conceptual plan in May, before the new high school groundbreaking can happen.

Best,
Letty

PS – March is Women’s History Month! A good way to get in a little exercise and learn about important women of Falls Church is to join the 2019 Women’s History Walk on Sunday, 3/31 from 1-4 pm. Wear white in honor of the 100th anniversary of the 19th amendment and stop at each station on the 1 mile route to learn about someone new.

 

What Happened This Week:

(1) FY20 Proposed Budget

For your reading pleasure: FY20 proposed budget & City Manager’s budget presentation

Highlights:

  • What’s the headline? Per the budget guidance City Council issued in December, the City Manager has proposed a budget that fully funds the requested budget from the School Board, maintains excellent services, and funds the city’s obligation to Metro at the 3% state mandated cap while keeping the real estate tax rate flat at $1.355 per $100 assessed value.
  • How big will the city’s annual budget be? The total operating budget will jump from last year’s $92.8M to $99.3M, a 7% increase, primarily driven by a 46% increase in debt service (ie, interest on bonds for capital projects such as GMHS, Library, Fellows property acquisition) and a 38% increase in our WMATA funding obligations. The transfer to the schools will grow 2.5% and the general government operating budget will grow 2.4% over last year’s amounts. Like previous years’ – everyone’s budgets are growing.
  • Why is the tax rate not going up, even as we take on all of this new debt? Recall that the city has been planning for this large debt service in previous years’ budgets, with two increases in the tax rates in FY18 and FY19, tightening operating budgets, and directing savings into capital reserves. Much like a consumer would tighten their household budgets and start saving money in advance of buying a house. We are also fortunate to still be in a very long positive economic cycle with property values increasing and reaping the benefit of local economic development, which continues to bring in net positive revenue.
  • Besides a lot of debt service, what are the key items being funded in this budget?
    • General government employee salaries will receive a merit increase of 3.25% and no COLA; police will get a step increase and a 0.5% COLA; teachers will get a step increase and a 1% COLA.
    • We fund our WMATA obligation, which continues to grow annually. There is some risk that the city share for Metro will need to go up, should the WMATA Board propose additional expenditures above the 3% cap.
    • We add 6 positions in general government, returning staffing levels to pre-recession when staff levels were a little over 200 (but for a 30% smaller population back then). The 6 positions include: 1 HR director, 1 police officer, 2 building inspectors to prepare for Founders Row and the GMHS campus projects, 1 fire safety inspector, 1 downtown improvement coordinator.
    • New/additional funding for senior tax relief, pedestrian improvements, traffic calming, traffic signals, park trails.
  • Why is this budget process “easier”?
    • The FY20 revenue forecasts are buoyed by a higher than expected property values assessments that came out in February. With overall assessed values at 3.35% higher than last year due to market appreciation and economic development (vs expected growth of 2% when we provided budget guidance in December), that means we have a little more money in the budget.
    • Lower student enrollment (and lower future enrollment projections) are enabling the schools to find efficiency in staffing and convert those savings into higher compensation for teachers and staff. Also, the schools will be moving to less expensive office space, resulting in more savings to be converted to compensation.
  • Bottom line for homeowners – while we don’t expect to increase your tax rate, the median homeowner can still expect your tax bill to increase by $252 per year due to increased assessments.
FY20 budget
Important to note that debt service will now be 14% of the budget (above the City’s historical range of between 6% and 8% of expenses). This ratio is expected to grow to 15% by FY2022 with the issuance of construction bonds for George Mason High School, as well as City Hall and Mary Riley Styles Library.

Letty’s thoughts: overall, I appreciate the spirit of cooperation and shared commitment to live within our means and find cost effective, creative budget solutions so the tax rate does not have to be increased this year. Knowing that we are about to take out enormous debt in the face of some uncertainty in the broader economy, this is an important, prudent step this year. I hope we’ll be able to maintain such discipline in future years – while organic revenues will be growing this year, that won’t always be the case and we won’t be so lucky to have higher revenues paired with lower student enrollments.

On the general government budget – I especially appreciate the sustained, dedicated funding in areas I’ve often written about: pedestrian safety, walkability, traffic calming, downtown improvements. Simple investments like sidewalks and crosswalks can be so impactful to safety and quality of life. Two initial areas jumped out at me in my first pass of the budget:

  1. As we’ve been in “building” mode the past few years and will continue for the next several, we should have appropriate maintenance budgets set aside so we can keep up with all the new stuff we’re building. For example, we’re investing in new parks and renovated buildings – let’s make sure we have commensurate operating dollars allocated to maintenance of these facilities. Similarly, we are implementing new parking restrictions in neighborhoods and in our downtown to encourage turnover of parking spaces, so let’s make sure we have appropriate staff to enforce the new restrictions.
  2. In our 2040 vision, we espouse diversity and inclusivity, especially having housing stock and opportunities for all. Reflecting back on last week’s demographics forecasts – the regional population and job growth paired with the expected housing stock shortage to come – I think there is not enough investment in this year’s budget. We have an opportunity to push harder on additional housing, more affordable housing, and missing middle housing now. We also have looming expiration of the affordability provisions at The Fields, and while that is several years away – much like how we have been planning for a new high school for years, we have an opportunity to start looking at dedicated revenue sources and plan for that known need.

Expect more budget discussions over the next 6 weeks. Our first vote on the budget will be 3/25, when we advertise the maximum tax rate, with a final budget adoption vote on 4/22.

(2) City Hall

The completion of the City Hall project and move in was due to occur in early 2019, but has been delayed. We authorized the City Manager to extend the temporary office lease until mid May to allow the work to finish at City Hall before relocating staff back into the building. If you need to find city offices, here is a listing of their temporary locations.

 

What’s Coming Up: