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,

In the vein of celebrating many milestones this year (namely, the city and FCCPS’s 75th birthdays, the library’s 125th birthday, and the W&OD’s 50th birthday) – this is my 370th post! Since 2015 when I first ran for City Council, these posts, my office hours, and “going to the people” via building visits, door knocking, and neighborhood meetings have been central to how I engage and listen to the community. I have aspired to write an easy-to-understand digest of city business, with links to the details should you want to dive deeper, while separating out my opinion. If you are a new reader or you have a burning question – I encourage you to check out one of my FAQ posts which covers all the usual suspects and misconceptions I hear especially when there’s a local election: development, school enrollment, traffic – you might be surprised by the facts. Other blogs have definitely come and gone since 2015, so I’d welcome your input on what has been useful for you and suggestions going forward.

Three main call outs this week:

• ‘Tis The (Leaf) Season: Falls Church Forward is launching our Leave the Leaves effort to encourage our community to try a different routine for leaves this season that is more eco-friendly and way less work. As a Leave the Leaves convert, I can give my personal endorsement. Let us know if you are interested in learning more or helping spread the word.
• Accessory Dwelling Meeting on Sunday: since the summer open houses, board and commission input, and work sessions – staff has synthesized the input plus national best practices into a “draft framework” that will be shared in these open houses for additional feedback.
• Letty’s Office Hours: as it’s looking rainy again next Monday, I’m moving my office hours indoors to Northside Social.

Read on for the city’s year end financial update. Being good stewards of the city’s finances – which includes generating the revenue to pay for new infrastructure and top quality services while keeping the tax burden on residents and businesses as low as possible (we have lowered taxes 14.5 cents, which is a rarity in the region right now) – is a critical part of the City Council’s job. So even if you’re not a numbers person, read on. And because next week is a 5th Monday, we have no meeting – so these posts will be on hiatus until the week of October 7, so you have two weeks to read!

Stay dry,
Letty

What Happened This Week:

FY2024 Financial Report

The staff report is here for Fiscal Year 2024 (FY24) that ended June 30, 2024 if you want to dive deeper, but here are the TL;DR takeaways and then my thoughts:

• Revenues: Revenues came in 5% or $5.3M over expectations or 8.7% over last year’s budget.
• High Interest Rates: Over half of the revenue surplus came from “investment revenues” – ie, interest rates stayed higher and longer than expected, so the city’s money earned more interest this year.
• The Local Economy Matters: local taxes now make up over 25% of our total revenues and in particular, meals, sales, personal property and hotel taxes have been strong.
• The Bottom Line: There was also $700K in underspending, which resulted in a total year end surplus of $5.9M. Because this is considered “one time money”, it should not be spent on personnel or other recurring costs. Here’s how the $5.9M will break down:
  • Rainy Day Fund: Of the $5.9M – about $1M will go into replenishing our Unassigned Fund Balance, aka the city’s rainy day fund, which we target at 17% of the budget – which currently has $20M. Having strong unassigned fund balance (plus Capital Reserves which is a separate pot of money we built up to afford the high school) helps us keep our triple-A bond rating.
  • Revenue Sharing with FCCPS: About $500K will be shared with the schools per our revenue sharing agreement. (FCCPS also has their own surplus fund balance of $1.6M as reported in their financial update this week.)
  • Remaining Surplus of $4.3M: We will consider one time expenditures from the schools and general government for the remaining surplus in our October and November meetings, culminating in budget amendment that will be voted on by City Council.

Letty’s Thoughts:

Overall this is good news. You should take away that the city’s finances are in good shape – the local economy is thriving, we have strong reserves, and a diversifying tax base based on the economic development of the past 20 years. This was seen in full force at the Fall Festival last week and visits by Fairfax City and the Virginia Municipal League gathering of regional and state electeds in the city this week. You can see and feel the vibrancy in our City now that did not exist before: people are walking on the streets, enjoying our restaurants, shopping around town.

What gives me pause is a structural imbalance that surpluses and one time money creates in the long run. In isolation, a surplus is great – we get to fund more one time requests like in parks, bike lanes, concessions stands. The surplus this year is due to a combination of higher interest rates (outside of the city’s control) and a strong local economy (very much in our control) which means our efforts in economic development are working as planned. However, I’d rather we not have surpluses and instead have the revenues hit the mark in our operating budget, which funds recurring programs and services in the city and/or further tax rate decreases. As we add more infrastructure via one time surplus spending (plus, we have deployed a lot of other one time money like ARPA), maintenance costs will also be increasing so we create more pressure in future years’ operating budgets.

The past few years’ of surpluses have been anomalous due to Covid and then post-Covid recovery, and staff believes the revenue projections used for the current FY25 fiscal year are far more aggressive, so we’ll keep an eye on it this winter. I’ve also asked that we do more multi-year revenue and expenditure forecasting, to include the expected revenues from the projects opening and under construction, to better prepare for future budgets.

What’s Coming Up:

Wednesday, October 2 – Ask the Council Office Hours (9 am, City Hall)

Monday, October 7 – City Council Work Session*

Monday, October 21 – City Council Work Session*

Monday, October 28 – City Council Meeting*

*Mondays (except 5th Mondays and holidays) at 7:30 pm. You can access the agenda and livestream here, including recordings of past meetings

Letty’s Office Hours:

Monday, September 30 – Letty’s Office Hours (12-1 pm, Mr Browns Park Northside Social)

Thursday, October 17 – Letty’s Office Hours (9-10 am, Cafe Kindred)

Thursday, November 14 – Letty’s Office Hours (9-10 am, The Happy Tart)