Huge 8.5¢ tax rate cut proposed by Shields

“Monday was a landmark night for Falls Church,” exclaimed FC Councilman Phil Duncan in a late-night text message to News-Press. The comment follows a lengthy Council meeting where City Manager Wyatt Shields’ recommended FY23 budget with an 8.5 cent property tax rate reduction was proposed, followed by the final Board approval of Founders Row 2, another large-scale mixed-use project.

“Another step towards a brighter future for the City of Falls Church, Founders Row 2 approved 5-2 combined with news of the City Manager’s proposed tax rate reduction of at least 8.5 cents at $1.235, the lowest in over a decade, Monday was a historic night for Falls Church,” reads the full text of Duncan’s statement.

At the meeting, Shields proposed to city council a budget for fiscal year 2023 (FY2023) totaling $112.6 million on Monday, which includes a 6% increase ($2,451,107) in general government operating expenses. and a 6.3% ($2,750,000) increase in local funding for public schools. , as requested by the school board.

Shields was joined by School Board President Laura Downs and Superintendent Peter Noonan during the budget presentation.

The reduction in the property tax rate from 8.5 cents to $1.235 per $100 of assessed value (compared to $1.32 from $1.32) is part of an overall increase in land values ​​by 11.4%, as reported recently.

“This budget proposal aims to strengthen basic government and education services to the high level that residents have come to expect, while ensuring that we manage well the transformative capital projects and new developments currently underway,” Shields said Monday. .

Key investments contained in the budget, he said, are the city’s public schools, basic government services, the city’s workforce, public safety, improvements to walkable neighborhoods and traffic calming, and flood mitigation.

“The tension between basic services and transformative things like all new developments coming up is a tension,” Shields said Monday, calling it “our most dynamic fiscal environment ever, including the exit from the pandemic, the impact of war overseas, the Virginia General Assembly actions in Richmond, and cost inflation.

With overall real estate assessments up 12.1%, as reported earlier this month, the proposed 8.5 cent tax rate cut offered by Shields does not cover all of the additional costs for homeowners that the valuation increase will represent.

To propose a reduction in the tax rate equal to the growth in the assessment would require lowering the rate to $1.19, he noted. Some Board members suggested in this context that lowering the rate below Shields’ proposed level of $1.23 would be open to Board consideration.

The proposed budget includes an additional $2.2 million new investment in compensation for City employees, as the City struggles to recover from labor shortages that have led to a high vacancy rate overall 15% and 25% last September for the police department. The department is now back at 100%, Shields reported.

The city’s tax rate reduction contrasts with what Shields reported there was no rate reduction for the city’s two larger neighbors, Fairfax and Arlington counties.

In Shields’ proposed budget, debt service will decrease by $1.3 million or 9% due to the cancellation of planned debt issuance in fiscal year 2021 and the repayment of previous debt obligations. 2013 and 2011 at lower interest rates.

The proposed budget includes the use of $4.03 million in capital reserves for debt service, which is part of the long-term financing plan for the new high school that was presented to voters in the referendum on obligations in 2017. Offsetting the use of capital reserves is the third ground lease payment ($4.5 million) for the impending 10-acre West Falls mixed-use project.

The budget proposal includes an allocation of $3,789,331 in federal pandemic assistance in the form of funds from the American Rescue Plan Act (ARPA): nearly $1.4 million for small business assistance , households and schools, and $2.4 million in the capital improvement program for sidewalks and HVAC replacement at the community center.

Last year, the city council approved $7 million in ARPA funds to be used for the six major flood mitigation projects recommended by the stormwater task force.

The budget proposes a new commercial and industrial (C&I) tax of five cents per $100 of assessed value of commercial properties, which by law must be used exclusively to fund transportation improvements. It was pointed out on Monday that this tax will be levied only on commercial property owners.

According to a City Hall statement, while most northern Virginia counties and cities have passed a 12.5-cent C and I tax in recent years to help pay for public transit and road expansion, the city proposes to use the revenue to pay for its share of WMATA capital costs, bike share program and other transportation needs.

Shields submitted the proposed operating budget to city council on Monday, along with a six-year capital improvement program (CIP) that will be detailed at a council business meeting next Monday.

The school’s portion of the overall budget proposal falls within the Board’s budget directions for the third consecutive year, below the projected 8.4% annual growth in overall revenue.

As the lion’s share of the school system’s budget goes to staff each year, this year it includes the addition of $1.6 million for a “staggered” salary increase and $890,000 for a cost of living. (COL) by 2.5%. That contrasts with neighboring Arlington County’s planned four-step, 11%, increase to offset pandemic-era constraints.

Yet, since construction of the new high school is actually under budget, the schools are returning $100,000 to the City’s coffers.

Three major components of school funding involve the continued infusion of International Baccalaureate K-12 programs, a “caring culture” and equity considerations, Dr. Noonan said.

The Council is expected to adopt a final budget on May 2. Fiscal year 2023 runs from July 1, 2022 to June 30, 2023. A virtual town hall is scheduled for today (March 31) at noon, and another on Thursday, April 7. , at 7 p.m. and city council meetings every Monday evening until the adoption of the final budget on May 2 are open to the public.

Jerry B. Hatch