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City Considers Split Tax Rate

June billing would be higher than December.

Who doesn’t love a good accounting glitch?

The City of Fairfax sets its tax rate in April and sends out tax bills in June and December. The fiscal year, however, starts in July. So, if the City Council lowers the tax rate when it sets the budget in April, the June bill reflects that lowered rate.

However, since the fiscal year has not yet ended, the June tax bill ends up with a lower rate than had been budgeted.

"If we reduce next year, we actually hurt the previous year’s fund balance," said Mayor Robert Lederer.

To try and correct that funding gap, the City Council, during its April 5 worksession, proposed the possibility of charging a split tax rate. When the June bill goes out, it would be based on the previous year’s rate to offset the accounting problem, Lederer explained. However, it would still be based on the current year’s assessment.

Therefore, the theoretical application of the policy would have residents paying last year’s higher tax rate on the current year’s higher assessed values. This year, the rate could not actually be set at last year’s rate (90 cents) because the City Council advertised a rate of 87 cents, and is not permitted to go any higher than that rate.

THE CITY initiated a similar program for one year in 1979. City staff has not be able to determine why it was done, or why it was stopped.

Another possible fix could be to change the billing date from June to July, thereby sending out the bills in the same tax year and fiscal year. Section 7.1 of the City Charter — which requires an act of the General Assembly to be changed — fixes the dates for both the fiscal year (July 1-June 30) and the tax year (Jan. 1-Dec. 31), but it stands mute on when the bills go out.

The City Code section 90.31 mandates the June 5 and Dec. 5 billing dates, but the code can be changed by the City Council. It could not, however be changed in time to affect this year’s budget.

Councilmembers continued their work to lower the tax rate in general. During the worksession, they continued going line by line through the budget finding items that could be delayed for another year or more in an effort to reduce this year’s expenditures.

One plan is to cut $150,000 from the city’s payroll. City employee salaries range from summer laborers who make $10.85 per hour to the fire chief and police chief, who have a maximum salary of $130,713 per year.

"We’re not looking for massive reductions, we’re just looking for tinkering around the edges," said Councilmember R. Scott Silverthorne.

Other cuts will include reducing the budget for the Festival of Lights and Carols and Bicentennial event, elimination of proposed positions, and financing of the renovation of Grandma’s Cottage on the Blenheim Estate.

After the cuts proposed at previous budget worksessions, and at the April 5 worksession, the council could now reduce the tax rate to 83.7 cents. In order for residents to be paying less than they did last year, the tax rate would need to be set to 78 cents or lower.

The council will make the final decisions about the tax rate — including the rates for the real estate, personal property or "car tax," and the rate for the meals tax, proposed cuts and other budget matters during its April 12 meeting.

COUNCILMEMBERS also heard an update on the George Mason Boulevard project. The city has plans to finish both ends of George Mason Boulevard to allow traffic to use that road instead of University Boulevard. The rationale had been that the residences on George Mason Boulevard are oriented in such a way that it would be safer for traffic to use that road.

The council hosted an outreach meeting in September to discuss issues about the proposed road with residents. Several citizens expressed concerns at the meeting, including the possibility of a sound wall along a portion of the road.

John Veneziano, director of public works, pointed out that while residents will likely want a wall that looks nicer, those typically cost more.

Lederer said the cost should not be the prime mover in the discussions. "Find out what the community wants," he said. If the cost becomes prohibitive, then the council could revisit the style of wall.

The proposal will also include a drawing of what the wall would look like so residents could have an idea of what they would get. "I would hate to put it up and have residents say, ‘This isn’t what we wanted,’" said Councilmember Patrice Winter.

Another outreach meeting will be scheduled in the near future to discuss the plan again, and Lederer expressed a desire to move forward as quickly as is practicable. "This has been dwindling and deferring, and anxiety has been building by the minute," he said.