To Raise or Not To Raise?

To Raise or Not To Raise?

Councilmembers debate three areas of the budget for nearly two hours before reaching a compromise.

About an hour and a half into the City Council debate over tax increases and the fund balance for fiscal year 2007-08, it seemed like a stalemate was the only likely outcome.

Councilmembers Joan Cross, Gary Rasmussen and Patrice Winter did not want to budge on letting the fund balance — essentially a rainy day fund — reach anything below 11.5 percent. Councilmember Gail Lyon was more concerned with raising the real estate tax, while Councilmember Jeff Greenfield wanted to chop away at the proposed property tax increase, because he said the lump sum payment is more of a burden to taxpayers.

"Somebody is going to have to give here," said a frustrated Mayor Robert Lederer. "It’s a simple process here, folks; we need four votes."

David Hodgkins, the city’s finance director, was busy crunching numbers half the night because councilmembers kept thinking up different formulas for balancing the budget. Some members wanted to leave the real estate tax at the rate it was last fiscal year, $0.71 per $100 of total assessed value, but make up the difference in the personal property tax increase and the fund balance. Each member had some variation of the formula that involved the three budget areas.

"Eleven and a half percent is about as low as I can go [with the fund balance]," said Cross.

Lederer expressed frustration with the members who were so stern about the fund balance, since the city’s policy is that it should not fall below 10 percent.

"Then we ought to change our policy to 11.5 percent," he replied sarcastically.

Once City Attorney Brian Lubkeman warned the council that it had to reach some kind of consensus before the night’s end, things began to move along. Lederer facilitated a vote for each item, one-by-one, in order to reach a conclusion.

Councilmembers voted unanimously to take the fund balance from the current 11.9 percent, to 11.5 percent in the next fiscal cycle — a $580,000 decrease. That balance has reached 0 percent and was as low as 4 percent in the 1990s. And since the city allows for a 10 percent balance, Lederer acted surprised that a few councilmembers so strongly opposed the use of the fund balance money to balance the budget.

COUNCIL PICKED AWAY at the personal property tax rate resulting in a compromise of $4.13 per $100 of assessed value, or a $0.34 increase from last year.

"Personal property tax is just one tax that people hate," said Greenfield. "It hits hard."

Greenfield struggled with any increase in the fund because he said people don't have the option to lump that payment into their mortgages. The one-time payment in October can burden people, he said. Silverthorne agreed that the real estate tax increase, at a lower rate than the proposed $0.74, would likely impact people less. The members ultimately voted for a penny increase, bringing the rate to $0.72 per $100 of total assessed value.

But after a 2 percent increase in the meals tax, an increase in the personal property tax and a 3 percent increase in the water and sewer rate, Lyon was concerned with tarnishing the council’s image.

"We don’t want to be the council that raised every tax," she said.

Lyon eventually compromised by voting for the penny increase in the real estate tax, even though she said she was totally against any real estate increase. She said she was confident the fun balance would be thriving again by as soon as six months from now, so she did not completely understand why some members were so worried about the 0.5 percent difference.

"Every year, we’re always up on the fund balance," she said.

IN OTHER COUNCIL news, members scheduled a public hearing for Tuesday, April 24, about the possible amendment to the City Code that would implement an ambulance transport service fee. The amendment would potentially bring in about $1 million in revenue, which the city would share with the Fairfax Volunteer Fire Department to offset some of the money the city currently provides to the volunteer department.

The council also swapped two items in the Parks and Recreation Department’s proposed budget. Instead of the allocated $30,000 for an overall park master plan, council voted to provide the department with $45,000 for a Van Dyck Park concept plan. The council agreed that the concept plan for Van Dyck is the priority right now, while an overall park master plan can wait.

"Van Dyck Park is the jewel of our park system," said Winter.

"Van Dyck Park is the jewel of our park system," said Winter.

Councilmembers offset the $15,000 difference by cutting it from the proposed $42,000 in the marketing and tourism budget that would go toward the FxVa marketing plan. The total Cultural, Tourism and Marketing budget is approximately $180,000.