The Fairfax City Council has about one month to discuss possible changes it should make to the city’s 300-page proposed budget for fiscal year 2008, which begins July 1 of this year.
City Manager Bob Sisson presented the budget to councilmembers at a Tuesday, March 13, work session meeting. He expressed his enthusiasm for the opportunity to present the budget during such a “shining moment in the city’s history,” referring to the many development and revitalization projects currently underway.
General fund expenditures in the proposed budget are 9.4 percent higher than last fiscal year, with revenue equaling expenditures at $110,460,221, or a $9.4 million increase from last year’s $100,969,759. The expenditure total from all funds, which include any transfers between funds, is proposed at $124,366,826.
The largest single source of the general fund’s revenue comes from real estate taxes, which city staff proposes to increase by $0.03, from $0.71 to $0.74 per $100 of assessed value. The increase would not only add to revenue, but it would make up for lower assessments across the board in 2007.
“Of the eight jurisdictions we compare ourselves to, four are recommending real estate increases,” said Sisson.
Of the other jurisdictions, the lowest tax rate next to the city’s — Prince William County — is still more than $.06 higher than Fairfax’s proposed hike. The City of Falls Church is the highest at $1.02.
A Fairfax residential property assessed at $500,000 in 2006 generated $3,550 in real estate taxes for the city. A lower 2007 assessment, $484,400, for that same property, would generate $3,585 for the city with the proposed tax increase — a difference of $35 for the property owner. Without the tax increase, Sisson said the city would not generate about $700,000-$800,000 of the proposed increase in appropriated funds, and nearly $1.8 million — the total increase the tax hike would collect in real estate tax revenue.
“I’m not excited about any increase in real estate tax; I have concerns about that,” said Councilmember Gail Lyon.
Lyon said the good news is that commercial tax is holding its own, since commercial assessments did not suffer as much as residential in 2007. In fiscal year 2006, residential assessments were up 21.7 percent from the year before. This year, they are down 2.6 percent from last year. Commercial assessments have remained steady though, with a 13.68 percent increase from last year. In 2006, they were also up nearly 15 percent from the year before.
“Commercial [assessments] have been the saving grace,” said Sisson.
MAYOR ROBERT LEDERER called the proposed budget “the perfect storm,” stating that the council and staff must keep in mind the possible affect the General Assembly’s transportation package could have. He said it would likely add to that perfect storm, since $400 million in revenue would be raised and kept in Northern Virginia. Lederer said he hopes council would not look at the budget and take the easy revision route by looking only at revenues.
“We certainly do have our work cut out for us,” said Lederer. "I hope we don’t forego tough dialogue and discussion.”
As for the city’s debt, considerable borrowing has taken place in recent years. The 2007-08 budget calls for additional borrowing, said Sisson, which will bring the city “to the top of the mountain” with regard to the many improvement and revitalization projects in the works. “We’ve taken advantage of low interest rates and borrowed at favorable rates to get these projects caught up,” said Sisson.
The city will reach the full payoff schedule in 2009, and there should be very slight reductions in annual spending, so the future debt schedule “doesn’t give us a lot of capacity,” said Sisson. “We will have to be very resourceful.”
The city’s 2006 general obligation debt is 2.22 percent of assessed value — the highest of the other seven jurisdictions the city compares itself to in the region. The maximum amount allowed by the state is 10 percent, so the city is still well below that amount, said Sisson.
The capital budget, which includes state, federal, utility, stormwater, cable and Northern Virginia Transportation Commission funds, including a $2.7 million transfer from the general fund, is proposed at $5,791,605.
In addition to the public outreach for the city’s budget, a public outreach week is also scheduled for March 24-29, for the master planning process of the Business Improvement District along Fairfax Boulevard. For more information, visit www.fairfaxva.gov/Boulevard/FBMP.asp