With the COVID-19 pandemic wreaking havoc on the economy, Fairfax City is among jurisdictions everywhere rethinking their FY 21 budget and real-estate tax rate. In February, City Manager Rob Stalzer presented his proposed budget that included a 3.25-cent real-estate tax hike, raising the current rate of $1.075 per $100 assessed valuation to $1.1075.
At the March 24 City Council meeting, he said Fairfax could reduce it later, at budget adoption. But for now, he recommended keeping it as the advertised rate. “The budget will be adjusted in the next month, and we’re looking at what we can do differently, what we can defer and what we won’t do, at all,” said Stalzer. “This rate potentially could be used for items [such as] revenue stabilization and assistance to businesses.”
However, said Councilman Jon Stehle, “I think the budget you presented is now out the window, and there’ll be a new one to look at.”
COUNCILMAN Michael DeMarco wanted to make sure, “Given the current situation and uncertainty right now, that this gives [us] enough levers in [our] financial toolkit to manage fluctuations in our revenue.” Stalzer said the City’s concerned about FY 20, too, so both fiscal years are being reconsidered.
“The reality is, I can’t predict when we’re going to hit bottom – I don’t know what bottom looks like, yet,” he said. “So this is going to be a week-by-week discussion with the City Council and mayor. I have confidence that, eventually, when we come out the other end, we’re going to recover really well. But we’ve got a lot of work to do before we can get there.”
Councilman Sang Yi was strongly against raising taxes during this crisis. “That $1.10 tax rate was realistic, a few weeks ago, but that’s not the kind of reality we’re living in today,” he said. “So to ease the financial and economic pain our residents are going to face, we should set the rate at the equalization rate and have staff make a budget [accordingly].”
That rate, $1.0533, would enable residents to pay the same amount of taxes as last year. To make it work, said Yi, “We’d have to slim the budget by about $3.5 million; and, perhaps, our reserve fund can also help alleviate people’s tax burdens.”
But Councilwoman Jennifer Passey said they need more facts before making such a decision, so she recommended moving forward with the $1.10 rate.
COUNCILWOMAN So Lim asked if they could defer their decision to April 14 to see whatever federal assistance is available to the residents.
But Stalzer said they wouldn’t gain anything by delaying. “Candidly, we might not be able to hit $1.0533 with our revenue,” he added. “I don’t know; we just don’t have the data. We’re hip-deep in response, and we haven’t been able to pull people off to get into the analysis.”
Stehle then made a motion to advertise the $1.1075 tax rate and DeMarco seconded. Yi also wanted the decision deferred, but a vote on it failed, 4-2. His motion for an advertised tax rate of $1.0533 also failed, 4-2.
Ultimately, Stehle’s motion passed, by the same margin. Mayor David Meyer then reassured the residents watching the meeting on TV that “The core activities of the City will continue. In the long term, the City will prevail and continue to thrive.”