With a potential shortfall of nearly $18 million in its FY 21 budget looming because of the pandemic, in January, the Fairfax City Council cut its capital and operating budgets. It also placed $7.9 million of budgeted expenses on hold.
But as the City’s finances improved, in February, the Council restored some $1.4 million of those previously frozen items into its current, General Fund expenditure budget. And during its third quarter FY 21 budget review, last Tuesday, April 6, it was able to give the go-ahead to soon restore even more items.
During that work session, City Manager Rob Stalzer said City staff now recommends an additional $166,868 worth of items held in reserve to be released, effective May 1. Chief Financial Officer Dave Hodgkins then gave a presentation.
“We’ll come back April 20 for action on our request,” he said. “We had a $20 million revenue reduction from what we proposed for FY 20 and what we adopted. Much of our increased revenues in FY 21 are going to help balance the FY 22 budget.”
He noted that the City received $4.3 million in CARES Act and FEMA aid in FY 21 but stressed that “It won’t be ongoing revenue. We expect revenues to eventually increase, over time, without raising the tax rate, because of new development.”
“But that doesn’t include the money we’ll need for our CIP [Capital Improvement Program] financing plan,” continued Hodgkins. “It calls for annual, additional funding up to 9.5 cents on the real-estate tax rate, or the equivalent – for example, increased assessed value from new construction.”
He said the $166,868 that staff is now requesting be unfrozen would go toward still-unfunded FY 21 initiatives/increases. “We’re seeking $139,955 for 2-percent [employee] merit raises, effective May 1 – not the 3.5-percent we originally requested,” said Hodgkins. “We also need $26,913 for compression relief.”
He said it’s to make up for when the employee salary scales had to be compressed to keep the City’s pay scales at the bottom levels in line with the market. Otherwise, added Fairfax Mayor David Meyer, “These people might leave the City and go elsewhere, for a small amount of money more.”
Hodgkins then told the Council members, “We won’t ask for any more budget releases. And sometime in July, we’ll come back with a fourth-quarter [budget] review. We’re looking for your guidance, going forward.”
Councilmember Janice Miller commended Hodgkins on his “thorough presentation,” telling him, “You answered all my questions ahead of time.” A majority of the Council then gave the thumbs-up for staff to proceed with its requested monetary release.
However, Councilmember Sang Yi wasn’t one of them. He wanted more information about how employees are evaluated for their merit raises so he could be sure that the City has a performance-evaluation system in place that’s equal for everyone, across the board. But Stalzer said he didn’t expect the City’s consultant on this matter to have this information available for another year.