Fairfax City Adopts FY 23 Budget

Fairfax City Adopts FY 23 Budget

Real-estate tax rate reduced 6.5 cents; average tax on Fairfax City home will increase $127.

Fairfax City’s newly adopted FY 23 budget fulfills City Council’s goals and directives. But more important for the residents, it reduces their real-estate tax rate by 6-1/2 cents.

When City Manager Rob Stalzer unveiled his proposed budget in February, he initially recommended trimming that tax rate from its current $1.075 per $100 assessed valuation to $1.035. But the figure adopted last Tuesday, May 3, reduced it even further to $1.01.

Because of the 8.75-percent rise in assessed values in calendar year 2022, the average residential tax bill will increase 2.2 percent. That means the owner of an average Fairfax City home valued at $588,964 will pay $127 more in real-estate taxes – less the $274 it would have cost had the tax rate remained at $1.035. 

“The [real-estate] tax rate strikes the right balance between the quality of life our citizens expect and the [rising property assessments],” said Councilmember Joe Harmon.

Stalzer explained that the reduction was made possible due to “an estimated $500,000 surplus” the City will receive because of Fairfax County’s recently updated FY22 school-tuition cost estimate. 

In addition, the average, annual, commercial real-estate tax bill will decrease by 4.2 percent. The personal-property tax rate remains at $4.13 per $100 assessed valuation. However, the personal-property tax rate on vehicles was lowered from 100 percent of fair-market value to 86 percent. (The tax rate for machinery and tools will remain at 100 percent). 

The overall FY 23 budget contains $193,908,167 for all funds and $162,157,744 for the General Fund. 

“[These] expenditures continue the significant progress made over the past several years,” said Chief Financial Officer David Hodgkins. “The adopted budget contains the necessary personnel, operating and capital resources to support economic recovery and grow the City’s commercial base in an impactful and sustainable way.”

The General Fund spending plan also provides the financial investment required to support the City’s FY23-27 CIP of $11 million, which was adopted last week, as well. It includes 116 projects and is fully funded at $80,409,389 for FY 23. The FY23-27 CIP total amount is $309.1 million, and its projects address many of the City’s current and future needs.

The FY 23 General Fund budget is $7.2 million higher than it was in FY 22 – an increase of 4.6 percent. The total FY 23 budget of nearly $194 million for all City funds – General, Wastewater, Stormwater Utility, Transit, Old Town Service District, Cable, Transportation Tax, Capital and American Rescue Plan Act Funds –– reflects a 5.3-percent increase over the FY 22 amount. 

It reestablishes the Old Town Service District tax rate at 4 cents per $100 of assessed value (a 4-cent increase from the previous $0.00 rate). And it raises the City’s required 12 percent undesignated fund balance to 15 percent, further bolstering Fairfax’s AAA bond rating. But the City’s enterprise utility funds for wastewater and stormwater will operate without General Fund dollars, while remaining financially sustainable. 

The new budget fully funds the City School Board’s $53,480,000 FY 23 contract with FCPS. And it includes a 3.5-percent merit increase and a 2.6-percent market-rate adjustment to City employee pay scales. The goal is to ensure greater parity within the Northern Virginia region and aid the City’s recruitment and retention efforts. It also provides for the transition of public-safety compensation plans from pay ranges to a step system, effective Oct. 1.

The budget funds a net increase of 9.75 full-time equivalent positions to address the growing needs and support initiatives in the departments of Economic Development, Human Services, Fire Code Administration, Fleet Maintenance, Information Technology, Finance, Public Works, Wastewater and Stormwater Utility.

During discussions last week, prior to adoption of the budget, it was obvious that not everyone was on board with it. “These are decisions none of us take lightly,” said Councilmember Tom Ross. “I’m concerned about reducing the tax rate. I understand our revenues have increased and tax assessments have to. So this is an opportunity to [use the increased income] to invest in the community. I hope we don’t have to increase the [real-estate] tax rate next year.”

Councilmember Sang Yi, however, believed the real-estate tax rate should have been reduced further. “I just felt like we could do a little bit better, considering the increased property assessments,” he said. 

“And with inflation, the cost of gas and food have gone up 8-10 percent – and not everyone gets a COLA [cost-of-living adjustment in their pay],” he continued. “That’s why I can’t support the $1.01, but I appreciate all the hard work that [City] staff and my colleagues have put into this budget.”

Meanwhile, Councilwoman Janice Miller – who made the motions to approve both the budget and the real-estate tax rate – explained why she did so. “This budget fully funds the City services and provides an increase in compensation for our dedicated and hardworking staff, and it funds the CIP,” she said. “By lowering the tax rate, we [still] funded the stormwater utility. And this budget is fair, reflects our values and preserves our funding plan for FY 23. I’m happy and proud to support the changes we made tonight, and I believe there’s enough flexibility in the budget to provide for the coming year.”

Ultimately, the budget passed with a vote of 4-2, with just Ross and Yi voting no.