City Passes Budget - How it Will Affect You

The City of Fairfax has officially adopted its budget for Fiscal Year 2013-144 (FY 13-14).

In a nutshell, yes – taxes are going up. But, not as much as City staff had originally proposed.

General fund and spending

In its meeting last Tuesday, April 30, the City Council approved the City’s $125.6-million general fund operating budget for FY 13-14. That is an increase of $5 million, or 4.2 percent, from the prior year. 

The total of all appropriated funds is $175.4 million, an 8.3 percent increase above the previous fiscal year’s budget. 

Real estate taxes going up

As expected, the Council did vote to raise real estate taxes, for the second year in a row, for residential home owners – but, not as much as City Manager Bob Sisson originally proposed.

Sisson had originally proposed raising the residential real estate tax rate 8 cents per $100 of assessed value of a property.

Just last year, the City raised the tax rate 7 cents, bringing it from $0.94 per $100 to $1.01.

Faced with a second rate increase - this time for 8 cents, bringing it from $1.01 to $1.09 – many Council members, and Mayor Scott Sliverthorne himself, hesitated.

For Councilmember Steve Stombres, he said he struggled with the proposed rate hike. He said, while he knew the City needed the money, he worried how that would affect many of the City’s more struggling residents. After all, as he said in last week’s meeting, it wasn’t that long ago that he himself was one of them, having spent a considerable time unemployed.

“When you look at last year, the tax rate increased from 94 cents to 1.01, and now to [potentially 1.06 or 1.09]. That really has a cumulative effect, and it can be a real challenge,” he said.

Stombres said, when the City Manager first proposed the 8-cent increase, he struggled to try and find other places the City could make cuts, to save residents that increase.

In the end, he proposed his own suggested set of cuts that equaled roughly $4.5 million, which he hoped would mean the City wouldn’t have to increase taxes at all.

“The cuts ranged from $300 here by eliminating snacks for the councilmembers, to hundreds of thousands of dollars there from some high-profile capital projects,” he said.

In the end, some of Sombres’ proposed cuts were adopted, and some of them weren’t.

The final word at last week’s meeting was that the City downgraded its real estate tax increase from 8 cents per $100 of assessed value, to 5 cents, bringing the new total to $1.06 instead of $1.09.

In real dollars, that means the average residential homeowner’s tax bill will increase by 7.1 percent, based on the adopted rate of $1.06 and a 2.1 percent increase in assessed values. 

On average, this equates to an additional $299 on a homeowner’s annual real estate tax bill, based on the average residential home assessment of $427,442 in Fairfax City.

The average commercial property owner’s tax bill increases by 4.7 percent from their prior year tax bill; commercial real estate values remained flat, the City reported.

The Old Town Service District tax will also remain unchanged, at 6 cents per $100 of assessed value. 

City Manager Bob Sisson said a big reason that they were able to downgrade the proposed increase from 8 cents to 5 cents is that projected school expenditures came in lower than expected.

City officials explained, enrollment dropped slightly in Fairfax City schools. Therefore, the amount the City had to pay into its contract with the Fairfax County Public School district went down by around $650,000.

Councilmembers Steve Stombres and Eleanor Schmidt voted against the increase in the real estate tax rate.

Wastewater rates to go up, but not water rates

The City Council also approved a wastewater rate increase of 10 percent, which they said will help offset costs of “the significant number of capital projects and debt service costs relating to the city’s share of Fairfax County wastewater plant upgrades, where the city’s wastewater is treated."

In a bit of good news, the City Manager had originally proposed raising residents’ water rates by 9.5 percent – but, thanks to the recent sale of the City’s water system to the “less-costly” Fairfax Water system, the City voted to cancel that increase.

Where will the money go?

The FY 13-14 adopted budget dedicates 2 cents on the real estate tax rate to the city’s stormwater fund, up from 1 cent last year.

City officials said, these funds will be used to address aging stormwater infrastructure and to meet future regulatory requirements. 

Revenue from the City’s commercial and industrial real estate tax, which they kept at its current rate of 5.5 cents per $100 of assessed value, are dedicated exclusively for new transportation projects in the city.  

In addition, capital fund expenditures will increase by $2 million, or 70.1 percent, to $4.9 million, for the next fiscal year. $1.6 million of that amount supports essential road and sidewalk maintenance, the City said.

Senior citizens

To aid the City’s older and aging population, the City Council voted to increase the maximum income eligibility limits of the Senior/Disabled Tax and Rent Relief Program to $72,000, and approved an increased disability income exemption of $10,000.

Merit increases for City employee salaries

Though it was not originally included in the City Manager’s proposed budget, the City Council voted last week to approve employee merit raises of 3.5 percent, meaning that, on the anniversary of an employee’s hire date, they are eligible for a pay increase of up to 3.5 percent, based on a favorable evaluation.

Also, public safety employees who have been at the maximum of their pay grade for some time will be eligible for “longevity steps” of 3.5 percent.

The total cost of these merit pay increases is around $300,000.

Councilmember Steve Stombres voted against this motion.

Reactions to the new City budget

Mayor Scott Silverthorne said, while imposing tax increases on residents is never an easy choice, he thinks the compromise all parties arrived at, between the City Manager’s original proposed budget, and what they ended up with, is a good one.

He thanked everyone profusely during last week’s City Council meeting, for all their hard work on the FY 13-14 budget.

“While it’s been a tough five years for the local economy, the City of Fairfax continues to slowly recover,” he said.

“I was pleased that the City Council reduced the City Manager’s proposed tax rate by several cents, bringing us closer in line to other jurisdictions,” he continued. “At the same time, the City will be making record investments in our Capital Improvement Program, and is moving aggressively to address the City’s storm water needs. These investments are long overdue.”

While Councilmember Steve Stombres said he is also happy the City was able to downgrade the rate increase, he said he is still disappointed the City didn’t avoid it altogether.

“I feel like this tax increase and this budget missed the mark in finding that balance cities need,” he said, describing an important balance between needing the money to fund essential services, while at the same time not over-taxing residents. “I try to think what it's like to be a senior or a single mom in this economy, and I think we missed the balance.”

“I thought we could have gone a lot further without compromising a lot of quality services we have in the city,” he added.

Stombres said, he knows the City is still trying to “catch back up” from a budget deficit it has been dealing with for the past few years, but he said, “You really can't catch back up in one year.”

HIGHLIGHTS FROM THE COMING FY 13-14 BUDGET:

• General fund expenditures and revenues of $125.6 million, an increase of 4.2 percent.

• Expenditures for all funds total $175.4 million, an increase of 8.3 percent.

•  Capital fund expenditures for general fund supported projects of $4.9 million, representing 70.1 percent increase over funding adopted in 2013.

• Adopted real estate tax rate of $1.06 per $100 of assessed value, a 5¢ increase from fiscal year 2012-13 real estate tax rate.

• Stormwater fund – $1.09 million (equivalent to 2¢ dedicated on the real estate tax rate) to maintain the city’s stormwater infrastructure and ensure compliance with pending regulations.

• Assessed value of all real property increased $111,800,000, a 2.1 percent increase.

• One cent on the real property tax rate is about $545,000.

• No change to the personal property tax rate of $4.13 per $100 of assessed value.

• No change to the commercial real estate tax rate of 5.5¢ per $100 of assessed value, dedicated for transportation improvements.

•  Merit increases of 3.5 percent for eligible employees and public safety longevity steps at 3.5 percent ($300,000 cost impact).

• Water rate remains unchanged and wastewater rate increase of 10 percent.

The adopted budget will be posted on the city’s website prior to July 1, when it goes into effect, at http://www.fairfaxva.gov/budget/budget.asp. A limited number of printed copies of the adopted budget book will also be available July 1 in the Finance Department, Room 313 at City Hall, 10455 Armstrong Street.  

For information on the fiscal year 2013-14 adopted budget, contact Jennie Tripoli, Assistant Director of Finance, at 703-385-3973 or jennie.tripoli@fairfaxva.gov.

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