The Fairfax City Council adopted the City’s FY 2014-15 budget last week, lowered the existing real-estate tax rate by two cents and gave raises to the city employees. In a special meeting, last Wednesday, April 30, the Council set City residents’ new real-estate tax rate at $1.04 per $100 assessed value, effective Jan. 1, 2015.
“This budget does a little extra for City staff,” said Councilman Jeff Greenfield. “It thanks the people, for example, like the ones who were out there tonight getting drenched in the rain, while working to keep the water out of the City buildings. And it helps the residents in this economy that’s been slow to rebound.”
However, there was quite a bit of back-and-forth discussion before the Council members could agree on the property-tax rate, how much money to set aside for Fairfax’s school-tuition expense and where the budget could be cut so the real-estate tax rate could be reduced.
THE SCHOOL-TUITION CONTRACT is the City’s single, largest expense and often fluctuates significantly from budgeted amounts. So to accommodate unforeseen fluctuations, City staff recommended Council establish a school-tuition reserve funded over several years.
Staff suggested funding this reserve via some portion of the real-estate tax revenue and/or savings realized whenever the school-tuition budget generated a year-end surplus. The city manager’s proposed budget allocated $846,000 – or 1 cent of the property-tax rate to the reserve.
Greenfield, though, proposed reducing this amount to just $250,000, saying that Council just needed to start a reserve fund and could add to it later. Councilman Dan Drummond seconded his motion and the Council approved it. Furthermore, Mayor Scott Silverthorne assured everyone that, “If there’s a need for reserve funding to the schools, the City Council will take care of it.”
Since most residents’ homes increased in assessed value this year, Council members Steve Stombres and Ellie Schmidt hoped to cut the City’s advertised real-estate tax rate of $1.05 per $100 assessed value to $1.03 instead. But Greenfield and Councilman Michael DeMarco favored $1.04, and Councilman David Meyer noted the importance of having an adequate surplus in the city’s coffers.
“Fuel and materials costs fluctuate during the year, and there are also unanticipated events,” explained Meyer. “For example, we spent a quarter of a million dollars more than we expected [this winter] in snow-removal costs.”
However, Finance Director David Hodgkins said the Council would have to find $234,000 in budget cuts to reach a $1.04 tax rate. So the members agreed to cut $40,000 from the amount budgeted for salaries for new positions, and City Manager Bob Sisson said he could find the rest of the necessary budget reductions.
Ultimately, the $1.04 real-estate tax rate passed, 5-1, with just Stombres dissenting. “Here in the City, people see value for the tax dollars they invest in the City and entrust us to spend,” said Drummond. “And we lowered the tax rate by 5 cents when we got out of the water business. City staff will continue to use the taxes wisely and the City will continue to thrive.”
Agreeing, DeMarco said, “I think we did a good job getting the tax rate down from $1.06 to $1.04. Educating our children and providing safety in our streets and homes is important. Yes, we’ve called on our citizens to pay more [because of their increased property assessments], but they’ll get more quality in their services.”
Besides that, said Silverthorne, “Most of our surrounding jurisdictions raised their rates and we lowered ours. And almost all our economic indicators are moving upward and in a positive direction for our community.”
FROM THE PROPERTY-TAX REVENUE, 2 cents per $100 assessed value will be dedicated to the City’s Stormwater Fund, and .28 of a penny per $100 assessed value will be dedicated to the school-tuition reserve.
Regarding the salary increases, the Council approved 3.5-percent merit raises for City employees, plus a .5-percent COLA (cost-of-living allowance), for a total of $428,000. This action goes into effect July 1.
The Council also adopted the tax rate for property zoned commercial and industrial. It remained unchanged at 5.5 cents per $100 assessed value. Revenue from this tax is used exclusively for transportation improvements within the City.