The thing to remember about the proposed City of Fairfax budget for FY 2016 is that it’s still a work in progress. City Manager Bob Sisson presented it last Tuesday, March 3, to the City Council, but there will be work sessions and public hearings before it’s finally adopted on April 29.

He called the document “an opportunity for the Council to hear what [City] staff thinks is going to happen over the next 12 months, beginning July 1.” And he encouraged residents, too, to examine the budget, attend a meeting and participate in the discussions.

Sisson described the City’s financial outlook as stable, with moderate growth projected. But Fairfax’s real-estate tax base – its single, largest, revenue source – will only experience limited growth.

“In FY ’15, the assessed value of real estate grew 3.3 percent, or $176 million,” he said. “This year, it’ll be just 1.8 percent, or $100 million.”

Meanwhile, General Fund expenditures are slated to jump by nearly $3.1 million. Some 56.4 percent of these outlays – including the City’s instructional contract with Fairfax County, non-education county contracts, required annual contribution to retirement systems and debt-service payments – are areas that can’t be financially reduced. That leaves only 43.6 percent of the General Fund budget for the Council to examine for possible funding cuts.

And although the school expenditure may eventually be adjusted somewhat, the City’s education contract is expected to be $46.1 million, or an increase of $660,000 over last year’s amount. Overall, the budget recommends total City expenditures of $172,485,000 – a 7-percent hike over the current fiscal year. Recommended General Fund spending is $131,054,000, or a 2.4-percent rise.

AS A RESULT, Sisson proposes raising the residential real-estate tax rate by 2.5 cents per $100 assessed valuation and the Commercial and Industrial real-estate tax rate by 2 cents per $100 assessed valuation. He also recommends a waste water utility-rate increase of 10 percent.

At the current real-estate tax rate of $1.04 per $100 assessed valuation, a person owning a home valued last year at $300,000 paid $3,120 in real-estate taxes. But this year, because of average 2.9-percent assessment increases, that same home is worth $308,806; and if the tax rate rises 2.5 cents to 1.065 cents per $100 assessed valuation, his tax bill would be $3,289 – or $169 more, for a 5.41-percent hike.

Two cents of the tax rate, or $1.1 million, will continue being dedicated to the Stormwater Fund, necessary to meet state and federal regulatory requirements, plus maintain aging infrastructure. In order to keep tax bills the same as last year, the City would actually have to reduce the real-estate tax rate by 3 cents to $1.01 per $100 assessed valuation.

Even with the proposed increase, said Sisson, the City’s real-estate tax rate would be the third-lowest in the region, only higher than Alexandria and Arlington. Fairfax County’s current tax rate is $1.131. And, he added, “We’re healthier and more diversified in our revenue than many of our sister jurisdictions.”

Still, with 1 cent of real-estate property tax equal to $567,166 in revenue, the City would have to cut more than $1.4 million from its projected FY ’16 spending in order to avert a real-estate tax increase.

Yet that could prove to be a tall order, considering the fact that “there are never enough resources” to fund all the needed expenditures, as it is, said Sisson. For example, staff requested more than $12 million for Capital Improvement Projects, but that number was scaled back to $5.6 million – including $2.1 million for street repaving – in the proposed budget.

Sisson also noted that the recommended 10-percent rate hike for wastewater services is necessary to generate sufficient funds for debt service relating to the City’s share of improvements at the Norman Cole Wastewater Plant. The money will also be used for ongoing capital needs of the City’s wastewater-collections system.

The proposed budget also includes some $45,000 for a pay and classification study for City employee salaries, plus 3.5-percent merit raises ($313,000) for eligible employees and a 1-percent market adjustment ($270,000).

AFTER THE PRESENTATION, Mayor Scott Silverthorne and the Council members thanked Sisson, Finance Director David Hodgkins and City staff for all their hard work preparing the budget document.

Silverthorne also reminded everyone that “This is the city manager’s budget, and we’ll be hearing from every key department head about their department’s needs. So there will be lots of opportunities for questions and dialogue. One of the key issues this Council will grapple with is the setting of the tax rate.”

“I’m disappointed with the [proposed] tax increase,” said Councilman Michael DeMarco. “So I think we should work on that with a sharpened pencil.”

Councilman David Meyer said Fairfax’s tax base has grown over time and “without redevelopment of our commercial properties, we won’t see appreciable growth in our tax base.” To Sisson, he said, “Our most important asset is our employees, so I commend you for recommending the pay and classification study; this is long overdue.”

Councilwoman Nancy Loftus called the budget document “bad news” and said she was disappointed in it. “Proposed expenditures are up, as are proposed residential, commercial and wastewater tax increases,” she said.

“And with increased home assessments, residential tax bills will already be higher, even if the real-estate tax rate remains flat,” she told Sisson. “You say commercial growth is down, yet you want to raise the commercial tax rate for businesses that are already struggling.”

However, revenue from the commercial and industrial tax helps fund the City’s transportation infrastructure. So, said Silverthorne, “Clearly, one of the questions we’ll have to grapple with, going forward, is if we want to invest in our CIP or not.”