Updates from Letty – December 16, 2022

Blog posts are the personal views of Letty Hardi and not official statements or records on behalf of the Falls Church City Council

Dear Friends,

We wrapped up our last meeting of 2022 and covered topics that I expect will be continued themes in 2023 – budget guidance, speed cameras, and employee compensation. Looking ahead, we’ll be discussing the rules for outdoor dining (that were temporarily relaxed during Covid), our community climate plan, and recommendations from the Planning Commission on T Zones in the first quarter of 2023.

Speaking of T Zones, I’ve been asked about my thoughts since City Council’s initial vote in May. I’ve deliberately chosen not to blog about T Zones while it’s in the Planning Commission’s hands (you can find my older blog posts easily in the search bar), but I am reading the comments and watching/attending the various discussions. I look forward to the PC’s recommendations back to us in early 2023. For your holiday reading, this Brookings piece is a good primer on “gentle density” and how adding more diverse housing stock helps with overall affordability, climate change, and economic opportunity.

We’ll be back from our winter recess on January 9 and my blog posts will resume then. I’m happy to hear from you via email over the holidays, but I will be taking digital breaks here and there. I wish you a joyful and healthy holiday season.


What Happened This Week:

(1) FY24 Budget Guidance

As I wrote last week, the early forecast for the coming budget year indicates 4.2% organic revenue growth (blended from a combination of increased real estate values of 3.9% and other local taxes growing 4.9%). This week, we voted 7-0 to adopt budget guidance that the general government and schools budgets “should strive to be within organic tax revenue growth” – in laypeople’s terms, that means without increasing or decreasing the tax rate.

Letty’s thoughts: As is often the case, there’s nuance behind a 7-0 vote. Unlike last year where we saw abnormally large real estate value jumps and a very strong local economy that enabled us to cut the tax rate by 9 cents, the upcoming FY24 budget will be different and more challenging. I have colleagues who fall on both sides of the tax rate issue – some see an opportunity to further reduce the tax rate and some would like to fund critical needs that may need more revenue beyond organic growth. I am cautious about a potential recession in the coming year (and our slowing sales tax revenue growth could be an early warning sign) and high interest rates, all of which could mean flat revenues next year, especially real estate which is our largest revenue driver. While our reserves provide us a very healthy cushion in the event of a downturn, I am also acutely aware of inflation and the impact to households. If the tax rate were to stay unchanged, the median household will still see a $400+ increase in their annual real estate tax bill. At the same time, I share the desire to ensure our staff are competitively compensated, especially in a tight labor market, and I know we face higher costs all around. We also want to keep up our investments in transportation safety, climate, and affordable housing. Last year, we added over 14 FTEs across general government and schools, with many of the positions still vacant due to hiring challenges – so throwing more resources may not be the right answer either. With all that in mind, my starting point is to keep the real estate tax rate flat at $1.23 – I look forward to budget discussions in the spring and opportunities to go up or down as needed.

(2) Speed Cameras

We also heard a recommendation from the Chief of Police on the feasibility of speed cameras in our school zones. The General Assembly granted localities the ability to use speed cameras in school and construction zones during school hours/days. Here’s what you need to know:

  • Out of the school zones in the city assessed by speed camera vendor, the staff recommendation is to deploy cameras on both sides of the 800 block of Broad St, as it would best meet the criteria and has the most traffic and pedestrian volume.
  • Based on the study and traffic count, the vendor estimated that approximately 10K speed violations per year would result from speed cameras in this corridor (with 20-40% not being able to be ultimately ticketed due license plate illegibility, etc).
  • For comparison, we see about 2K red light violations and 800 school bus stop arm violations per year, which are the other automated enforcement* tools deployed in Falls Church.
  • We would also look to use a similar tiered fine structure as our neighbors who are also implementing speed cameras – if a car is measured at 11-19 mph over the speed limit, there would be a $50 civil fine; if 20 mph over, a $100 fine.
  • We expect the program to be further discussed and up for approval in early 2023, with a target implementation before the next school year. There is good data that speed cameras not only help enforce speeds, but deter future speeding, so I hope to see this implemented ASAP.

*It’s important to note that while speed cameras are “automated enforcement”, the legislation requires manual review by sworn officers behind the scenes that we will need to resource.

(3) Employee Compensation

At the beginning of 2022, we commissioned a salary study that looked at external/market competitiveness of city salary and benefits across the region and internal equity across job categories. The full report is 50+ pages, with the main takeaway that if we target the market midpoint, the city has been 2-7% below market in salary, whereas benefits are very competitive. In the last budget, we had allocated $200K as a placeholder to make necessary salary adjustments from this study. To fully implement the recommendations, it will require another $200K in the upcoming budget so the changes can be phased over two years.

Letty’s thoughts: as discussed in the FY24 budget guidance, competitive compensation for our employees is a top priority for us, especially in a tight labor market where we are competing for talent to deliver our ambitious priorities. There needs to be a broader discussion on our compensation philosophy for city employees – in a small jurisdiction like ours, I believe compensation needs to reflect the realities of a flatter organization structure, which may have less advancement opportunities coupled with more complex roles (ie, more generalists and “jack of all trades” than specialists) than our larger county neighbors. Also, additional opportunities to differentiate compensation based on performance should be discussed (ie, merit based pay) which is a common practice in the private sector to reward and retain top talent. To compete for talent and to be the employer of choice for current employees, several of us also expressed the desire for city salaries to be targeted *above* market midpoint, so that will add increased cost pressure in the upcoming budget.