A New Year - Reasons to be optimistic

We are now three days into a new year and the clouds hovering over our economy seem to be clearing. In fact, in the City of Fairfax there are reasons to be quite optimistic about the year ahead.

To start, we are seeing housing prices stabilize - if not increase. According to George Mason's Center for Regional Analysis, Case-Shiller and a Washington Post analysis, from 2009 to 2010 the price for homes has gone up by about 2 percent and the time on the market has gone from 71 days to 48. Ancedotally, I have heard from many people who - when refinancing - have even seen a 3 to 4 percent increase in their home's value.

At the same time, we are seeing the vacancy rates of commercial properties within the City stabilize as well. On the flip side, assessments of commercial property - which make up more than half of our property tax base - are going down. And that could have a seriously negative effect on our City budget.

While not scientific, my own observation of foot traffic at Best Buy and other City retail outlets as well as people eating at restaurants over the holidays leads me to believe that we'll see an uptick in consumer spending, which means more tax revenue. Our unemployment rate is also still around 5 percent - about half of the national rate.

Moreover, we are continuing to see renewed interest in the City as a place to invest as we still have a healthy pipeline of projects awaiting administrative or Council decisions. We are also the beneficiaries of federal stimulus spending with many government contractors finding the City a great place to set up shop given its proximity to Mason. For instance, a Fairfax Times article by Michael Pope reported that"according to a database compiled by ProPublica ... Fairfax City and Arlington received the most stimulus money per capita in Northern Virginia, almost twice as much as Fairfax County or Alexandria."

Grant it, our federal government could soon institute a variety of austerity measures that may put the crimp in spending on contractors, which could impact us. For the time being though, it's fair to say that because of where we are situtated and importance to the region, we may not receive the blunt end of any cuts. Only time will tell.

All of this good news could lead one to believe that our City budget will be peaches and cream. It won't. We still face significant challenges such as increased personnel costs related to a change in our pension system, increases in operational costs(gas, supplies, etc), regulatory requirements, a potential increase in school population and the potential for decreases in tax revenue.

With all of this said, I feel a lot better about the City's prospects in 2011 then when I first came into office in 2008 and we faced a multi-million budget deficit. Even during my first budget during the spring of 2009 the Council was able to hold the line on discretionary spending, give employees a small pay raise (the only locality in Virginia or the region to do so) and still have the lowest tax burden in all of Northern Virginia. We also earned a AAA bond rating for our prudent and wise fiscal management.

Clearly there are challenges, but the City of Fairfax has much to be thankful for - and much to look forward to in the coming year. Happy New Year to all!