Fairfax officials detail budget outlook for fiscal year

Fairfax officials forecast expenses to outpace revenue in fiscal year 2025-26, which starts July 1.

The shortfall, reported during a budget workshop on Friday, means some requests, like filling a vacant police officer position and funds for the Fairfax Festival, will be hard to fulfill, Town Manager Heather Abrams said.

“This budget is solid, the town is not in fiscal jeopardy,” Abrams said. “Unfortunately, it is not growing. Our revenues are not growing at the same rate our expenses are.”

Town staff project a starting general fund balance of $4.7 million made up of previous years’ surpluses, which will cover the operating shortfall. Revenues are expected to be around $12.7 million and expenses around $14.5 million.

Finance Director Michael Vivrette said about 57% of the town’s revenue comes from property taxes. Various sales taxes make up around 15%.

“Our revenue projections have cooled,” said Vivrette, who added that county property taxes are expected to only rise 3.3% in the upcoming fiscal year. This time last year, they were up 6.4%.

Vivrette noted that because the budget workshop is a month earlier than usual, the projections are not as fine-tuned.

Public safety comprises 59% of the budget — about $4.9 million for police services and $3.5 million for fire services — and town administration 9%. Even with the growing expenses, town staff expect to be able to keep the reserve funds at 25.1%, just over the policy of 25%.

The draft budget outlook means there is little room for some requests, Abrams said. In February, organizers of the Fairfax Festival asked the Town Council for financial help. The council asked festival leaders to get more organized and raise revenues.

“I am not comfortable committing $10,000 without transparency on what kind of revenue they are bringing in,” Vice Mayor Stephanie Hellman said. “It’s a pass for me.”

Mayor Lisel Blash noted that the nation is headed into a “period of fiscal instability” that should be kept in mind.

“There may be impacts down the road based on the economy, on our pension liability, all kinds of different things, so I think it’s really good for us to get a realistic picture of where we’re at, which is we’re in an OK place,” Blash said. “There are future hazards and we need to be realistic and cautious.”

Vivrette said the town pension obligation parcel tax is projected to bring in around $2.2 million in fiscal year 2025-26. The town’s employee benefit payments, which include CalPERS and the town’s unfunded accrued liability, equal about $2.2 million. However, the stock market’s performance affects CalPERS’ estimates, and if the market is performing poorly, Fairfax would have to make up the difference.

The budget does not propose any new employees, but it does keep vacant a police officer position that has been frozen since 2008. Councilmember Frank Egger pointed out the projected overtime expense of more than $239,000, and wondered if that expense would be brought down by a new employee.

Police Chief Rico Tabaranza said a median estimate to hire a new officer would be $130,000, it would take six to eight months, and there would still be some overtime pay.

Abrams noted that employees are a long-term commitment with increased costs every year.

Councilmember Michael Ghiringhelli said that 25 years ago, the town’s administrative staff operated with far fewer people. He asked why the town needed so many employees.

Abrams said state and federal regulations have increased and staff are needed to meet those deadlines and requirements. The town can be penalized for not meeting those regulations, Abrams said.

“We’ve got to be looking at everything,” Ghiringhelli said.