With its approval of the budget, the council set the real estate tax rate at 79 cents for every $100 of assessed property value, up from 72 cents for the current fiscal year.

The owner of a single family detached home with an assessed value of $505,000, which is the average assessment of such a home in the city in 2008, would pay an annual bill of $3,990, or about equal to last’s year’s bill. In 2007, the average assessment for the same type house was about 9 percent higher or $555,300.

City Assistant Manager and Director of Finance David Hodgkins said that even with the higher tax rate, and because property assessments are down overall, residential real estate tax bills should only increase about 2.5 percent on average.

“We will see a tax bill that is smaller than the rate of inflation. That’s still relatively good news,” said Councilman Scott Silverthorne, who will not be seeking reelection in May.

While residential assessments are down, commercial assessments in the city are up by double-digit percentages in some cases.

With commercial real estate tax bills anticipated to rise substantially, the council looked to ease the burden for at least some commercial property owners by reducing a special tax surcharge levied on properties in the downtown and in the Fairfax Boulevard business improvement district (BID).

The council also decided not to exercise an option made available by the Virginia state legislature that permits localities to levy a surcharge on commercial real estate of up to 25 cents for every $100 of assessed value. The state mandated that taxes collected from the surcharge could only be used to fund transportation projects.

Mayor Robert Lederer praised the six-member council for making the cuts necessary to help bridge an original budget gap of between $6-9 million, which grew even larger with the loss of several hundred thousand dollars in investment interest and an unexpected increase of about $2.2 million in the school tuition contract with Fairfax County Public Schools.

“I applaud the city staff. I applaud the council,” Lederer said. “At the end of the process, I think this body served the community very well.”

Councilman Gary Rasmussen was not as complimentary. Despite voting for the budget, he criticized the sale of a public asset, namely the old library property, to help balance the budget.

He also criticized the use of part of the general fund balance to aid in closing the budget gap. The fund balance is a kind of rainy-day fund primarily to pay for unanticipated costs during the fiscal year. The fund balance was reduced by about $3 million, from an original 12 percent of the general fund budget to about 10 percent.

Rasmussen said the council crossed the line in its “stewardship and good financial management of the city.”

The city council also approved a personal property tax rate of $4.13 per $100 assessed value, which is unchanged from last year. The council increased the water and sewer service rates by 7 percent. Connection fees remain unchanged.