- Board calls for balanced budget with no tax rate increase
- More than $24 million gap projected for Schools, County
- Tax revenues projected to grow 3.1%
- FY 2014 ends under budget
The Arlington County Board on Tuesday, November 18, directed the County Manager to develop a balanced proposed budget for Fiscal Year (FY) 2016 that assumes no tax rate increase and includes options for County budget reductions, excluding Schools. The projected budget gap for FY 2016 is more than $24 million, which includes more than $20 million for Arlington Public Schools (APS), and $4 million for County government.
“This will be another difficult budget year for our County,” said Arlington County Board Chair Jay Fisette. “To avoid a tax rate increase, while at the same time balancing community needs such as school enrollment growth, we have told the County Manager to include no new programs for FY 2016 beyond those previously approved by the Board, and to give us options for service and budget reductions.”
The Board emphasized the importance of maintaining long-term financial sustainability and preserving the County's triple-AAA bond ratings while funding services that protect the health and safety of Arlington residents, continue investments in a quality public education, provide safety net for those in need, and ensure affordable housing and environmental sustainability.
The Board approved the guidance by a vote of 4-1.
$4 million projected County funding gap
Increases in expected County costs are in the areas of employee compensation, healthcare, debt service and funding for Metro. Funds also are needed to cover full-year funding for the County's homeless services center and costs associated with the consolidation of the Department of Human Services' office space at Sequoia Plaza.
The current projected funding gap maintains the current real estate tax rate of $0.996 per $100 of assessed value (including the sanitary district tax), the lowest tax rate in the region. The gap does not include program expansions, or increases in demand for services. The County Board's guidance notes that the final APS percentage of locally generated revenues will be adjusted through budget deliberations.
If tax revenues exceed the current forecast of 3.1 percent growth, the Board advised the Manager to propose optional uses of the additional funding, including a tax rate reduction, and applying the revenue toward priority demands, such as student enrollment growth.
County Manager Barbara Donnellan already has taken steps designed to give the Board options for closing the projected funding gap. She is continuing an existing hiring slowdown and has instructed department heads to provide options for budget and service cuts.
Stronger revenue growth expected in FY 2016
Based on current projections, revenue growth is anticipated to be stronger in FY 2016 than in the last few years. The County is projecting the overall real estate tax base to rise 3.0%, with residential real estate assessments rising, on average, 6% to 8%, while commercial assessments are projected to be flat or slightly negative. Residential values reflect the rebound in the single family market.
Commercial values, however, continue to be under pressure from rising vacancy rates, due to the impacts of Defense Base Closure and Realignment (BRAC), the uncertainty of the federal budget, and growing regional competition in the commercial office market. Real estate taxes, which are based on assessments, are the single largest source of revenue for the County.
Read details on the County website; click on the Nov. 18 County Board Recessed Meeting and scroll down to item #32.
The budget guidance kicks off the annual budget process that sets the box in which the County Manager will develop a proposed budget – to be presented in February 2015. Public work sessions with each County Department will be held between February and April. Public budget and tax rate hearings will be held in March and the intensive process will culminate in April with the County Board's adoption of the FY 2016 Budget.
“It is our number one job to ensure that the budget reflects the values of our community and that each dollar is used wisely. Our credit rating reflects how highly our County's fiscal management is viewed. We take this responsibility seriously.”
Arlington's fiscal year runs July through June. In December, County Manager Barbara Donnellan and APS Superintendent Patrick Murphy will hold a joint community budget forum. Donnellan will meet with the chairs of County commissions on December 18, and will hold an online community chat on a date in December TBD. To learn more about these and other budget events, visit the County website.
FY 2014 ends with surplus driven by savings and strong tax revenues
The County Board also closed out the FY 2014 Budget. Expenditure savings were realized by both the County and Schools, and real estate taxes came in slightly higher than anticipated. Read details on the County website; click on the Nov. 18 County Board Recessed Meeting and scroll down to item #31.
Arlington County's General Fund balance for FY 2014 was $233.1 million; most of which, $203.3 million, or 86%, is allocated in accordance with reserves, previous commitments or current County Board policy or legal restrictions, including:
- $62.4 million to maintaining the operating & self-insurance reserves, which are critical to keeping the County's triple AAA bond ratings.
- $48.8 million for the Affordable Housing Investment Fund (AHIF).
- $46.7 million for unspent expense balances and additional tax revenue to support Schools.
- $39.2 million in funding decisions made by the County Board as part of adoption of the FY 2015 budget, including funds for affordable housing, housing grants, schools, an economic stabilization contingent, and a number of other priority programs.
The remaining $29.8 million in discretionary funds have been allocated for one-time items and to provide flexibility for the FY 2016 budget, including funding in FY 2016 for a number of programs funded in FY 2015 with one-time monies, such as AHIF, maintenance capital and housing grants. To view the other discretionary funds allocated, visit the County website; click on the Nov. 18 County Board Recessed Meeting and scroll down to item #31.
The Board voted 5-0 to approve the closeout appropriations.