County and Schools Reaffirm Revenue-Sharing Principles
- Joint work session starts FY 2017 Budget process
- Transparent, predictable, flexible framework for developing budget
- Initial local tax revenue transfer to APS 46.5%
The Arlington County and Arlington Public Schools boards on Thursday, Oct. 15 reaffirmed the revenue-sharing principles for public education during a work session at the start of the Fiscal Year 2017 Budget process.
“Revenue sharing provides a transparent, predictable and flexible framework for both the County and Schools’ budget development processes,” the Boards noted in their revenue sharing principles document.
Under the agreement, APS is expected to receive 46.5% of local tax revenues in Fiscal Year 2017. The Board has continued to raise the percentage of local tax revenues, yielding more funding for schools in recent years as APS has dealt with growing enrollment and other increased costs.
The Boards also noted that “given the increased enrollment and the demands that growth places on both School and County resources, both the School Board and County Board are committed to prioritizing expenditures to ensure that the needs are met in a balanced and fiscally responsible way.” The two Boards agreed that “one-time revenue shortfalls or gains are shared between the County and Schools, and will be allocated based on the percentage share of local tax revenue established for that fiscal year.”
In addition, “at (budget) closeout, APS will contribute to the County’s operating reserve based on the revenue sharing percentage in effect for that particular fiscal year. APS will also, as needed, contribute to a limited joint County/APS infrastructure reserve fund to meet infrastructure improvements required with school expansions and new schools.”
Preliminary budget outlook
The two Boards also received their first public briefing from staff on the preliminary outlook for revenues for FY 2017.
The County faces a mixed economic picture as it begins the months-long process of crafting a budget for FY 2017, which begins in July 2016.
Acting County Manager Mark Schwartz pointed out that the County’s office vacancy rate, which began to rise in 2011, and climbed to a historic high of 23.6% in the fourth quarter of 2014, has begun to drop and is currently at 20.8%. Much work remains to be done, to bring the vacancy rate back to single digits, Schwartz said, but the current trend is encouraging and reflects both the improving economy and new efforts by the County to attract businesses.
County staff reported that residential real estate assessments are expected to rise slightly — between 1% and 3%. Residential real estate sales and prices are up slightly in 2015 over 2014. Commercial assessments, however, are expected to stay flat or fall slightly and the County’s office vacancy rate is expected to remain high. In Arlington, commercial property represents half the property tax base.
Other taxes — including sales, meals and Transient Occupancy Tax are all increasing, while Personal Property Tax and BPOL are expected to remain flat.
Arlington’s population, school enrollment and service demands are expected to continue to grow in FY 2017. The County’s population grew 4.4% between 2010 and 2015 and is projected to grow by 66,300 or 31%, through 2040. Student enrollment has grown 2.8% to 5.2% per year for the past five years and is projected to grow by 2.7% to 3.5% per year over the next five years.
The County’s growing population means increasing demands on public safety and County services.
To view the Budget Overview presentation, visit the County website.
To read the Revenue-Sharing Principles,visit the County website.