(Note: this release was corrected on Nov. 20, 2019 to reflect that $500,000 in FY 2019 close out funds was allocated to be set aside for emergency housing assistance in FY 2020 and not FY 2021, as stated in the original release, issued Nov. 19, 2019).
The Arlington County Board today instructed the County Manager to include no real estate tax rate increase in his Proposed Fiscal Year 2021 Budget, and to provide more money for affordable housing.
“The Board understands that anticipated increases in property assessments could have a real impact on residents,” Arlington County Board Chair Christian Dorsey said. “We want the Manager to come back to us with a proposed budget with no increase in property tax rates and to consider a reduction in the tax rate if possible. Our guidance to the Manager also emphasizes the need to invest more in preserving and creating affordable housing in Arlington, including housing affordable to extremely low-income families.”
The Board also directed the Manager to propose “long-term efficiencies and improvements in service delivery that will continue beyond FY 2021,” and said that any new programs, or expansion of existing services, should be funded by increased revenue, including fees or re-allocations.”
The Board’s guidance followed a more upbeat financial forecast for FY 2021 compared to recent years from County Manager Mark Schwartz at the Board’s Tuesday, Nov. 19, 2019 Recessed Meeting.
“Our focus on economic development is starting to pay off,” Schwartz said. With County revenues expected to grow by three to four percent in FY 2021, “I’m confident that a stable budget year is ahead, which will allow us to continue investing in affordable housing, Metro, schools and other community priorities,” he said. Real estate assessments are expected to grow between four percent and six percent. For every one percent change in assessments, the average residential real estate tax bill increases $68.
Emphasizing funding affordable housing, preventing displacement
The Board directed the Manager to include options for increasing funding for the County’s Affordable Housing Investment Fund (AHIF) by at least $3 million, $5 million, and $9 million above the FY 2020 level of $16 million by using both ongoing and one-time funds. AHIF, a revolving loan fund, is the County’s primary vehicle for funding affordable housing.
The Board asked the Manager for recommendations for how an increment of new AHIF funds or other housing funds could be used to support the housing needs of residents making less than 30 percent of the Area Median Income (AMI). Recommendations, the Board said, could include a set-aside for achieving deeper affordability in new committed affordable housing projects in FY 2021; loans to refinance existing committed affordable housing projects and changes to Housing Grants formulas or eligibility to serve more residents making less than 30 percent of the AMI.
The Manager also will develop proposals for funding, staffing and policy approaches to better monitor trends in rents in Market Rate and Committed Affordable apartments and to support low-income residents facing housing instability as a result of significant increases in rents and/or utilities. Proposals the Board said it wants to see include counseling and tenant services; increased emergency assistance through the County’s eviction prevention fund; legal services; outreach specialists embedded within County agencies, on site and in partnership with Arlington Public Schools or within another community partner.
Any increase in AHIF funding proposed for FY 2021 should target meeting the needs of households in Arlington earning no more than 30 percent of the Area Median Income, the Board said. The federal government considers households earning less than 30 percent of the AMI to be extremely low-income. A four-person household in the Washington Metropolitan Area earning 30 percent of the AMI earns about $32,760 a year.
The Board also directed the Manager to develop a strategy for the County to fund or facilitate the purchase of property for affordable housing and community facilities.
The Board asked the Manager to submit a review of the County’s StormwaterWise Landscape Program, and any recommended changes, with his proposed budget. The County program funds voluntary projects to reduce stormwater runoff from private properties.
The Manager also will provide an update on potential alternative funding approaches for Arlington’s stormwater programs, specifically an analysis of the pros and cons of continuing the stormwater tax or an alternative approach of a fee based on impervious surfaces. The Board asked that the Manager explore opportunities to deploy flood sensors and report to the Board on best practices for flood warning systems and identify potential locations in the County as part of the County’s emergency response.
The Manager’s proposed funding for Arlington Public Schools in FY 2021 should be consistent with the Revenue Sharing Principles, which in FY 2020 allocated 53 percent of tax revenues to the County and 47 percent to Schools, the Board said.
The Board adopted the FY 2020 Budget in April 2019, and the fiscal year began on July 1, 2019. The Board adopted an increase of two cents per $100 of assessed valuation in the property tax rate at that time, with 1.5 cents devoted to Arlington Public Schools. The increase raised the Calendar Year 2019 tax rate to $1.026, including the sanitary district tax, per $100 of assessed value.
Fiscal Year 2019 Budget Close out
The Board also voted unanimously to close out Fiscal Year 2019’s budget and allocate $23.2 million that is not needed for reserves, restricted funding, allocations already approved by the Board, or needed for projects that straddle multiple fiscal years. More than half the carry-over funds were set aside for FY 2021 budget deliberations.
The $23.2 million of discretionary funds is 2.7 percent of the revised FY 2019 County General Fund budget, excluding schools. By adopting the recommendations of the County Manager, the Board allocated the funds to three areas:
- $13.9 million was set aside for FY 2021 budget deliberations.
- $6.8 million was allocated to increase the Budget, Revenue and Economic Stabilization Reserve, which increased County reserves from 6.0 percent to 6.5 percent, a critical step in ensuring the County’s triple-AAA rating.
- $2.0 million to an operating contingency so the County can respond to needs not budgeted during the current fiscal year.
- $500,000 was set aside for emergency housing assistance for FY 2020.
To view staff presentations on the FY 2021 financial forecast and FY 2019 close-out, scroll to Item No. 44 on the Agenda for the Tuesday, Nov. 19, 2018 Recessed County Board Meeting.
The Board’s guidance to the Manager is the beginning of a months-long public budget process. The Manager will build his proposed budget by gathering input from his leadership team, County employees, and the Arlington community before presenting his Proposed FY 2021 Budget to the County Board in February.
The Board then will conduct an exhaustive review of all aspects of the budget, through work sessions with Arlington Public Schools, the Manager and County Departments, and through public input on the Manager’s recommendations.
The Board will hold public hearings on the proposed Calendar Year 2020 real estate tax rate and on the Budget before adopting the FY 2021 Budget in April 2020. The FY 2021 fiscal year will begin on July 1, 2020.
With the FY 2021 budget season underway, the County Manager is seeking public input as he develops his proposed budget to present to the County Board in February. There will be opportunities to provide input throughout the budget process.
The County’s new engagement tool makes it easy to get involved. It encourages Arlingtonians to share what they think about Arlington, give ideas for promoting diversity and inclusion, and even play budget director—all in less than one minute.
Learn more about FY 2021 Budget development.