Board Ready to Cut Taxes

Board Ready to Cut Taxes

Any rate cut must leave enough money for schools, public education.

With calls mounting across the county for tax cuts, County Board members appear to be ready to oblige.

While no one wants to slash too deeply, they say, a cut in the tax rate is likely, without cuts in education or public safety, Arlington’s two top priorities.

County Board members were set to discuss the budget, and possible rate cuts, at a Monday night work session, before the session was abruptly canceled. But reached beforehand, a majority of board members voiced support for limited local tax cuts.

With a two-cent cut in the real estate tax rate likely, Arlington Republicans and anti-tax activists have recast their message. It is no longer a question of whether the board will make any cuts, they say, but how much.

<b>THAT WAS THE QUESTION</b> posed by Mike Lane at a March 21 public hearing on the county tax rate. Lane, former chair of Arlington’s Republican Committee, told the board members county taxpayers need a significant cut to offset rising assessments, up an average of 21.1 percent across the county.

Even a month ago, county Republicans were calling for a six- to nine-cent cut in the county’s current rate of $1.023 cents per $100 of a home’s value. Democratic Board members get closer to cutting the rate down, to between $1.03 and $0.993. As that eventuality gets closer, Republican criticism has become more strident.

Communications over tax rates have increasing referred to Board Chair Chris Zimmerman as "Zimmie," and the Republican party used a call for lower taxes to engage in local partisan warfare.

In a resolution passed at the last Republican Committee meeting on March 28, the party blasts its opponents in county government.

"The all-Democrat County Board has not given any indication of providing tax relief to Arlington citizens this year," reads a resolution passed by the Republicans, "despite the sizable increase in assessments and tax revenues, despite the sizable new assessment burden and the greater-than-anticipated revenue projection."

The effect, Republicans said, was to drive Arlington families and businesses out of the county. They ended by calling for a seven-cent cut in the tax rates, to $0.953 cents.

<b>AROUND ARLINGTON,</b> other civic groups are joining the call for a cut in the tax rate. On April 2, the Arlington Civic Federation passed a budget analysis calling for a six-cent cut in the county property tax rate, to $0.963.

On April 11, the county’s Fiscal Affairs Advisory Commission, a citizen committee, passed a resolution calling for a rate reduction of three cents, cutting to $0.993 cents. The commission’s other main recommendations to the county were to eliminate the local parking sticker fee, and to immediately fund all public safety initiatives.

In the Civic Federation’s analysis, one of the main funding mechanisms for the six-cent rate cut would be the inclusion of carryover funds in the coming year’s budget. Currently, the proposed 2003 budget does not include any carryover funds, tax money collected but not spent during the current fiscal year.

The Civic Federation includes $25 million of carryover funds in its analysis of the coming year’s budget – an inclusion that offsets nearly $8 million in recommended increases in county expenses.

Overall, the federation found $18.6 million in budget revenues from carryover funds that it said could be used to fund a six-cent cut in the county tax rate. But the county response to the federation’s proposal did not inspire hopes for that six-cent cut, Federation president Jim Pebley said.

"When we gave it [County Manager] Ron Carlee, his reaction was, ‘You mean you would use carryover in the base budget?’" Pebley said.

<b>CARLEE’S REACTION</b> was not based on an ignorance of the carryover, but a difference of definition over the possible uses for excess funding. Arlington Republicans, tax activists and the Civic Federation include the carryover funding in funding for the coming budget year.

County staff and Carlee have been opposed to the use of carryover funds in revenues for the coming county year. When Carlee first presented his budget proposal to the board, he noted that this year was the first time the county did not include any carryover funds in the coming year’s budget.

The reason, he said, was uncertainty. The county cannot be certain it will collect as many tax revenues as projected until the end of the year, meaning that some collections may fall short.

But more importantly, he said, there is an uncertainty about where funds will come from in the future – carryover funds create an "unsustainable expenditure base," he said.

What does that mean? If carryover funds are used in the budget, he said, they could end up paying for a program or an employee. When the next year comes, if no carryover funds are available, the county must find a way to continue to fund that program or employee, or else cut funding altogether.

Instead, he said, carryover funds would be used to pay for one-time expenses, the purchase of a vehicle or land, or the cost of construction of a building.

<b>BOARD MEMBERS SUPPORT</b> Carlee’s decision.

"Carryover is one-time. If you start funding people with that, then you’re digging yourself a hole," Jay Fisette said. In fact, he said, the same problem comes with building new facilities, and with accepting grants from other sources.

"That’s one of the things I’ve talked about: building in staff time," he said. "We have to consider, if we build a facility, it costs to staff it, to provide security."

In fact, Board member Paul Ferguson said, he and his colleagues were practicing a kind of fiscal conservatism by not including carryover funds in the budget. "Theoretically, all of us will be on the board next year," he said, noting that Zimmerman’s seat is up for reelection this year. "Traditionally, the thing to do is pass the cost on to your successor. We’re just trying to be as conservative as possible."

<b>THAT DOESN’T PRECLUDE</b> a tax cut. A majority of county board members said they would be looking at cutting property tax rates between two and three cents. But they were guarded in their support for a cut.

"Certainly, we’re looking at how much assessments went up. A tax cut is on the table," said board member Barbara Favola. "But other fiscal priorities need to be met."

Those include education and public safety first and foremost. The county has a revenue sharing agreement with the schools, and any county tax cut automatically means a cut in funding to schools.

"We would like to see the budget fully funded," said Mary Hynes, chair of the school board. "But I believe they can do a tax cut and also support schools."

That is the belief on the County Board as well. Arlington must make sure education and public safety needs are adequately funded, Fisette said, and then look at providing more tax relief for Arlington’s elderly taxpayers and those with disabilities.

After that, he said, it’s on to cutting the property tax rate. "I feel we should be able to provide relief broadly with a reduction, once those needs are addressed," Fisette said "I hope to find a way to reduce the tax rate and hold schools harmless."