County Manager Presents $662 Million Budget

County Manager Presents $662 Million Budget

Real estate tax revenue fuels 5.4 percent increase despite loss of state funds.

While state legislators are wrestling with a budget shortfall that reaches into the billions, county officials are looking at a $662 million balanced budget proposal that increases spending despite cuts in funding from state officials.

On Saturday, Feb. 8, County Board members got their first look at County Manager Ron Carlee’s proposed budget for fiscal 2004 on Saturday, Feb. 8, a proposal Carlee said maintained all current county services and provided suggestions for additional programs that would be self-sustaining. “Of course this is only the beginning of the process,” said Carlee.

County officials will hear concerns of residents over the next few months before the county board approves an official budget on Saturday, April 26.

As usual, budget numbers were calculated based on the current tax rate, but many residents have said they will ask the board for cuts in real estate taxes in response to the release of the latest real estate assessments late last month.

Assessments on single-family homes in Arlington rose an average of 17.3 percent, which could translate to a $462 tax increase for homeowners across the county. Rising assessments have been “the savior” of county programs, said Chuck Gubisch, county budget director. Indeed, 48 percent of county funds in the proposed budget would come from real estate taxes.

That means local homeowners will bear an unfair burden in such uncertain economic times, according to some residents. Tim Wise, president of the Arlington Taxpayers Association, said county officials’ emphasis on state funding cuts draws attention away from the facts.

Officials estimates show that state money coming to Arlington will be cut by $2.1 million next year, while county spending will increase by $14 million. Wise says that shows county officials aren’t just making up for state cuts to maintain services. “The local government is plundering the citizens of Arlington,” he said.

COUNTY BOARD MEMBERS said they would listen to the concerns of residents, but it’s too early to say how much of a tax cut, if any, could come to Arlington homeowners.

County officials estimate that for each penny drop in the real estate tax rate, county coffers would lose $3.2 million in fiscal 2004, which runs from July 1, 2003 to June 30, 2004.

County Board chair Paul Ferguson said he remains hopeful that priority services such as schools, public safety and neighborhood conservation could remain protected while county officials find room to keep the tax burden low.

Board member Barbara Favola said she too would consider lowering taxes, but only after she is certain that county services would be adequately funded. The current budget proposal represents a “compassionate budget,” with full funding for public education and public, she said.

Favola rejected the notion that increased spending means unfair burdens on taxpayers. “It’s becoming more and more expensive to run the county,” she said. Nevertheless, she expects rising expenses will be balanced against concerns for the taxpayers.

SIGNIFICANT CHALLENGES faced county budget planners, including cuts in state funding, increasing insurance costs, and minimal growth in sales, personal property and business tax revenues.

Although state aid makes up only 8 percent of county funds, the loss of $2.1 million dollars from Richmond forces county officials to make some adjustments. Carlee said unlike many jurisdictions, he and his staff did not even consider dipping into rainy day funds, reserve funds set aside for emergencies, to make up for the cuts. Instead, they’re banking on continued prosperity in the real estate market and streamlining some county services.

For instance, to respond to the projected $1.3 million dollar, or 34 percent, increase in insurance costs, employees with health insurance policies through the county will face larger co-payments and prescription costs.

County budget proposals rarely include a long list of new initiatives. This proposal is intended to provide a balanced guideline for the county board to use when considering new programs.

“I think this is a continuing-services budget,” said Barbara Donnellan, director of the Management and Finance Department. In other words, some funds were reallocated, and revenue sources shifted, but the core services provided by the county remain essentially unchanged under the proposed budget.

The proposal does contain provisions for four strategic initiatives that county board members may or may not choose to support: economic sustainability, transportation, human services and neighborhood conservation.

ALL FOUR INITIATIVES are self-funded, meaning residents would not incur any additional across-the-board taxes if the board chooses to adopt them.

The Economic Sustainability Initiative would create a special taxing authority in Rosslyn. In order to create a Business Improvement District, the authority, made up of local businesses and community groups, would impose a small property tax on Rosslyn buildings, to fund cleaner streets, marketing for the area and community events.

In addition, board members would consider a 2-percent increase in the hotel tax to fund a new Conference Center, one of the chief priorities of late county board chair Charles Monroe.

On Saturday, county board members were hesitant to discuss specific initiatives but have on numerous occasions said they will dedicate this year to fulfilling Monroe’s vision for the county, so it seems likely that the conference center could become a reality.

The hotel tax increase is not included in the main budget and would be enacted only if the conference center is approved.

RESIDENTS WILL PAY more to park if the board approves the Transportation Initiative. The initiative would be funded by a 25-cent increase at all parking meters, making an hour 75 cents at long-term meters and $1 at county short-term parking.

The extra funds would go toward pedestrian safety measures, mass transit and a new Parking Coordinator position. The coordinator would “take a more strategic look” at Arlington’s parking crisis, Donnellan said, and would study ways of improving parking policies across the county.

Transit funding continues to be elusive under the current budget proposal. Despite limited self-funding under the Transportation Initiative, the county will be searching for funds to meet its obligation to Metro and to push forward on mass transit for Columbia Pike.

On Saturday, a new Bus Rapid Transit vehicle was demonstrated outside the county board meeting. It’s one option for Columbia Pike and elsewhere in the county. But Jim Hamre, Transit Program Coordinator, said he expects funding and operations would not be ready for another six years.

DISCUSSIONS ON funding transit improvements included revenue from the regional sales tax referendum that was voted down in last Novemeber’s elections. But board member Chris Zimmerman said county officials had not been banking on it.

Nevertheless, when that referendum was defeated, it left county officials scrambling for ways to improve mass transit. Zimmerman says the next option is to lobby for federal funding. In today’s uncertain economic climate, though, it’s unlikely Arlington will be seeing federal transit dollars any time soon.

The Human Services Initiative wouldn’t require any additional funding derived from residents’ pockets. Federal funding would be applied to various programs including behavioral health services and affordable housing.

Affordable housing is one area Ferguson said he will examine closely. On Saturday, the board approved an affordable housing redevelopment project in Columbia Heights West. The project will almost completely empty the county’s affordable housing fund for this year.

Some residents opposed the project, saying depleting the fund this early in the year is putting too much faith in the success of this development. But Ferguson said he remains hopeful that the 2004 budget will contain enough funding to replenish the affordable housing fund without cutting into other services.

NEIGHBORHOOD CONSERVATION may prove to be an unavoidable initiative. The manager’s proposal would add staff to help manage the projects already approved by the Neighborhood Conservation bond of 2002.

That’s an example of how one expense locks taxpayers into greater burdens for years to come, Wise told board members. Infrastructure funded by bonds requires provisions in future budgets for maintenance. “You should have known that when you approved the bonds,” he said.

Necessary maintenance of existing infrastructure explains part of the county budget increase, as does inflation. But the 5.6 percent increase in the proposed budget exceeds those factors, Wise said.

Funding for public schools creates the largest drain on county funds, due to the 48.6 percent revenue-sharing agreement. That means when county revenues rise in 2004 due to real estate assessment increases, Arlington Public Schools get more money whether they need it or not. The schools transfer would rise 8.6 percent under the proposed budget, because county revenues are expected to rise 8.6 percent.

“It’s obvious that the schools are going to be drowning in money,” Wise said.