On Saturday, County Manager Ron Carlee will unveil his budget proposal for next year, a budget proposal that could approach $740 million.
County Board members anticipate that this year, like years past, will see a tug-of-war over the budget, as some Arlingtonians ask the county to spend more in some places, while others ask for tax rate cuts somewhere else.
Carlee will present his budget proposal for fiscal 2005, which begins in July, to Board members at their Feb. 7 meeting.
But before they even saw Carlee’s budget proposal, board members agreed: This year, the question would not be whether to cut real estate tax rates, but how much to cut them. “I can tell you, the tax rate will be cut,” said Board member Paul Ferguson.
Property assessments across the county increased on average by 11 percent, and the assessed value of single-family homes increased, on average, 17 percent. Given those increases, rate cuts are almost a given, said Board member Jay Fisette. “Mine went up 28 percent. I’ve begun to hear from friends, and from people who’ve mentioned they’ve had similar increases.”
Still, advocates of tax rate cuts in the county aren’t expecting to see the cuts they want. In the last three years, property values increased by double-digit percentages, and the county has only cut the tax rate five cents since 1999.
“What they’ve done in the past couple years, they’ve been almost cynical, they’ve only cut the rate one or two cents” said Tim Wise, executive director of the Arlington County Taxpayers Association.
<b>DESPITE CALLS</b> for tax cuts, Board members say they feel caught in the middle.
“It’s always the case that you have people saying Arlington is not doing enough,” said Ferguson. “There’s a very small number of people saying we should do less and cut the tax rate.”
State budget crises in the last four years have meant there’s even more of a need for Arlington to pick up the slack, said County Board Chair Barbara Favola. Under a revenue-sharing agreement between the county and the school system, almost half of all revenues collected go to Arlington schools, and with some requirements not funded by the state more pressure falls on the county, she said.
That pressure, in turn, falls on county property owners. “We always try to balance real estate, we always want to acknowledge the increased payment of taxpayers,” she said. “But real estate [tax revenues] are 46 percent of the budget. Nothing else comes close, and it’s hard to find a revenue stream that will compensate.”
The actual effect of tax rate cuts on the tax bills are minimal, she said, but translate to huge cuts in the county’s tax revenues. “The value of a one-cent reduction costs us $4.8 million, and only gives the taxpayer $56.”
Because of that imbalance, Favola said she couldn’t promise tax cuts of any size. “I can’t make a commitment to what we’re going to do,” she said.
There is some breathing room, Fisette said, in one-time capital costs, improvements to county infrastructure like roads and buildings. “That is where I focus most of my attention in trying to find the right balance in making a rate reduction,” he said. “Clearly we need it.”
<b>WHILE HE’D LIKE</b> to see a significant drop in tax rates, Wayne Kubicki is not expecting Board members to commit to much. “They’ll provide, maybe, a two-cent tax cut,” said Kubicki, a member of the county’s Fiscal Affairs Advisory Committee.
Some anti-tax activists in Arlington routinely call for flat tax bills, asking the county to cut the tax rate so that county homeowners will pay no more than last year’s tax bill, plus the rate of inflation.
To break even, Kubicki said, the county would need to set the tax rate at about 88 cents per every $100 of a home’s assessed value. But that rate doesn’t account for many of the costs that will face Arlington in the coming year: yearly step-increases in county salaries plus cost-of-living increases; debt service payments for county bonds, with the possibility of more every year; and the possibility of an increased payment to the Metro Authority.
“To cover that, without taking scissors to anything, just staying even?” Kubicki said. “I would hope at the end of the day, there’s dollars here for more than just a two- or three-cent cut, but it’s not a dime. To my taste, a nickel would be nice.”