County Increases Spending, Lowers Tax Rate

County Increases Spending, Lowers Tax Rate

County Increases Spending, Lowers Tax Rate

County Manager Ron Carlee unveiled Arlington's budget for the 2006 fiscal year Tuesday. Highlighting the fourth consecutive reduction in the tax rate — taking it to the lowest level in 10 years — and a $4.5 million increase in funding for affordable housing programs, Carlee delivered the two-volume document to the County Board for review.

"This budget is framed around constraining expenditures," Carlee said.

The county's aim this year, he added, is a budget that will "make living in Arlington as affordable as possible."

Carlee's message to the Board outlined changes in county spending, the largest item being $33.6 million set aside for tax relief. Arlington's general fund, he said, will see a budget increase of only 3.7 percent, up $26.6 million over 2005, because of inflation in costs surrounding Metro, health care, retirement and managing debt. Funding for Arlington Public Schools is also up 5 percent to $288 million. The budget contains no new programs yet at the request of the County Board; it does create a new reserve fund drawing from $2.25 on the real estate tax rate, projected to reach more than $9.7 million. The fund, Carlee is said, will be used for tax relief, emergencies and for the county's capital needs.

Carlee's budget would bring the fourth consecutive cut in tax rates.

The estimated total of $21.6 million in cuts for this year includes proceeds from the recent rise in cigarette taxes. The proposed tax relief program includes a new homeowners grant program designed to provide an average of $500 to households earning $72,000 or less. It also increases the limits on tax exemptions and deferrals for senior citizens and the disabled who earn less than $72,000 each year. Arlington, Carlee said, should closely monitor the effects of these cuts.

"It is important that we be cautious and take a lesson from federal and state bodies which issue tax cuts only to find themselves in debt," Carlee said.

PERSONAL PROPERTY taxes will remain the same, yet water and sewer rates in the county are projected to rise no higher than 93 cents to an estimated $74 in annual costs per household each year.

County Board Chairman Jay Fisette reaffirmed Arlington's commitment during the meeting to creating more affordable housing in the coming year. Carlee pointed to several items in the annual budget addressing that community need, like an added $2.9 million for the county's Housing Investment Fund, money that Arlington will likely loan to private groups for the creation of low-cost housing. That fund is included in the county's base budget for the year, accounting for $40 million. Among Carlee's other affordable-housing provisions are a $500,000 item for housing grants along with money to manage the conversion of buildings into condominiums and $200,000 for landlords who provide housing for people with developmental disabilities. A total of $700,000 will be used to support low-income housing for senior citizens at Culpepper Garden, an assisted living facility.

"It's a great first step, but it just isn't keeping pace with the costs of real estate here," said Douglas Peterson, executive director of the Arlington Partnership for Affordable Housing.

Peterson said the county could try to use other measures that might bring in more money for affordable housing. He pointed to a one-penny tax on real estate transactions in one Maryland community as an example.

Among the county's rising costs this year are Metro, up 10 percent, and Arlington Transit, up 5 percent. The cost of retirement for county employees is up $4 million over 2005. The cost of employee health care is up $2.4 million, a rise of 10 percent. The rising cost of county debt services, up $6.5 million according to Barbara Donnellan, director of management and finance, stems from the high number of ongoing infrastructural projects in Arlington.

"We're making up for years past," Donnellan said. "We are doing a lot of capital projects right now, and the rise in our debt service is reflective of that."

CARLEE'S BUDGET calls for increases in several county fees and fines. A 5-percent raise in parking meter fees, according to the budget, is expected to bring an additional $700,000 into the county's funds. That hike, Donnellan said, brings parking fees to levels comparable in surrounding counties.

"That hasn't been raised in years," she said. We looked around at what other communities in the region are doing and decided it was time to raise the fees."

Commercial utility taxes and other fees are also expected to rise, as the county attempts to gather a base of $3.5 million for assets preservation.

County expenditures this year are $456.2 million, an increase of $12.7 million, or 2.9 percent over 2005. Revenue in the county's general fund is expected to reach $783.9 million, up $65.5 million or 9.1 percent. A total of only $1.4 million has been left unallocated. Just how that money will be used, Donnellan said, is the prerogative of the County Board.

Donnellan said further review of the county's expenses will be done through a series of audits later this year. The county's budget will undergo a long process of review leading up to its expected final approval, April 16. Although the proposed budget raises county spending by only 3.7 percent, some are calling county expenditures excessive.

"ARLINGTON COUNTY spends much more than it needs to spend," said Tim Wise, a member of the county's Fiscal Affairs Advisory Committee and spokesman for the Arlington County Taxpayers Association (ACTA). "It had passed the point of funding just the traditional core services years ago."

Wise was critical of the county's spending on grant programs and the creation of the new reserve fund, a fund he sees as unnecessary.

"We already set aside about 2 percent of the budget in a reserve," he said.

The county government, he added, is focusing less and less on monitoring its spending. The average real estate tax bill in Arlington, according to the county, will increase about $849 on average. That increase, Wise said, is tied to a 24-percent rise of land values in Arlington.

"The increase of those values should benefit individual citizens, not the greedy government," Wise said.

Arlingtonians will have the opportunity to comment on the budget and make recommendations to the Board during a public hearing scheduled for March 29 in the County Board Room. A second hearing on the county's tax rates and fees will be held there on March 31.

Carlee's budget was praised by members of the Fiscal Affairs Advisory Committee. Chairman Peter Rousselot issued a statement before Carlee delivered the budget to the County Board.

"I expect that some will advocate substantially more real estate tax relief than the manager, and that others will advocate substantially more spending that then manager," Rousselot said. "However, given the fiscal constraints imposed on Arlington by the state of Virginia, the only realistic ways for the county to cut real estate taxes by a substantially greater amount, or to increase spending substantially, would be to pay for those greater tax cuts by cutting spending on vital programs or raiding the Rainy Day Fund or to pay for those spending increases by slashing the tax cuts or raiding the Rainy Day fund."

Happenings in Richmond, he added, figure heavily into Arlington's finances.

"Those who want much greater real estate tax relief and those who advocate substantially greater spending should look to Richmond, not Arlington County," he said. "Major steps in further real estate tax relief can only be financed if Arlington County and other Virginia jurisdictions are able to substantially diversify their revenue bases. Until the Virginia legislature grants such authority, we will continue our annual and often unproductive debates about cutting residential real estate taxes or cutting spending on vital programs."