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COUNTY MANAGER's MESSAGE To the County Board of Arlington,
Virginia:
Arlington is once again extremely fortunate to have a
thriving economy that has resulted in high incomes, low unemployment, and
increased values in all classes of property.
Due to these increased property values, $33.6 million is recommended for
tax relief and the creation of a new reserve fund. By comparison, only $26.6 million is recommended for County and
School budget growth in the proposed General Fund budget of $745 million. This budget increase of only 3.7% is a
significant achievement given higher than normal inflationary pressures in
areas such as Metro, debt service, retirement and health care; however, it is also
necessary in order to maintain the long-term sustainability of the County - the
ability to live within our means - in any economic environment.
Five critical decision areas are
presented in the Fiscal Year (FY) 2006 County Manager's Proposed Budget. Each is discussed below.
Tax Relief & Reserve Fund
This is the largest item in the
FY 2006 budget. The recommended tax package would be the fourth consecutive tax
rate reduction, resulting in the lowest tax rate in over 10 years and the
largest rate reduction in 15 years. The
package provides relief to all taxpayers and targeted assistance to those most
in need. Included in this tax relief
package are the proceeds from the higher cigarette tax, as directed by the
County Board when the increased tax rate was approved. Additionally, funds are recommended for a
new reserve that could be used for revenue stabilization, critical capital
needs, or emergencies. Were Arlington's
economy to remain strong, some or all of the reserve could also be used for
additional tax relief. Major elements
in this package include the following:
- Tax
rate reduction of not less than five cents ($21.6 million);
- A new
homeowners' grant program – equivalent to one-half cent -- to provide
additional relief of approximately $500 to households earning $72,000 or
less ($2.2 million);
- Increased
income and asset limits for tax exemptions and deferrals for persons who
are elderly or disabled and earn less than $72,000 a year ($0.1 million);
- Creation
of a new reserve fund of 2.25 cents ($9.7 million).
Increased Support for Affordable Housing
Recognized by the County Board as
Arlington's most important program priority, affordable housing programs are
recommended to increase by approximately $4.5 million. As directed by the County Board, this
increase is supported by using all the revenues from the increase in the
recordation tax: $1.9 million in the
current year and $2.6 million projected for FY 2006. Allocation of these resources is recommended as follows:
- $2.9
million for the Arlington Housing Investment Fund contingent to be used as
loans to leverage private investment.
This is in addition to the $4.0 million base budget recommendation;
- $0.5
million for Housing Grants to support current participants (an increase to
the $3.4 million included in the base budget);
- $0.2
million for increased funding to sustain providers of supportive/assisted
housing for persons with developmental disabilities ($1.7 million is
proposed in the base budget for residential services);
- $0.1
million to manage condo conversions and $50,000 for tenant outreach;
- $0.7
million to support a transition at Culpepper Garden to maintain assisted
living opportunities for low-income elderly people.
Sustaining the Base Operating
Budget
The base budget contains no new
programs, initiatives, or positions.
Funds for the Arlington Public Schools are provided based on the revised
revenue sharing agreement at approximately $289 million, an increase of
5%.
The routine costs of most County services can be sustained within normal
inflationary costs; however, a small number of high cost items are escalating
at a much faster rate. To deal with
these items, we have three options:
recognize that the overall cost of government will exceed basic
inflation, implement cost containment in these areas, or reduce other programs. The major cost drivers in the base operating
budget are the following:
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Transit: Metro (up $1.2 million; 10%), Arlington
Transit (up $0.3 million; 5%);
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Personnel: defined benefit retirement system (up $4
million; 30%) and employee health care (up $2.4 million; 10%);
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Debt Service
(up $6.5 million; 17%)
Additionally, we are still analyzing future needs for paratransit and
medical care in the detention center.
Strategic Options
A limited number of program changes above the base budget guidelines are
recommended for consideration. A total
of $1.4 million has been put in a contingent to enable the County Board to
consider these priorities and others that may be identified during the budget
review process. Items identified
through staff review have been narrowed to the following:
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New facilities recently or soon
to open
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Facilities Maintenance & Upkeep |
$291,293 |
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Barcroft Recreation Center
Garage
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$100,920
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Barcroft Park Maintenance
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$109,363
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(1.0 FTE)
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Shirlington Bus Transfer
Station
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$ 52,940
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Walter Reed Community Center
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$ 99,241
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(2.3 FTEs)
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Shirlington Library
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$ 39,367
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(1.5 FTEs)
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Strategic Initiatives
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Performance Audits
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$100,000
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Replace Grant for Aurora House
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$372,894
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MR/DD Case Manager
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$61,894
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(1.0 FTE)
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Traffic Enforcement
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$88,631
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(1.0 FTE)
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Community Arts Facilities
Monitor
(Expense offset by user fees)
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$0
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(1.0 FTE)
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Providing for Long-Term Economic Sustainability
Maintaining the basic
infrastructure of a community is one of the greatest challenges facing all
governments. Infrastructure is built
incrementally, over time, often using one-time funds generated by budget
surpluses, private investment, or bond sales.
To get the maximum return on these investments, ongoing maintenance is required,
but not always explicitly included in fiscal planning. Historically, Arlington has used
unanticipated revenue and expense surpluses to fund the pay-as-you-go capital
budget, the primary purpose of which is to provide the maintenance necessary to
preserve the County's capital assets.
This is a sound practice and should be continued; however, relying on
surpluses will not be sufficient for the future. As budget projections become increasingly accurate for both
revenues and expenditures, surpluses will diminish. The FY 2006 budget includes recommendations to raise a limited
number of taxes and fees to provide a modest base of $3.5 million for capital
asset preservation.
| Commercial Utility Tax
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$2.0 million;
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Parking meter fees
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$0.7 million;
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Ambulance fees
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$0.4 million;
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Parking fines
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$0.4 million.
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This step should only be
considered a beginning. As the County
is able, additional base funding should be allocated to preserving the County's
assets. I expect this to be a major
policy element of the FY 2007 biennial update to the Capital Improvements
Program.
Conclusion
The guiding principles in
developing the County Manager's Proposed Budget for FY 2006 have been tax
relief and fiscal sustainability. In
preparing the budget, I met with leaders from the County Board's Citizen Commissions,
a number of whom made compelling cases for program expansions or
improvements. Additionally, each County
agency has areas it would recommend for enhancement. This is not a time for growth, however. It is a time to be sensitive to the tax pressure on homeowners
and to focus on long-term stability and sustainability. In the end, the County Board is once again
faced with balancing the budget – not just fiscally – but from a policy
perspective. How do we ensure that our
funding choices support the vision that the Board and community have
articulated? The Manager's Proposed
Budget becomes only a starting point for the discussion.
Respectfully submitted,
Ron Carlee
County Manager
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