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Progressive Voice: Maximizing Returns on Community Investment

by Mike Lieberman — August 7, 2014 at 1:00 pm 567 0

Progressive Voice is a weekly opinion column. The views and opinions expressed in this column are those of the author and do not necessarily reflect the views of ARLnow.com.

Mike LiebermanOn July 19, the Arlington County Board voted to send $219 million in bond funding to the public for approval on the November ballot.

The bond program this year runs the gamut — $105.78 million for education, $60.24 million for Metro and transportation, $39.9 million for community infrastructure, and $13 million for parks and recreation. These proposals represent the next step in a long Arlington tradition of community investment, and our world-class public infrastructure and well-managed growth in Arlington are the end result.

But often lost in the big numbers of these bond programs is what makes them so effective — the fact that Arlington is not only investing, but living within its means. This fact was validated again in May of this year when Arlington announced that Moody’s, Fitch, and Standard & Poor’s again issued Arlington a triple/AAA bond rating for the 14th year in a row.

These ratings assess the likelihood that a municipality will repay investors the debts it owes; a triple/AAA rating means that repayment is virtually assured. Arlington was one of only 39 counties nationwide to receive this highest bond rating from all three agencies.

The benefit of this rating is manifest each year in the market. In May of this year, for example, Arlington announced that it received a 2.8 percent interest rate for a $65 million general obligation bond sale. Counties with bond ratings of AA, A, or lower generally experience interest rates more than 3 or 4 percent, or even higher to secure the same amount of funding.

This is not rocket science. If a county has its budget in order, and a prudent planning process in place, investors want to invest in that county, and are willing to offer favorable financial terms for the opportunity.

But what does that mean in real terms?  It means that Arlington can spend far less of its tax dollars on debt service, and more on public programs than its peer jurisdictions. That means more dollars collected are actually spent on school construction, improved parks, transportation improvements, and the other public infrastructure we have come to expect in Arlington.

At a time when the news is peppered with examples of financial mismanagement — including a downgraded bond rating for the U.S. government — it should be reassuring to all Arlingtonians that we live in a community that stands as an exception to this trend.

Community investment is what made Arlington what it is, and the ability to continue to make investments at an affordable rate, and with responsible debt service, will help ensure Arlington’s continued success for many years to come.

Mike Lieberman is the Immediate Past Chair of the Arlington County Democratic Committee and a former member of the Arlington Fiscal Affairs Advisory Commission.

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