At its Saturday meeting, the Board approved a set of budget guidelines intended to assist Donnellan in putting together her proposed budget for fiscal year (FY) 2014. Despite two years of rising real estate assessments and tax rates, the projected 1-2 percent increase in county property values this year is not expected to be enough to keep up with increased spending.
(The real estate tax accounts for just over 55 percent of all county revenue.)
Costs are expected to increase in FY 2014 in the specific areas of employee compensation, health care, funding for Metro, debt costs, communications infrastructure and operating expenses for new county facilities like the Arlington Mill Community Center.
Donnellan has already taken initial steps to begin cutting costs, such as ordering a hiring slow down, which has already gone into effect. Donnellan has also authorized early retirement offers to qualified staff, and has instructed department heads to provide expenditure reductions.
The county last year benefited from an $18 million carryover from the previous year’s budget. Without that carryover, revenue next year is projected at $1.039 billion while total spending is expected to increase 1.1 percent to $1.064 billion. Projected county expenditures in FY 2014 include $401.8 for Arlington Public Schools, a 0.7 percent increase over this year’s budget.
Among the factors hurting county revenue, officials say, are the impacts of the Base Realignment and Closure Act, potential federal budget cuts and stagnant real estate assessment growth.
County Board Chair Mary Hynes promised to engage the community in the budget process, but warned residents to expect some unpopular budget decisions.
“During these uncertain economic times, we will have to make some tough choices,” she said. “We look forward to months of discussion with the community as we set priorities and make those choices.”
The Board asked Donnellan for an equal mix of tax hikes and budget cuts.
“The Board emphasized the importance of maintaining long-term financial sustainability and preserving the County’s AAA bond ratings,” according to a county press release.
One sticking point of the budget discussion came in dealing with funding for affordable housing. Board members Walter Tejada and Chris Zimmerman were in favor of increasing the annual allocation to the county’s Affordable Housing Investment Fund. Zimmerman said that the Board needs to take action to prove its commitment to affordable housing, and waiting would cause the goal to fall farther and farther to the wayside.
“The problem is of course that we’re losing a lot of opportunities now and it becomes harder over time, it becomes more expensive if you try to make up ground later,” said Zimmerman. “If we’re not ready and our non-profit partners aren’t able to make acquisitions at that time, then we lose the opportunity and those become high value, high income places exclusively. And we won’t have the opportunity to save the housing that we said we’d save.”
Board member Jay Fissette disagreed with increasing the AHIF.
“To actually step out in this difficult period when the rest of this guidance acknowledges the challenges we face, to suggest that we should limit this Board and the manager in future years without the knowledge of what’s coming up, and increase the affordable housing fund, commit ourselves to nearly triple it, I find irresponsible,” said Fissette.
Board member Libby Garvey agreed with Fissette, saying few budget cuts are ever easy to address.
“There are a lot of priorities that are really good. And governing is all about trade-offs and some of them are pretty difficult,” said Garvey. “It’s a complex issue. It’s a very costly issue to address.”
Ultimately, Hynes made the final call not to include the AHIF increase in the guidance, saying the Board can re-examine it later because this is simply the beginning of the budget process. She disputed Zimmerman’s claims that the county could fall behind in its affordable housing goals if the issue isn’t immediately addressed.
“We will not lose ground. We will move forward. The trouble we have right now is that at this point in time, we still don’t exactly know what’s going to happen with the local or the national economy. We’re looking at pretty low revenue growth from assessments, and we have a lot of very ambitious goals,” Hynes said. “We always have to make tough choices, that’s just the way it goes.”
Prior to addressing FY 2014, the Board closed out the FY 2012 budget. Allocations made with extra funds left over from the budget include $5.4 million for employee compensation adjustments and $3 million to increase the FY 2013 Budget Stabilization Contingent, which will be set aside to deal with impacts from possible sequestration and the loss of federal funding.
Arlington residents will have their first formal opportunity to provide input on the county budget on Thursday, Nov. 29., during a planned joint county-school budget forum. The forum will be held from 7:00 to 9:00 p.m. at the Washington-Lee High School (1301 N. Stafford Street) cafeteria.