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Donnellan Proposes $1.16 Billion Budget, No Change in Real Estate Tax Rate

County Manager Barbara Donnellan presents her FY 2014 budget on Feb. 20, 2013(Updated at 12:50 p.m.) Arlington County Manager Barbara Donnellan has presented a $1.156 billion proposed budget to the County Board.

The budget keeps the county’s current real estate tax rate — of $0.996 per $100 in value — the same, but would result in a net tax hike for homeowners thanks to property assessment increases.

The county’s real estate tax base has increased 3.4 percent, thanks largely to a 4.9 percent increase in single family home assessments and a 4.7 percent increase in apartment building assessments. (New construction added over 0.7 percent to the base.)

The average Arlington homeowner will pay $7,567 — an extra $23 per month, or $281 per year — in total county taxes and fees under the proposed budget.

For owners of Arlington office buildings, which have experienced record levels of vacancies thanks in part to BRAC, taxes will go down. Office assessments decreased 4.5 percent, while hotel assessments decreased 4.7 percent.

Donnellan says she was able to balance the budget and close a forecasted $4 million budget gap without making any formal cuts. Healthcare and retirement costs were lower than expected and some “efficiencies” were found in the budget, she said.

“I think Arlington have been really fortunate,” Donnellan said of the budget, which she was able to balance without significant cuts despite the high office vacancies.

No changes to personal property, stormwater, business improvement district or business license taxes have been proposed. While there’s no change proposed in the household solid waste rate, Donnellan does propose a 1.8 percent increase in the water/sewer rate. Some parks and recreation fee changes have been proposed, including reductions in the rates for aquatics and gymnastics programs.

While not in her base budget, Donnellan included an optional slate of cuts for the Board to consider. The “budget reduction options” include $4.1 million in cuts and savings in various parts of the budget, including:

  • Closing Artisphere, but reinvesting half of the $900,000 in annual savings into the county’s Cultural Affairs program (last year Artisphere was funded with $1.8 million in county funds, half of which were designated “one-time” funds.)
  • Converting Metrobus 3A service in Arlington to less expensive ART bus service
  • Consolidating an elementary after-school program with Arlington public schools
  • County vehicle fleet reductions and utility savings
  • Publishing one fewer Citizen newsletter per year
  • Reductions to bike and pedestrian programs
  • Reductions to employment services programs in the Dept. of Human Services
  • Reductions to the community energy program
  • Reductions to planning resources
  • Reductions to tree planting
  • Reductions to library materials
  • Reductions to urban agriculture
  • Eliminating a proposed increase in funding to courts and constitutional officers, meant to offset state cuts

Donnellan said her suggested cuts wouldn’t result in “totally outraged” community members, but would likely receive some push back from “interested parties.”

“They’re not core services in the sense of how we deliver day-to-day business,” Donnellan said of the proposals.

At $1.156 billion, Donnellan’s budget is a 0.7 percent increase over last year’s $1.15 billion adopted budget. The proposed budget includes a $710.9 operating budget for the county government. The remainder would go to Arlington Public Schools, which will see an overall funding increase of $13.2 million, or 3.1 percent.

APS Superintendent Dr. Patrick Murphy will proposed his Fiscal Year 2016 budget tonight.

Donnellan’s budget includes step and merit salary increases for the county’s 3,863 employees. It also includes $130,000 in “Live-Where-You-Work” grants for employees. Currently, one-third of county employees live in Arlington, officials said.

The budget will fund a full year of the county’s new year-round homeless shelter and provide additional funding for food purchases at the Arlington Food Assistance Center. It also includes $36.3 million in funding for affordable housing — 5.1 percent of the total county budget — including funding for the county’s rapid re-housing homelessness prevention program and an additional $1 million in ongoing funds for housing grants.

“This proposed budget stays true to the community’s values and our vision of Arlington as a diverse, vibrant and inclusive community, with a mix of programs and services that continue to be recognized internationally,” Donnellan said in a letter to the Board. “I look forward to the continuing dialogue with the community and the County Board as we move toward budget adoption.”

Donnellan will present her budget again at the County Board’s meeting on Saturday, where the Board will vote on advertising tax and fee rates.

County Board work sessions will start Feb. 26 and will continue until an FY 2016 budget is ultimately adopted on April 18. Public budget hearings will be held on March 24 and 26.

The county’s press release about the proposed budget is below.

Arlington County Manager Barbara Donnellan today previewed for the Arlington County Board a proposed $1.156 billion budget for Fiscal Year (FY) 2016 that is balanced with no tax rate increase. Excluding the transfer to Arlington Public Schools (APS), the County operations budget totals $711 million, a 0.5 percent increase over the adopted FY 2015 budget.

In October 2014, Donnellan had forecast a $4 million budget gap for Arlington County, based on revenue projections at that time.

“The real estate assessments and other tax revenue estimates we made in October were as projected,” Donnellan said. “But our health care and retirement costs were lower than estimated, enough so that we were able to close the gap and address some structural budget issues.”

The proposed budget fully funds the County’s debt service and provides for a 4 percent increase in funding for Metro. Donnellan also provided the County Board with $4 million in potential additional cuts that the Board could make if it chooses to add funding to schools, public safety, or other programs, or to reduce taxes.

Investing to stay competitive

With the ongoing impact of the federal government’s Base Realignment and Closure (BRAC) decisions pushing the County’s office vacancy rate to a historical high, and regional competition intensifying, the County is continuing to make technology and other investments to stay competitive, Donnellan said. The County may need to devote more resources to its economic development efforts, a discussion the Manager said she will have with the Board and the community during the proposed budget review.

“We continue to make strategic investments in infrastructure, to strengthen Columbia Pike and the Crystal City-Potomac Yard corridors, and to plan for the long-term, including a community planning process for public facilities,” Donnellan said.

One of the most important challenges facing the County today is “the good challenge” posed by the inflow of students into the Arlington Public Schools, Donnellan said. The County also faces demand for infrastructure investment; funding Metro; expanding public safety programs; maintaining core services and caring for the community’s poorest and most vulnerable residents. The County also must provide services for the growing numbers of millennials who live and work in Arlington, as well as seniors who are aging in place or moving here.

“We must balance the demands for services, programs and investments in infrastructure with the need to limit the tax burden on residents and businesses,” Donnellan said.

Tax and fee burden to rise

Even with no tax rate increase, she said, the overall tax and fee burden for the average household will increase, both because assessments have increased and because the water-sewer rate increased by 1.8 percent, due to inflation and the need to add key personnel for meter and valve maintenance.

Under the proposed budget, the average homeowner will see their tax and fee burden rise from $7,286 to $7,567 – a four percent increase – about $23 a month, or $281 a year. The proposed budget includes no tax rate changes for personal property tax, business tangible property, business and professional occupational licenses, or the dedicated stormwater tax.

Increasing Schools funding

Donnellan’s proposed budget follows the Revenue Sharing Principles recently adopted by the County Board and School Board. It includes a transfer to APS of $445.5 million, a $13.2 million, or 3.1 percent, increase in ongoing funding over FY 2015. The proposed budget includes another $8 million in direct support to Schools. These funds will pay for nurses, including a new part-time clinic aide and part-time health nurse for the new Discovery Elementary School, due to open this fall; School Resource Officers, and crossing guards.

Revamped fee rate structure for aquatics and gymnastics teams, senior adults

The proposed budget includes recommendations made by the community work group appointed by the Manager in 2014 to evaluate the Department of Parks and Recreation’s (DPR) fee structure for the County’s two gymnastics teams and one aquatics team.

The group recommended that team fees should recover no more than 100 percent of direct costs, and that non-residents should pay 15 percent more than residents to participate on County teams.

The proposed budget also includes a new membership option for senior adult programs. The base $20 membership remains the same, but seniors also will have the option of a $60 membership that provides base benefits plus unlimited use of all County fitness centers.

Employee compensation

The Manager proposes merit and step increases for employees, and the reinstitution of the County’s Live-Where-You-Work grants that provide grants to employees seeking to rent or buy in Arlington.

“In order to attract and retain the most talented people, we need to compensate our employees fairly,” Donnellan said.

Possible additional cuts

Following the Board’s direction, Donnellan also provided the Board with service and budget reductions totaling one percent of the County’s department operating expenditures – approximately $4 million in proposed cuts that the Board could make if it chooses.

The largest of the proposed cuts would be $2.4 million in service reductions, including bike/pedestrian programs; transportation planning; Arlington Initiative to Rethink Energy (AIRE) and the district energy initiative; urban agriculture and employment services and cluster care for seniors, closing Artisphere and redirecting some of that funding to Cultural Affairs. Another $1.4 million would be saved by converting some Metrobus service to less expensive ART service; utility and fleet savings and eliminating a redundant after-school care program done in collaboration with APS.

Next steps

The County Manager sought feedback from the community in putting together her proposed FY 2016 Budget. Residents were invited to make comments and suggestions online, the Manager met with Commission chairs in November and she and the Superintendent of Schools held a joint public budget forum in December. The County Manager also held an online budget chat with employees. She will formally present the budget to the County Board at its February 21, 2015 County Board Meeting.

The Board will hold a series of public work sessions on the budget and two public hearings; information will be posted on the FY 2016 Budget webpage. The first budget hearing is scheduled for March 24. The second, on tax and fee proposals, will be held March 26.

The Board will adopt the budget in April, and the new fiscal year will begin in July. To view the Board’s meeting schedule, visit the County website.

For more information on the FY 2016 Budget, visit the County website and search “FY 2016.” The County Manager’s full Proposed Budget will be available February 21, 2015, on the FY 2016 Budget webpage.

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