Join Club

Peter’s Take: Allocating Arlington’s Close-Out Surplus Funds

Peter RousselotPeter’s Take 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.

Last year, responding to years of community pressure, the county government finally adopted a new review process in which the County Manager’s close-out surplus recommendations were first proposed in October, but not voted upon until November.

I strongly recommended last fall that almost all of last year’s $17.8 million close-out surplus be kept in reserve until the FY 2018 budget was approved.

Despite support from Board member John Vihstadt for such a reserve, the Board voted last fall to spend most of the surplus. When it came time to approve the FY 2018 budget this spring, the Board approved a tax rate increase of 1.5 cents, estimated to produce $11.1 million.

Discussion

Arlington should follow certain principles to guide its decisions in allocating any close-out surplus.

  1. A fair and reasonable percentage (i.e., a percentage higher than 0 percent) of any close-out surplus always should be allocated to moderate the tax rate and/or reduce bonded indebtedness

Adopting this principle would mean only that a fair and reasonable percentage of any FY 2017 close-out surplus would be earmarked for property tax rate moderation in calendar-year 2018. Adopting this principle would not necessarily mean that the calendar-year 2018 property tax rate would fall, rise or remain the same.

What is “fair and reasonable”? That should depend upon the close-out surplus amount in any given year and careful consideration of public input. But the fair and reasonable percentage should be multiplied against the entire surplus, and set aside for consideration next year before any final decisions are made regarding how to allocate any remaining surplus.

Similarly, we should consider using some percentage of any close-out surplus for early debt retirement when that makes financial sense. Retiring debt early will help free up more bond capacity in addition to reducing interest expense.

  1. The remainder of any close-out surplus (after setting aside a percentage for tax rate moderation and any debt reduction) should next be considered to address any emergency that requires funding before final adoption of the FY 2019 operating budget

An “emergency” expenditure is one that simply cannot be deferred until the FY 2019 operating budget is approved in April 2018. Reasons for not waiting until April 2018 might include the complete loss of a current vital opportunity or the strong likelihood of sharply escalating costs to meet a core government function.

However, before using surplus close-out funds, the county should first determine whether it already has an appropriate reserve fund set aside which it could tap to cover the emergency.

  1. All other proposed uses of any close-out surplus automatically should be deferred, and the remaining funds’ allocation should be decided in conjunction with the FY2019 budget process

Close-out surpluses are one-time funds rather than ongoing revenue. They exist solely because the County collected more tax revenue than required to meet its budgeted commitments. Therefore, these funds should be used for nonrecurring expenditures (e.g., replacing a bridge, acquiring land).

Conclusion

In its final FY 2018 budget guidance adopted this spring, the County Board directed the Manager “to provide an option for County Board consideration that would direct all carryover funds to consideration in the FY 2019 budget process, except for what the Manager deems to be emergency or unanticipated needs that, in his best judgment, require immediate allocation or appropriation.”

At a minimum, the Board should adopt that option this fall.

Recent Stories

Morning Notes

Alexandria Arena Nixed — “The City of Alexandria just announced that the city is ending negotiations related to the Potomac Yard Entertainment District and ‘the proposal will not move forward.’”…

Good Wednesday evening, Arlington. Let’s take a look back at today’s stories and a look forward to tomorrow’s event calendar. 🕗 News recap The following articles were published earlier today…

Arlington is receiving nearly $300,000 in federal funds to help clean up the Chesapeake Bay. The money is part of a much larger $206 million federal grant given to the National…

Schedule your tour today to see The Grace and Reva residences in National Landing. Located in the heart of the neighborhood’s vibrant food scene on Crystal Drive, these two residential…

Award-winning drag queen Tara Hoot is bringing her Family Fun Story Time Brunch to Arlington at Freddie’s Beach Bar! Saturday April 6 at noon! Join Tara for songs, stories, puppets, bubbles and joy! It’s not just stories, it’s a SHOW that’s perfect for kids and kids at heart–fun for everyone! Plus a tasty brunch at Freddie’s! Click the link and make your reservations now! ❤️ 🫧 🌈

Submit your own Announcement here.

The Summer 2024 STEAM (Science/Technology/Engineering/Arts/Math) Fellowship application is now open! Apply by April 15 to be considered!

The STEAM Workforce Development Teacher Fellowship provides Arlington Public Schools (APS) high school, middle school, and elementary school teachers with opportunities to learn about workplace needs in STEAM-related fields and for them to use the experience to enhance student learning to match workplace expectations in a selected industry. STEAM Fellows participate in a three-week summer fellowship, receiving a $4,000 stipend upon completion.

Applicants planning to pursue a fellowship in the arts must demonstrate how they will build connections between the arts and science, technology, engineering, or mathematics.

Click the button to learn more, share, apply, and see the variety of fellowships completed in previous years.

Read More

Submit your own Announcement here.

ACFCU’s Homebuying 101: Steps to Getting Pre-Approved

Are you ready to jump into homeownership, or have you started considering it but don’t know where to start?

Financial preparation is key when thinking about purchasing your first home and the first step to getting pre-approved. Join ACFCU for

Free Right-Sizing Workshop – How to Get Rid of Your…

Cody Chance and Dick Nathan of Long & Foster are hosting a free workshop at our office on Cherry Hill Rd. (formerly Lee Highway) on the topic of “down-sizing” Thursday, March 28 from 5:30-7:30. We have created a workbook with

×

Subscribe to our mailing list