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The Right Note: Watch Out

by Mark Kelly January 25, 2018 at 3:45 pm 0

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

Arlington homeowners received some bad news last week when the county announced that residential property tax assessments were up over last year while commercial assessments, driven by office buildings, went down.

The news will put a real strain on the County Board guidance to hold the tax rate steady as they chase the mythical budget gap.

Residential assessments are up 3.9 percent over last year, which means the average homeowner will already pay 3.9 percent more in taxes absent a rate cut. A year ago, the County Board raised the tax rate by 1.5 cents on top of the 2.5 percent assessment.

Overall assessments rose by 1.9 percent, instead of the projected 3.2 percent. It is hard to imagine a scenario where the Board doesn’t eventually say they were “forced” into raising the tax rate again this year by another 1 or 1.5 cents.

Lest you think they needed the last rate increase, the Board once again spent millions in extra revenue during the closeout process last fall. It was more than enough to eliminate the need for last year’s rate increase.

Since they do not need the extra revenue another rate increase would bring, let’s take a moment to discuss some of the other go-to talking points when the subject of assessments and rate increases come up.

“Arlington homeowners should be pleased their assessments are going up because it means their homes are worth more.”

Sure, it’s great over the long haul for when you want to sell your home. It is not so good for young professionals trying to buy into the housing market or for retirees trying to age in place. Right now, we have to pay all the taxes out of our income. If your incomes are not rising by 4-5 percent every year, you are not further ahead, you are further behind.

“We use conservative estimates of revenue to determine how much of a rate increase we will need.”

It’s only a conservative estimate if your intention is to give the money back when you consistently estimate the revenue wrong, and in a way that creates a “budget gap” and requires you to raise taxes. And it’s not conservative when your intention is to spend the excess each year in order to raise spending even more the next.

Here’s a challenge to the Board and the County Manager as they continue through the budget process

Step 1 –Continue to write your budget in a way that rates would not to increase under the “conservative” estimates.

Step 2 — At the end of the process, reduce spending by .5 percent across the Board.

Step 3 — Use any closeout revenue available in November of 2018 to cut next year’s tax rate.

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