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Proposed $1.54 billion county budget would hold property tax rate steady amid rising values

Arlington County Manager Mark Schwartz presents his proposed budget on Feb. 18, 2023 (via Arlington County/YouTube)

(Updated at 4:20 p.m.) Arlington’s property tax rate will not be going up in the new county budget, but it looks unlikely to come down, either.

The County Board voted unanimously last night (Tuesday) to advertise a property tax rate of $1.013 per $100 in assessed value. That sets a cap on the real estate tax rate, locking in the county to a rate that’s flat or lower than last year.

But homeowners would still see their taxes go up significantly even with the rate unchanged, owing to a 4.5% rise in residential property assessments. Between taxes and fees, the average Arlington homeowner would be paying $454 more to the county compared to the previous year, a 4% increase.

That includes a $100 hike in the annual trash collection fee paid by homeowners — from $308 to $409 — which county officials attributed to a “significant increase to contractual costs due to driver shortages, current labor costs, and equipment pricing.”

FY 2024 proposed county budget slide (via Arlington County)

Arlington County Manager Mark Schwartz’s budget proposes keeping the current $1.013 real estate tax rate, despite a better-than-expected revenue outlook.

“The facts have changed since November and December,” Schwartz said, referencing what was then predicted to be a $35 million budget gap. “We’ve seen higher than anticipated real estate assessment growth. I think a number of people saw that when they received their residential real estate assessments in January.”

“On the commercial side, we had anticipated a drop in overall assessments, and there was a very small drop in the commercial assessments, but when you factor in the new commercial buildings the numbers were actually up,” the County Manager continued. “And also, our other taxes… are doing quite well.”

The county is seeing a 10.7%, 15.4% and 33.3% rise in sales, meals and hotel tax revenue, respectively, according to Schwartz’s presentation to the Board on Saturday. After a brutal couple of years for Arlington’s hospitality industry, hotel taxes are now about back to pre-pandemic levels, he noted.

FY 2024 proposed county budget slide (via Arlington County)

Schwartz’s $1.54 billion budget — up 2.8% over last year’s adopted budget — also includes a number of proposed cuts,

Just over 20 vacant positions would be eliminated, including an auditor position in the County Board office, and other savings would be found from initiatives like paperless billing of property and business taxes. In all, the cuts would save $5.6 million.

While the county is no longer benefiting from the firehose of Covid relief funds from the federal government, it will save $2.6 million thanks to energy credits stemming from its 2020 solar power agreement with Amazon.

In the expense side of the budget, however, the picture is less rosy.

Schwartz said the county is still facing a “very competitive environment in terms of workforce,” making it hard to hire for certain positions and driving up wages. The budget proposal includes a $2,000 bonus for qualified county staffers and 4.5-10% salary increases, including:

  • General Employees — 4.5%
  • Uniformed Fire — 4.5%
  • Service/Labor/Trades — 4.5%
  • Uniformed Sheriff — 8.5%
  • Uniformed Police — 10%

“We are still having challenges in hiring vacancies,” Schwartz said.

FY 2024 proposed county budget slide (via Arlington County)

Other initiatives in the budget include purchasing 22 electric vehicles for the county fleet, part of an ongoing transition, and a community engagement effort focused on libraries. The latter will “review the operating model (locations, hours) considering where we’ve seen growth in the County and how that overlaps with service demands.”

However unlikely, there could be flexibility for a slight decrease in the property tax rate. Schwartz left $4.5 million in his budget unallocated, for consideration by the Board.

Starting next week the county will start a series of in-depth work sessions focused on individual departments and offices, followed by public hearings at the end of March and a County Board vote on the final Fiscal Year 2024 budget on April 22.

FY 2024 proposed county budget slide (via Arlington County)

More from an Arlington County press release, below.

County Manager Mark Schwartz’s proposed FY 2024 budget responds to the community’s needs and priorities while also addressing the shortfall for the coming fiscal year. The County’s General Fund Budget provides foundational services for the community, including public safety, environmental services, transportation and schools; this year’s proposal has additional focus on human services and affordable housing.

The proposal details $1.54 billion in General Fund spending, a 2.8 percent increase over FY 2023. The budget is based on a 3.6 percent growth in real estate assessments and a 4.9 percent growth in overall tax revenue. The proposed budget also assumes no changes in the real estate and stormwater tax rates.

Early forecasts projected a budget gap of over $30 million between anticipated revenues and expenditures for FY 2024, and while there has been revenue growth in real estate assessments and in meals and sales taxes, the County continues to face budgetary pressures, including commercial vacancies, inflation and rising interest rates.

The Manager’s proposed budget also includes $5.6 million in departmental reductions to balance the budget, which includes eliminating 20.3 vacant positions.

“This budget proposal helps us transition to a future that looks different from the world we knew prior to COVID,” said County Manager Mark Schwartz. “Given the financial pressures we continue to face, we had to make hard decisions that reflect our commitment to our community and our workforce. The budget also emphasizes affordable housing and efforts to stabilize households in Arlington to create a more equitable community.”

Investments in the Community

The Proposed FY 2024 budget is the result of months of study, evaluation and input from the public on how best to invest available revenue. Core investments in the proposed budget include:

  • Workforce Investment for County Employees:  The FY 2024 budget proposal includes salary increases and additional benefits for County employees, including expanded parental leave, bereavement leave, and increased contributions for adoptions and Health Savings Accounts.
  • Housing Support: The proposed budget includes $76 million dedicated to housing programs, with an emphasis on stabilizing housing for households in need and improving housing conditions. These investments include $14.4 million for the County’s Housing Grant program, $5.4 million for the Permanent Supporting Housing program and $3.6 million for eviction prevention. The budget also maintains the prior year’s ongoing funding level of $9.7 million for the Affordable Housing Investment Fund (AHIF).
  • Capital Investments: The Manager’s budget includes investments that benefit the community in the areas of energy management, facilities, parks, technology and transportation. These investments include street lighting and safety improvements, electric vehicle chargers, and playground design and replacement.
  • Schools: For FY 2024, the proposed budget includes a County transfer of $607.6 million–46.8% of local tax revenues–to Arlington Public Schools. This is a 4% increase over FY 2023.
  • Commercial Resiliency: To address the high commercial vacancy rate and support economic recovery for the business community, the proposed budget includes $1 million for the Arlington Innovation Fund and continued small business support.

Budget Engagement Process

The County Manager collected feedback from the community on approaches to balancing the budget and which services and programs should be kept as top priorities through an online form and in-person pop-up engagement opportunities. Over 2,400 participants weighed in on the budget, either online or at in-person pop-up engagements. The feedback from the community helped the County Manager determine where to apply resources. View the Engagement Overview here.

Tax Rate & Next Steps

After the County Manager submitted his proposed budget, the Arlington County Board voted on advertising no changes to the current year tax rates and proposed fee schedule changes. Next, the Board will review the budget proposal and conduct a series of work sessions, starting in early March. The County Board will then hold a budget hearing on Tuesday, March 28, 2023, and a tax rate hearing on Thursday, March 30, 2023. Members of the public can sign up to speak in public hearings in person or virtually. Visit the County Board Webpage to sign up as a speaker. The final vote on the FY 2024 operating budget is scheduled for Saturday, April 22, 2023. The fiscal year begins on July 1, 2023.