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Arlington Launches New Transparency Tool to Help Taxpayers Navigate County Budgets

With a budget well over $1 billion, Arlington’s checkbook can feel a bit overwhelming to the average taxpayer — but the county is launching a new resource to help change that.

The county rolled out the first phase of “Arlington Wallet” yesterday (Tuesday), unveiling a new online tool to help Arlingtonians get a clearer look at how officials are spending money each year.

The website, commonly known as an “open budget” database, will allow users to access budget data in graphs and charts, and drill down into each county department’s budget for a clearer look at Arlington’s expenses and revenues over the years.

The tool also lets users create their own charts and download any of the raw data for themselves.

“There’s no greater obligation we have than to be good stewards of taxpayer dollars,” County Manager Mark Schwartz said in a statement. “Arlington Wallet makes it easier than ever for our residents and business owners to see exactly how the county is spending money.”

The database currently contains budget information from fiscal year 2014 through December 2018, though the county has plans to expand it in the future. Officials are also planning to launch a second phase of the tool later this year, with data on individual county transactions.

The county compared the new phase in a news release to a “a personal checkbook or online account statement” that will show “what the county is buying and who it’s buying it from.”

“Arlington Wallet” runs on a platform created by the software company OpenGov, which provides similar services to hundreds of other governments and government agencies. Information on how to access the database is available on the county’s website.

Arlington previously launched an open data portal with a variety of county information available back in 2016, and has since regularly convened meetings of an “Open Data Advisory Group” to guide its transparency efforts.

Photo via Arlington County

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Lawmakers Overwhelmingly Support Incentive Bills to Bring New Amazon Headquarters to Arlington

State lawmakers have overwhelmingly approved an incentive package designed to lure Amazon to Arlington, sending legislation to Gov. Ralph Northam’s desk that will direct hundreds of millions of dollars in grant funds to the tech giant over the next 15 years.

Virginia’s House of Delegates passed a bill on the matter by an 83-16 margin today (Monday), after the state Senate signed off on the legislation with a 35-5 vote last week. Northam will ultimately have the final say on the issue, but considering that his administration helped broker the deal with Jeff Bezos’ firm in the first place, it now seems a sure bet that the company has the state’s support for a massive expansion in Pentagon City and Crystal City.

The legislation sets up a “Major Headquarters Workforce Grant Fund” to hand out the payments, designed to offset state taxes Amazon would incur should it set up a massive new headquarters in the county. In all, the bill would send $550 million to the tech giant between now and 2030, so long as the company delivers on its promise to bring 25,000 high-paying jobs to the area.

If the company can come through with another 12,850 jobs after that, Amazon stands to earn another $200 million in incentives, for a total haul of $750 million attached to the project.

Northam and his negotiators promised a variety of transportation improvements around the proposed headquarters in order to make Arlington seem especially attractive to the company, in addition to investments in tech education programs at state universities. But those measures will likely be included as part of the state budget, or funded through other state programs, leaving the incentive bills as the clearest chance for the General Assembly to have its say on Amazon’s arrival.

“When it comes to Arlington and Alexandria, I believe this is exactly what they want,” said Del. S. Chris Jones (R-76th District), a member of a powerful panel of lawmakers who worked with Northam to hammer out Virginia’s offer to the company, during a brief floor debate today.

While the incentive legislation never faced much in the way of serious opposition, it did attract dissenting votes from Republicans and Democrats alike. Six Democrats and 10 Republicans in the House opposed the bill, while all five state senators to vote against the measure were Republicans.

Notably, Del. Alfonso Lopez (D-49th District) was the lone member of Arlington’s legislative delegation to vote against the bill.

Part of the company’s headquarters will be based in his South Arlington district, and he’s already raised concerns about how Amazon will disrupt the area’s housing market. He also chose to send back campaign contributions from the tech giant, after Amazon shelled out cash to all of Arlington’s lawmakers and many other prominent state leaders.

“The thing I keep hearing about over and over again are the prospects of displacement,” Lopez said. “This has been a problem for a really long time. HQ2 has just shown a bright light on it.”

Lopez commended some of the planned investments in housing affordability measures that Northam is promising as part of his offer to the company, but he says that “neighbors are worried about being displaced now, long before money creates any new housing.”

Experts across the region say that it’s no sure bet that Amazon will suddenly drive up all home prices and force renters out of the county, but they do believe it’s a distinct possibility that low- and middle-income people could feel a squeeze from the company’s arrival. And with Arlington and Alexandria committing to just limited affordable housing measures on top of the state’s efforts, some lawmakers do indeed see reason for skepticism.

“Those provisions are too little and too late,” said Del. Lee Carter (D-50th District), an intense Amazon opponent and the legislature’s lone Democratic socialist. “Even if construction were to be completed right now, it’d be too late for some neighbors in my district.”

Others still, Republicans and Democrats alike, questioned the wisdom of handing over such large incentives to a company owned by the world’s richest man. But the potential of the deal to bring so many jobs to the region, with a corresponding flow of tax revenue to local governments, was too promising for many lawmakers to pass up.

“We put together one of the best business deals I’ve ever seen in my 20 years of economic development experience,” said Del. Matthew James (D-80th District) during a committee hearing on the legislation last week. Like Jones, he helped negotiate the deal with Northam’s team.

The House also acted today to combine two identical Amazon incentive bills into one before sending the legislation to Northam, which should remove the need for the Senate to consider a version of the bill to originate in the House. Once this year’s legislative session ends on Feb. 23, the governor will have a month to decide whether to sign or veto the bill.

In the meantime, Arlington officials have yet to consider their own package of incentives attached to the deal, totaling about $23 million in grant funds over 15 years. The County Board plans to take that matter up no sooner than its Feb. 23 meeting, but some members have recently begun suggesting that they could push the issue into March instead.

Photo via @Osubi_C

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Arlington Property Values Tick Upwards in 2019, But Not Enough to Fill County’s Yawning Budget Gap

Residential and commercial property values in Arlington ticked up last year, sending more revenue into the county’s coffers, but officials warn the increase won’t be enough to avoid the painful budget gaps facing county leaders this year.

The good news, the county says, is that the total assessed value of all Arlington property increased by 3.5 percent this year, compared to a 2.2 percent bump last year. Today (Friday), county mailed out property assessments, which determine the size of homeowners’ tax burdens. It plans to make all that information available online by tonight at 6 p.m.

The county said in a news release that three out of every four homes saw an increase in assessed value, for an overall bump in residential property values of about 2.9 percent. The average home’s value is now $658,600, up from $640,900 last year.

Commercial property also saw a 4.1 percent increase in value, and the county says the construction of new apartments was “responsible for about a third of the collective increase.” Office properties specifically saw a 4.3 percent bump, a substantial turnaround from the 6.9 percent decrease they recorded last year.

“Rising property values mean Arlington is a place people want to live and work,” County Manager Mark Schwartz said in a statement. “And the revenue we collect from real estate taxes helps us maintain the high-quality amenities and public services that make Arlington so attractive.”

Of course, the county still has its challenges. The release notes that Arlington’s office vacancy rate still sits at about 17.4 percent, and the resulting tax revenue slowdown has led to all sorts of fiscal challenges over the last few years.

Amazon’s arrival in Crystal City and Pentagon City will go a long way toward reversing that trend, but county leaders expect that it will take years for Arlington to start to feel the positive revenue impacts.

In the meantime, Schwartz is warning that the county’s budget deficit could be as large as $78 million in fiscal year 2020, given the gap facing both the county and its school system.

Schwartz expects that the county will need to close a gap of anywhere from $20 million to $35 million all on its own, which is driven by factors including Metro’s increasing expenses, the new raises for public safety workers the Board approved in the FY 2019 budget and new spending associated with the statewide Medicaid expansion.

The county school system could also tack on another $43 million in unmet needs, as it works feverishly to build new schools and keep pace with the county’s influx of students.

The County Board has already directed Schwartz to prepare options for the new budget ranging from tax increases to staff layoffs. He’ll deliver a proposal for a new spending plan next month, as will schools Superintendent Patrick Murphy.

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Lawmakers Revive Push to Raise Taxes for Metro Funding, A Key Priority for Arlington Officials

A pair of state lawmakers are pushing to revive a proposal to raise some Northern Virginia tax rates to fund Metro, a key priority of Arlington and other localities around the region feeling a budget squeeze.

A bill now backed by Del. Vivian Watts (D-39th District) and Del. Alfonso Lopez (D-49th District) would bump up taxes slightly on real estate transactions and hotel stays in the jurisdictions that benefit from Metro service. The legislation is broadly similar to Gov. Ralph Northam’s push to raise those rates last year, as lawmakers squabbled over the best way to find a dedicated funding stream for the troubled transit service.

That effort failed, even as state lawmakers did agree on a bill to send $154 million to WMATA annually, as part of a first-of-its-kind, three-way deal with Maryland and D.C. to send dedicated money to Metro each year. Republicans, led by Del. Tim Hugo (R-40th District), insisted on pulling cash away from other sources instead of raising taxes to pay for the deal.

Primarily, that change redirected funds from the Northern Virginia Transportation Authority, a regional body that hands out sales tax money to help localities fund major transportation projects. Arlington officials, in particular, were irked to see the group lose cash, as many were counting on the NVTA to help the county fund major transportation projects while Arlington’s own budget picture grew a bit grimmer.

One of the main projects the county was hoping to fund with NVTA money — a second entrance at the Crystal City Metro station — is now set to receive millions in state funds, thanks largely to its inclusion in the deal to bring Amazon to the area.

But Arlington officials have also had to push out plans to build new entrances at the Ballston and East Falls Church Metro stations, in part due to the NVTA’s money problems. The County Board included a request for just this change as part of its legislative wish list for the new General Assembly session, and local Democrats have broadly been receptive to renewing this fight in the months since Northam’s effort failed.

The governor himself previously told ARLnow that he’d seek to bring back the tax increases to restore money for the NVTA — his spokeswoman did not immediately respond to a request for comment on this piece of legislation.

Should it pass, the bill would send about $30 million back into the NVTA’s coffers each year, according to documents prepared for the Commonwealth Transportation Board. However, the NVTA has estimated its annual funding losses due to the Metro deal as closer to $100 million each year.

“We appreciate Del. Watts’ efforts to restore funding to the NVTA,” Executive Director Monica Backmon told ARLnow via email. “We have not conducted a detailed analysis of the bill at this time. However, we anticipate discussing this bill and others at the Feb.14 authority meeting.”

A NVTA spokeswoman added that Watts’ bill is the only one introduced this session to restore the group’s funding via the tax increases.

But with Republicans still holding narrow majorities in both the House of Delegates and the state Senate, the bill could well face an uphill battle.

Notably, House Speaker Kirk Cox (R-66th District) assigned the legislation to the House’s Rules Committee, a group of powerful lawmakers. While other committees are balanced to reflect the partisan makeup of the House, the Rules Committee is dominated by Republicans on an 11-6 margin, leading many Democrats to accuse Cox of sending bills to the committee to expedite their failures.

The group is also unique among House committees in that it can send bills directly to the floor for a vote, rather than casting a ballot on whether or not to advance the legislation. That allows Cox to force a vote from the full House on a bill, should he choose to do so.

The committee has yet to schedule a hearing on the bill, however.

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As Shutdown Drags On, County Offers More Assistance for Furloughed Workers

Now that this latest government shutdown has become the longest in the nation’s history, Arlington officials are taking some new steps to lend a hand to furloughed workers missing out on paychecks.

The county already announced plans last week to arrange payment plans for utility bills, should any of Arlington’s thousands of federal employees need help keeping afloat while the shutdown continues. Now, it also plans to offer tax relief and waive some fees as well, per a press release.

Anyone with concerns about meeting a tax deadline can call the county treasurer’s office at 703-228-4000 to work out a payment deal through the county’s “Taxpayer Assistance Program.”

Furloughed workers can also apply for the Department of Parks and Recreation’s “fee reduction policy” if they have trouble paying fees to use county facilities or programs. The county’s library system is also waiving overdue fees for some federal employees; people can call 703-228-5940 or visit a library and provide a federal ID to see if they qualify.

Arlington Economic Development hopes to offer resources for small businesses impacted by the slowdown in spending stemming from the shutdown. Any business owners “seeking assistance on how to restructure your business, financing or to discuss changes to your business strategy” can contact the agency’s “BizLaunch” office.

“I am hopeful that our efforts as a county will make a difference, but the longer this goes on, the more difficulty we’re going to be facing,” County Manager Mark Schwartz said in a statement. “Until this shutdown is over, I am asking every Arlington resident and business-owner to be on the lookout for opportunities to help those who might be in need.”

As local businesses suffer due to the shutdown, so too could county tax revenues. Economists estimate that the shutdown costs the entire region about $119 million a day, and the county says it previously saw a “decline in sales, meals and hotel tax revenues due to drops in government-related business travel to the area” during the last extended shutdown in 2013.

“An absence of federal workers in key business districts on weekdays also brought less spending at restaurants, dry cleaners and other local businesses,” county staff wrote. “The county maintains reserve funds specifically to address such unexpected events and shortfalls in revenue.”

The county doesn’t expect to lose much direct revenue from the federal government as a result of the shutdown, though it will “monitor the status of these programs for any potential disruptions,” but any drop in tax revenues could prove to be quite troublesome as officials turn to an already-challenging budget for the new fiscal year.

Arlington’s persistently high office vacancy rate has already squeezed county coffers, and the County Board could soon be grappling with a budget deficit as high as $78 million, even before any impact from the shutdown.

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Arlington Democrats Warn GOP to ‘Lead, Follow or Get Out of the Way’ in New Legislative Session

After years facing powerful Republican majorities in both chambers of the General Assembly, Arlington lawmakers are accustomed to harboring only modest ambitions for each legislative session.

But as legislators return to Richmond today (Wednesday), members of the county’s all-Democratic delegation say they’re ready to flex their muscles a bit over the new, 45-day session.

With all 140 lawmakers on the ballot this fall and Democrats just one seat away from seizing power in both the House of Delegates and the state Senate, Arlington legislators sense an opening. Republicans have taken a beating in all manner of elections across the state over the last two years, and Democrats expect that will inform how GOP leaders manage their slim majorities in this session.

Arlington lawmakers hope that will result in some of the party’s more moderate members finally embracing their efforts around everything from redistricting reform to gun violence prevention, in a bid to appear more attractive to swing voters. What it all comes down to for state Sen. Adam Ebbin (D-30th District) is a simple motto for his colleagues across the aisle: “lead, follow or get out of the way.”

“They can can decide to lead on some of the most important issues facing Virginia, which they have failed to do, they can choose to follow Democrats, or they can have voters get them out of the way,” Ebbin told ARLnow. “If they come to the table on a variety of issues, I think their chances are enhanced… But will [House Speaker Kirk Cox] want to allow bills to come to the floor so that a handful of members who want to appear to be moderates vote for them, or even sponsor them? Time will tell.”

Del. Patrick Hope (D-47th District) says he’s “hopeful” that Republicans will pursue such a strategy over the next weeks — not only does he see it as wise political strategy, he jokes that “with my last name, I don’t have a choice” but to be optimistic.

But Del. Mark Levine (D-45th District) takes a gloomier view of the GOP, arguing that Richmond Republicans have done nothing but “march in lockstep” with their leadership for years, and could soon face an electoral price for doing so.

“If moderate Republicans continue to fall in line and do what’s against their constituents’ wishes, we will absolutely run against them for it and they will lose in November,” Levine said. “I see it as a win-win: either we get the policies we want, with majority support, or we get these people out.”

Should Republicans choose to sign onto some Democratic priorities, Arlington legislators see two key areas for agreement: a constitutional amendment establishing a nonpartisan commission to draw district lines, and the ratification of the Equal Rights Amendment.

In both cases, the Democrats expect they’ll have enough votes to pass the bills on the floor — Republicans have either introduced or co-sponsored bills on both subjects — the question is whether the legislation will make it out of committee, where a handful of lawmakers have the power to quickly kill the bills.

Del. Rip Sullivan (D-48th District), a key backer of redistricting reforms, sees a real “sense of urgency” to the aforementioned issue this year, simply due to timing. Democrats hope to pass a constitutional amendment before the next round of redistricting in 2021, and that requires a complex process.

Lawmakers need to pass the amendment twice: once before a legislative election, and once afterward. Then, the matter will head to a statewide ballot referendum, which Sullivan is hoping to line up with the 2020 elections. Should it pass all those hurdles, stripping power from lawmakers to draw their own districts, the new commission would be in place by the time the Census mandates a change in boundary lines.

Considering that Democrats may well take control of the General Assembly this fall, Del. Alfonso Lopez (D-49th District) expects it would be in the best interest of Republicans to agree on a nonpartisan process now while they still can. Levine notes that it doesn’t help the GOP’s chances either that federal courts have ordered a redrawing of some House district lines over claims they were racially gerrymandered, a process that will likely weaken Republican chances in several important seats.

“Not passing something will essentially hand the reins of gerrymandering back to Democrats, and I don’t think that’s what they want,” Lopez said.

Even with this newfound pressure, however, Sullivan says it’s “not clear to me that leadership will even allow a vote” on redistricting or the ERA ratification, which could revive the long-dormant effort to mandate equal rights for women in the U.S. Constitution.

“There’s a lot of momentum behind the ERA, so it will be interesting to see if Republicans, in an election year, will let it come forward for a vote,” Hope said. “And I’m absolutely convinced it will pass if gets to the floor.”

Instead, it seems clear to lawmakers that a debate over tax revenues will prove to be the dominant issue of this legislative session.

The Republican tax reform bill shepherded through Congress in 2017 will result in an extra $1.2 billion in state revenues, and battles lines are already being drawn about how to spend that money. Democratic Gov. Ralph Northam is proposing a mix of tax relief for low- and middle-income families and new investments in everything from education to broadband access; Republicans would rather see all of the money invested in tax breaks for slightly wealthier earners.

“If you think we argue or fight when times are tight, wait until you see the kind of arguing we can do when there’s extra money,” Sullivan said.

Cox and his fellow Republicans claim that Northam’s proposal amounts to a “middle-class tax hike” because it doesn’t send all of the savings generated by the federal tax cut back to middle-income families. But Democrats charge that the GOP’s plan, which centers on households making between $125,000 and $150,000 a year, targets only richer families and leaves the poor behind.

“We really need to encourage those folks working hard in the toughest economic circumstances to make it easier for them to have childcare, to have healthcare,” Ebbin said. “For people working hard, we should help them get ahead. That’s what this country is about.”

Democrats point out that Northam’s proposed investments, which could raise teacher pay across the state and expand select healthcare programs, would provide their own benefits for Virginians across the income spectrum. But Lopez also concedes that the most likely scenario is that the two sides strike a a compromise with “a little bit of both” tax relief and new spending.

With all this uncertainty, however, one thing is for sure — the short session will move awful quickly, especially with elections on the horizon.

“It’s going to go fast, and it’s going to be furious,” Lopez said. “And there are a lot of issues affecting Arlington families that we’re going to try to keep folks updated on.”

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Arlington Chamber Urges County Board to Avoid Tax Hikes, Despite Looming Budget Deficit

As Arlington leaders gear up to confront a yawning budget deficit in the new fiscal year, the county’s business community is delivering a message to officials holding the purse strings: cut spending, but don’t raise taxes.

The Arlington Chamber of Commerce recently staked out a series of local policy positions as 2019 gets rolling, and one of its biggest asks this year is that the “county government seek and adopt additional savings and economies of scale before considering any increase in the real estate tax burden.”

Such a request may well be a futile one — the County Board has already asked County Manager Mark Schwartz for proposals on what various tax rate hikes might look like for fiscal year 2020. Schwartz has also warned that a mix of service cuts, layoffs and tax increases will likely be necessary to cope with a budget deficit that could prove to be as large as $78 million, as Arlington anxiously awaits Amazon and its projected boost to county coffers.

But the chamber is, perhaps predictably, urging the Board to instead embrace its strategy from a year ago, when members opted to avoid any tax rate increase in favor of some targeted cuts.

The business group is even asking the Board to conduct “a local study of comparative tax rates between Arlington and surrounding jurisdictions to discover specific tax rates and impact fees that put the county at a competitive disadvantage in attracting and retaining certain segments of the business community,” which could prompt additional rate and fee cuts.

The chamber would much rather see the Board focus on attracting more businesses to boost revenues instead, urging leaders to make economic development the Board’s “chief policy priority” this year.

That means the business group wants the county to continue its use of “competitive incentives, tied to strong benchmarks, both to attract and to retain businesses” — Arlington officials long disdained such measures, but the county’s soaring office vacancy rate has convinced leaders to use incentives to lure companies from Amazon to Nestle in recent years.

Naturally, the chamber says it also backs the county’s proposed incentive package for Amazon itself, set to include a mix of investments in transportation improvements around the new headquarters and a chunk of the new tax revenues generated by the company’s arrival in the area. The chamber previously backed the county’s pursuit of Amazon even before the exact details around the incentives became public in November; the Board will formally vote on the deal this winter, as will the General Assembly.

With Amazon on the way, the group also urged the Board to embrace the “addition of mass transit systems (bus-rapid transit or similar) in the Crystal City/Potomac Yard and Columbia Pike corridors.” The county is set to extend the Crystal City-Potomac Yard Transitway to Pentagon City in the coming years, while the idea of bus-rapid transit for the Pike has been batted around ever since the notorious streetcar’s cancellation.

Other transit projects on the chamber’s wishlist include “second entrances at the Crystal City and Ballston Metro stations, and a new Rosslyn tunnel.” The Crystal City second entrance is set to be constructed as part of the Amazon improvements; the Ballston and Rosslyn projects will require a considerably more tricky funding lift from the county.

And when it comes to ways to beef up the county’s supply of affordable housing to cope with Amazon’s projected impact on home prices, the chamber stressed that “providing developers and property owners with incentives is the best, perhaps only, way to obtain substantial additional units that are affordable to a broad part of the community and to preserve existing housing stock.”

The chamber also did not pass by another opportunity to lament the “ill-advised” nature of the county’s development of new “housing conservation districts” in 2017.

Some property owners felt ambushed by the county’s work to freeze the redevelopment of affordable homes, and the chamber is pushing for a more “open process that includes suggestions and comments from the business community” as the Board charts out the next phase of policies governing the districts.

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County Plans Hiring ‘Slowdown’ to Cope With Mounting Budget Pressures

County Manager Mark Schwartz is calling for a “hiring slowdown” for Arlington’s government, choosing to leave dozens of positions vacant while county officials mull how to cope with a yawning budget deficit.

Schwartz told the County Board last Tuesday (Nov. 27) that he isn’t planning a full hiring freeze for the county workforce, but he will nonetheless direct 10 department heads to hold off on hiring across 45 different positions for the foreseeable future.

The county’s budget picture for fiscal year 2020 is still coming into focus, but Schwartz projects that the county and its school system could combine to face a $78 million budget gap next year. That means that some mix of tax increases, staff layoffs and program cuts are likely in the offing, after the Board declined to raise taxes this year, and Schwartz is working to get ahead of some of those unpleasant measures with this slowdown.

“It may not be immediately noticeable to people, but we will see increased caseloads for some employees,” Schwartz told the Board. “It’s not something that, unless you’re going around and really trying to appreciate it, you’d notice.”

Schwartz said that the positions left unfilled include roles like librarians, code enforcement and housing inspectors and cultural affairs staffers with Arlington Economic Development. He added that the county generally has roughly 200 positions left unfilled at any given time, out of its workforce of about 3,500 employees, and he’d like to leave some spots open in case the Board does indeed pursue layoffs.

“We want to keep some positions vacant for some employees who might be affected by any reduction in force,” Schwartz said.

At the same meeting, the Board did direct Schwartz to present it with options for both layoffs and tax increases as he develops a proposal for the new budget. Even with Amazon’s impending arrival, and the tax windfall the company’s expected to generate for the county, Arlington leaders are gearing up for what Board member Libby Garvey termed “the toughest budget I’ve had to deal with in my 24 years in elected office.”

“We are looking at a path toward a resolution for a long-term structural budget deficit… so our outlook is so much better than it was even just a few weeks ago,” said Board Chair Katie Cristol. “But this will still probably be one of largest gaps between revenues and needs we’ve seen since the Great Recession.”

The county is indeed projecting that Amazon won’t generate substantial new tax revenues for several years yet, leaving Arlington officials with some lean budgets in the meantime. Schwartz projects that new expenses associated with the statewide Medicaid expansion, to the tune of about $1.2 million a year, and rising costs to fund Metro service, with expenses nearing an additional $10 million this year, will put a particular strain on county coffers.

“This is just a different situation than the county has faced before,” Garvey said.

Schwartz is set to present his first budget proposal to the Board in February.

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With Budget Gap Looming, County Board Set to Ask for Proposals on Tax Increases and Staff Layoffs

Arlington leaders now say they’re ready to start studying unpleasant budget measures from tax increases to staff layoffs, as they gear up to confront next year’s hefty budget gap.

The County Board is set to sign off today (Tuesday) on new budget guidance for County Manager Mark Schwartz, as he gets to work on a new spending plan for fiscal year 2020. The memo directs Schwartz to develop a range of possible options for the Board to evaluate next year, including “a range of potential tax increases” and “proposals for program and personnel reductions or eliminations” if Schwartz can’t develop a balanced budget while relying on the existing tax rates.

The Board made a handful of spending cuts in the budget for fiscal year 2019, but opted not to raise any of the county’s tax rates.

Since then, Schwartz has frequently called for the Board to give him the flexibility to pursue such budget measures, given the county’s gloomy near-term financial prospects. Though Amazon’s arrival in Arlington could well pour millions in new revenue into county coffers, officials project that their budget challenges won’t vanish overnight. In all, the county’s combined budget deficit could be as large as $78 million next year.

All on its own, Schwartz expects that the county will need to close a gap of anywhere from $20 million to $35 million, a gap driven by factors including Metro’s increasing expenses, the new raises for public safety workers the Board approved in the 2019 budget and new spending associated with the statewide Medicaid expansion.

But the county school system could tack on another $43 million in unmet needs, as it works feverishly to build new schools and keep pace with the county’s influx of new students. Without any tax rate hikes, staff currently projects that the county will be able to send about $7.7 million to Arlington Public Schools than it did last year. But that increase, driven by rising real estate assessments, likely won’t be enough to solve all of the school system’s funding woes — the School Board only narrowly avoided class size increases last year, and will face similar challenges this time around.

The Board’s budget guidance does identify one program that it hopes Schwartz will be able to protect from budget cuts: the Affordable Housing Investment Fund, a loan program designed to incentivize the construction of reasonably priced homes. The memo to the manager suggests that Schwartz craft a proposal to maintain the $14.3 million in funding the Board sent to the fund last year, and recommends making more of the funding “ongoing” rather than subject to the Board’s appropriation process each year.

The latter change was one championed by Board member John Vihstadt in his losing bid for re-election this year, and the entire Board has emphasized the importance of funding affordable housing programs to prepare for Amazon’s projected impacts on the housing market. As part of its deal to land the tech giant, the county even committed to directing about a third of the money it spends on affordable housing each year to specifically serve the areas around Amazon’s new headquarters in Crystal City and Pentagon City.

The Board is set to vote to approve the new budget guidance today, setting the stage for Schwartz to deliver his proposal to the Board in February. The County Board and School Board are also set to hold a joint work session next Tuesday (Dec. 4) to kick off their initial budget deliberations.

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Tax Hikes and Service Cuts Look Increasingly Likely Next Year, County Leaders Warn

Arlington officials expect a mix of across-the-board service cuts and tax rate increases is the surest way for the county to tackle its widening budget gap next year.

With a funding gap that could ballon as large as $78 million for fiscal year 2020, County Manager Mark Schwartz has repeatedly warned that some tough times are ahead for the county government. He repeated those gloomy projections at a budget-focused town hall with community leaders last night (Wednesday), noting that factors ranging from swelling school enrollment levels to dwindling county revenues to increasing Metro funding obligations will all squeeze county coffers once more.

The question Schwartz (and soon enough, the County Board) is looking to answer is: how should Arlington balance cuts with new tax increases? The answer will set the tenor of the Board’s upcoming budget deliberations, particularly when considering that the county has avoided tax increases in recent years.

“New tax increases are certainly a tool we should be looking at this year,” Schwartz told the group. “It depends on what the Board gives me as guidance, but I’m hoping that they carve out some room for tax increases.”

That’s not to say that Schwartz is only looking at jacking up tax rates — he says he’s asked all of his department heads to sketch out what an 8 percent budget reduction would look like for them, even though he tends to “hate across-the-board cuts” and would much rather “apply a set of principles to choose among departments and decide where to spend our marginal dollars.”

Nevertheless, Schwartz believes the county’s funding squeeze is such that simply slashing expenses can’t be the only answer. In addition to opening three new schools in the coming year and digging deep to cope with money pulled away from the county as part of the new Metro funding deal, Schwartz says the county needs to get creative to address the new costs of public safety pay increases the Board approved last year and new expenses associated with the state’s Medicaid expansion.

“People really have a problem finding something in the budget to get rid of or do less of,” Schwartz said. “It’s not a complaint, but in many cases, we’ve not had a really hard conversation about what we don’t want to do. And at a certain point, efficiencies won’t cut it, and this is one year where it won’t.”

He suggested that both the real estate and personal property tax rates could go up to address those budget concerns, though it’s difficult to know by how much just yet. A great deal depends on the budget the school system delivers to the county, considering that initial estimates suggest a $43 million budget gap from Arlington Public Schools alone — Schwartz encouraged the School Board to consider the hard question of bumping up class sizes and formulating a “revenue-based budget versus a needs-based one,” but the final decision will rest with APS leaders.

Eventually, Schwartz expects that the county’s office vacancy rate will shrink to a point where Arlington isn’t constantly facing such pressures. He noted that the rate has shrunk from 20.8 percent in 2015 to 18 percent as of last month, and as “outdated buildings” in neighborhoods like Crystal City are increasingly refreshed or converted into apartments, he expects the county will soon enough be back on sound financial footing.

In the meantime, however, he urged a focus on more than “nibbling a little bit here and there” and a real focus on “looking at how we do things” to bolster the county’s financial picture.

While the sentiment among county taxpayers is another story entirely, the town hall participants, at least, seemed broadly receptive to paying a bit more to avoid drastic cuts.

“I’m a old, retired coot living on a fixed salary… but Arlington has absolutely fantastic programs for everybody,” said Bill Braswell, a member of the county’s Neighborhood Complete Streets Commission. “I’m ready, willing and able to support a tax increase, because I’m getting far more than I pay in tax increases, and I enjoy it.”

Photo via Facebook

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Arlington’s Car Decal Requirement Set to End Next Year

Starting next year, Arlington drivers won’t need to display a car decal on their vehicles for the first time in decades.

The County Board voted unanimously yesterday (Tuesday) to end the requirement that owners of vehicles parked in Arlington use a sticker to prove they’ve paid personal property taxes.

The “motor vehicle license fee” associated with the decal, which helps the county pull in about $5 million each year, will remain under the Board’s plan. But starting July 1, 2019, the county will now rely entirely on license plate readers to track whether drivers are up to date on their taxes.

“This is truly the end of an era for Arlington,” County Board Chair Katie Cristol said in a statement. “The decal is going the way of the horse-and-buggy.”

The county first began requiring drivers to display a metal tag on license plates all the way back in 1949, moving to a decal system in 1967. Yet, as other localities across the state have increasingly abandoned similar decals, pressure on the county to follow suit mounted.

“It’s been a long time coming,” Board member John Vihstadt said at the meeting Tuesday. “We’re not getting rid of the fee, it’s important to our tax base and enforcement of motor vehicle regulations and so forth. But this will eliminate the nuisance of having a decal.”

County treasurer Carla de la Pava remains confident that Arlington will be able to maintain its low tax delinquency rate even with this change, though it will also mark the end of her office’s annual design competition for the decal, which featured art from local high school students.

“The decal competition was a great collaboration between art, teens, and local government, and I am sorry to see it end,” de la Pava said in a statement.

File photo

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School Board Warns of More Budget Challenges Ahead

The School Board is warning of more tough budget times ahead for the county’s school system.

In a memo to Superintendent Patrick Murphy to be discussed at the group’s meeting tonight (Thursday), the Board urges Murphy to be wary of the fact that the county’s planned revenue transfer to Arlington Public Schools “is not sufficient to meet our critical needs” as “cost pressures” for the system only continue to increase.

The school system only narrowly avoided class-size increases as it set its last budget, thanks to the County Board finding some additional money to keep classes at their current levels. But as APS gears up to start the budget process for fiscal year 2020, the Board expects that, as the school system opens five new schools and programs over the next two years, the change will “increase baseline operating costs significantly.”

“We anticipate that, as budget deliberations continue, additional funding for APS’s critical needs will be a top funding priority,” members wrote.

As Murphy works up his new budget, the Board is also directing him to “if possible” avoid additional class size increases, and find funding for other cuts the school system was prepared to make if the county hadn’t come through with the additional revenue last year.

“No new, major initiatives should be presented,” the Board wrote.

The Board expects that its decision this year to cut back on devices offered to second graders will save some money, and it’s also directing Murphy to “explore longer-term strategies for efficiencies, such as collaboration with the county on swimming pools reimbursement and Transportation Demand Management funding.”

County Board members have frequently spoken about their commitment to finding more money for schools, yet the county’s own tight budget picture, brought about by complications stemming from the Metro funding deal and persistently high office vacancy rates, will likely complicate the debate. County Manager Mark Schwartz has repeatedly warned that more tax hikes will likely be on the table in 2020 and beyond.

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Morning Notes

Ballston Mall LED Screens Nixed — Developer Forest City is, for now, withdrawing a request to install two large, high-definition LED video screens above the main entrance to its still under-construction Ballston Quarter mall. The screens do not comply with Arlington zoning rules. Attorneys for Forest City say they are still hoping that the County Board will eventually amend the zoning ordinance to allow such screens. [Washington Business Journal]

Free ART Bus Rides Thursday — “Think there’s no such thing as a free ride? Not if you take the bus in Arlington, Virginia, and you’re traveling on Sept. 20. Arlington Transit is letting passengers ride free Sept. 20 as a way to celebrate the transit agency’s 20th anniversary.” [WTOP]

Tax Delinquency List — Arlington County Treasurer Carla de la Pava has released her office’s annual list of residents and businesses that have not paid their taxes. The list includes nearly $200,000 in delinquent real estate taxes, $1.3 million in delinquent personal property taxes, $1 million in delinquent business license and property taxes, and more than $500,000 in delinquent meal (restaurant) taxes. [Arlington County]

Celebrating Community and Elders in Nauck — “Celebrating the lives and achievements of the community’s elders was a centerpiece of the 2018 Nauck Civic & Community Pride Day, which brought food, music and fellowship to Drew Model School on Sept. 15. Four community residents who had reached, or were set to reach, the centennial mark – Elizabeth Cole, Novella Cummings, Mary Lockett and Thelma Russell – were honored by the Nauck Civic Association.” [InsideNova]

Critic Praises Shirlington’s Signature — “The Tony Award-winning Signature Theatre — the Arlington troupe known for musicals — shapes up as my favorite D.C. company. I’m not saying Signature is hands-down the best theater in Washington… But Signature showcases a lot of assets, from its singular glam factor to plain old ease of use.” [Washington Post]

Late Night Storms — Thunderstorms that rumbled through Arlington around midnight last night brought a period of frequent lightning and thunder that set off car alarms and awakened some residents from their sleep. [Twitter, Twitter]

Flickr pool photo by Tom Mockler

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Morning Notes

More School Renaming Committees on the Way — Though the Washington-Lee controversy gets all the headlines, the School Board will also soon kick off the process of naming two new buildings and renaming two others. Patrick Henry ES will likely draw the most scrutiny. [InsideNova]

Former Gov. Terry McAuliffe Fundraising for de Ferranti — Virginia’s last chief executive will help Democratic County Board hopeful Matt de Ferranti fill his campaign coffers later this month. McAuliffe, a potential 2020 presidential hopeful, joins Attorney General Mark Herring as another statewide politician lending de Ferranti a hand in his bid against John Vihstadt. [Twitter]

County Treasurer Slashes Tax Delinquency Rate Again — Carla de la Pava has hit new highs by ensuring that more taxpayers are keeping up with their payments than ever before, recording the lowest delinquency rate in county history. [InsideNova]

Arlington Centenarians Still Dancing — The county has at least 47 residents who have passed the 100-year mark, and they say they feel as young as ever. [WAMU]

Flickr pool photo via Erinn Shirley

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Real Estate Tax Break Program for Seniors Set to Change Next Year

(Updated at 1 p.m.) Some changes are on the way for Arlington’s real estate tax relief program for seniors, though officials declined pursue the sort of sweeping overhaul favored by some in the community.

The County Board approved a series of tweaks to the program’s eligibility criteria Saturday (July 14), in a bid to better realize the county’s goal of helping older Arlingtonians stay in their homes even as values, and associated tax bills, creep upward.

Starting next year, the program will be open to homeowners age 65 or older and people with disabilities, with an annual income of up to $99,472 and household assets — excluding the home itself — up to $400,000, a slight increase from the old $340,000 limit. The county is also now letting people apply for an exemption from 75 percent of their tax bill, when the program previously only let homeowners try for an exemption from their full bill, half of it or a quarter of it.

“This is important not just for a compassionate community, but a community that works,” said Board Vice Chair Christian Dorsey.

To make up for some of this expansion in eligibility, the newly revised program stipulates that the top earners eligible to apply for tax relief — households making anywhere from $80,000 to $99,472 per year — can only apply for deferrals on their tax bills, not exemptions. Yet even that change frustrated some in the county, who would’ve preferred to see the Board move to a deferral-only system instead.

“I absolutely cannot understand why we want to help out the heirs in Spokane of people who are receiving an exemption,” Dave Schutz, a local activist and ARLnow comment section veteran, told the Board.

Caitlin Hutchison, an assistant director in the county’s Department of Human Services, said staff and a working group convened on the issue considered such a policy change, but ultimately decided against it. She noted that the city of Hampton moved to a deferral-only system, only to change course after many homeowners with reverse mortgages “almost immediately received notice that foreclosure proceedings would initiate” when tax bills came due.

“I have no interest in protecting inheritances,” said Board Chair Katie Cristol. “I am concerned that folks can stay in their home without a notification of eviction or having to leave the county.”

Hutchison also noted that the program broadly does not serve the wealthiest Arlingtonians — 76 percent of households who applied for the program last year had an annual income of $60,000 or less, and total assets of $100,000 or less. Since the tax relief changes were first proposed, the Board also added new limits on the eligibility of owners of properties valued at $1 million or more.

But Kathryn Scruggs, a longtime affordable housing advocate and member of the working group discussing the issue, argued that the program needs an even more substantial makeover to serve solely homeowners with “low incomes, low asset levels and lower than average home values.”

“There is no justification for increasing the asset limit, that just diverts resources from the people who need it most,” Scruggs said.

The revised program is indeed likely to cost the county an extra $154,000 in tax revenue each year. But Hutchison argued that the asset limit changes will help homeowners keep pace with rising home values, and stay in the county longer.

The tweaks will also help Arlington keep pace with its neighbors, Hutchison said, as both Alexandria and Loudoun County have higher asset limits for similar programs.

And as the county struggles to manage a surge in its student population, Dorsey argued that it can only be a good thing for Arlington to keep older residents in their homes for as long as possible.

“Typically when seniors leave their homes, they’re not replaced by seniors,” Dorsey said. “The more we concentrate our housing stock on families with children, the more it creates pressures in other areas.”

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