Fiscal Malpractice in Arlington County?
According to Arlington County’s fiscal documents (Capital Improvement Plan, requires Adobe):
“The Capital Improvement Plan (CIP) is one of the most significant planning processes for Arlington County and Arlington Public Schools. This plan identifies the capital needs of the community over a ten-year period. This plan not only identifies the immediate needs but also seeks to capture longer-term capital needs.
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“The CIP is the primary instrument for planning the funding and timing of the needs and priorities that have been approved by the County Board. The funding and implementation of CIP projects follow in the form of bond referenda; the annual appropriation of Pay-As-You-Go (PAYG) projects by the Board as part of the annual operating budget; and approval / receipt of other funding sources identified in this document.”
Last night, at the Arlington County Board’s public hearing on the CIP, Wayne Kubicki, Arlington’s government watchdog extraordinaire, raised just that issue in his testimony before the Board. His testimony follows:
“Madame Chairman, good evening.
“This process seems to have been entirely driven by the 10% debt service limitation as a percentage of total spending. That test, however, is not the whole picture.
"You have an adopted policy - pg A-5 in the CIP - that says "the County will annually develop a six year forecast of General Fund revenues and expenditures." Such an analysis would give the true picture of what kind of revenue growth would be needed to fund continuing services along with the Manager's CIP proposals.
"Where is this forecast? (emphasis added)
"I'll give you a hint - it's NOT in the CIP book. Contrary to your policy, there was no six year forecast done at all last year. As far as I have been able to ascertain, no such forecast currently exists, either.
"Consideration of this CIP, absent such an analysis, is fiscal malpractice.
"The CIP projects 3% annual revenue growth for FY14 through 16.
"The School Board applied that 3% growth number to their operating budget and CIP. Including step increases, it showed budget shortfalls of $33M over the next three years, $13M for FY14 alone.
'Where is this analysis for the County budget? (emphasis added)
"If one existed, it would show a need for dramatically higher revenues. Combining just the operating costs for new items such as Arlington Mill ($3.3M) and the Silver Line (our first year cost is $1.7M), and increased debt service costs, our FY14 budget already needs over $14M in growth - before increasing anything. (emphasis added)
"Funding the proposed CIP will necessitate major revenue growth, well over 3%, and unlike the past two fiscal years, where the burden of increased spending fell mostly on our commercial sector, the next several years will more heavily fall on homeowners. Commercial assessments are very unlikely to jump a third straight year.
"There is one prime candidate for controlling some of this - the Long Bridge pools building, with its $73M price tag.
"With our admittedly deteriorating infrastructure, and pressing school capital & operating needs if enrollment growth continues, coupled with uncertain future revenues and the over $7M in annual operating subsidies for the two streetcar lines upcoming, is Long Bridge really a priority? Can it seriously be called a “need”?
"Combining proposed debt service, including the $20M interim non-bond borrowing, with its projected operating subsidy, Long Bridge’s annual cost is nearly $7M per year. That's over one cent on the current tax rate - for one single building, that most residents will never use, and that many would have trouble finding, even if you gave them a map.
"The Long Bridge project raises the term "vanity project" to a new level, and fiscally has the potential to be the Artisphere on steroids.
"If Long Bridge is on the fall ballot, it should be as a separate, stand-alone referendum, with nothing else attached to it, as the Civic Federation strongly recommended at its June meeting. The fiscal ramifications of this project deserve separate discussion and a separate vote.
"Thank you for your time this evening."
Additional information about the 10% debt service limitation, as well as information about the the other assumptions, can be found in the CIP (Debt Capacity Analysis section, beginning on page B-15). Arlington County taxpayers should be concerned about the absence of the six-year forecast in the CIP. Kudos, Wayne, for a great presentation.