At their October 18, 2016 recessed meeting, the Arlington County Board considered two budget items. One involved closeout of the fiscal year 2016 budget that ended June 30, 2016 (agenda item #34). The second was the Board's budget guidance to the County Manager in preparing the FY 2018 budget that will begin July 1, 2017, and included a financial forecast (agenda item #35).
The county's press release coming out of the meeting identified four talking points for the two items, which were:
- Manager makes recommendations for $17.8 million in FY 2016 close-out funds
- $5.4 million funding gap forecast for FY 2018
- Increased funding for Metro, Schools anticipated for FY 2018
- Board draft guidance for FY 2018: balance budget within existing tax rate
In addition, the county said:
"Arlington County is asking the public to weigh-in on both the County Manager’s recommendations for how to spend $17.8 million in Fiscal Year 2016 Budget close-out funding and on the Board’s draft guidelines for the County Manager’s FY 2018 Proposed Budget.
"Arlingtonians should have a chance to study and comment on the Manager’s proposals for spending our FY 2016 close-out funds, and the guidelines the Board is proposing the Manager follow in preparing the FY 2018 Budget. We look forward to hearing from them before taking a final vote on these important fiscal decisions at our November meeting,” County Board Chair Libby Garvey said.
"Share your feedback on the County website. Comments are visible online and will be compiled and presented to the Board before its November meeting, when the Board will hold a public hearing and take a vote on both close-out spending and the draft guidelines for the FY 2018 Budget."
Feedback via the county website's feedback form closed at 5:00 P.M. today. However, the county says they will accept "additional feedback by e-mail." Just click-on the following link:
There are currently 269 responses to the two issues: 1) FY 2016 closeout; and 2) FY 2018 budget guidance. The two questions asked about the FY 2016 closeout were:
- Do you agree with the County Manager's recommended allocations for the FY 2016 close-out funds?
- Do you have an alternative recommendation(s) for the County Board to consider?
There were also two questions about FY 2018 budget guidance, which were:
- Provide feedback or comments on the priority areas outlined in the draft guidance that you would like the County Board to consider in its final guidance to the County Manager.
- Funding for Metro and Schools will likely be budget pressures for the FY 2018 operating budget. How would you propose we address these issues if we are unable to fund these needs within projected revenue?
Before responding to the above questions, you may want to consider three suggested principles offered by Peter Rousselot in his October 27, 2016 column at ARLnow.com. They were:
- As a matter of prudent financial management, a fair and reasonable percentage (i.e., a % higher than 0%) of any close-out surplus always should be allocated to moderate the tax rate and/or reduce bonded indebtedness.
- The remainder of the close-out surplus (after setting aside a % for tax rate moderation and any debt reduction) should next be considered to address any emergency that requires funding before final adoption of the FY2018 operating budget.
- All other proposed uses of the close-out surplus automatically should be deferred, and the remaining funds’ allocation should be decided in conjunction with the FY2018 budget process.
Since closing out the accounting records for the fiscal year is a necessary accounting procedure, I could continue Mr. Rousselot's first. However, I would combine his second and third steps, and defer their allocation until adoption of the FY 2018 budget. If they were needed to further moderate any tax rate increase, fine. If they were needed to shore-up reserve funds, fine. And, if the Board wanted to use them for special "one-time" County Board projects, the funds could be used for that, too. As Mr. Rousselot reminds us:
"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."
So take some time, and provide the Board with their requested feedback on the FY 2016 closeout and FY 2018 budget guidance. Use the link to send your feedback via e-mail to the Department of Management and Finance.
Telling the Arlington County Board to reserve that most if not all of the $17.8 in surplus funds to moderate a real estate tax increase is especially important. According to the Arlington Sun Gazette's Scott McCaffrey's report of the Board's October 18 recessed meeting:
"Higher costs associated with transit and schools could translate into higher tax bills for Arlington property owners next year.
"County Board members got their first formal briefing on prospects for the fiscal 2018 budget on Oct. 19, and it’s clear the county government will be unable to count on higher property assessments to bring in more revenue without increasing existing tax rates.
"County officials estimate an assessment growth of 2.1 percent next year – 2.4 percent in the commercial sector and 1.9 percent in the residential – which would be the lowest increase since 2013 and less than half the boost in assessments seen in 2014 and 2015.
"Even with expected increases in business and personal-property taxes, increased revenues would be eaten up by higher government expenses: a projected $10.2 million more for schools, $7.5 million more for staff compensation, $1.2 million more for health-care benefits, $2.1 million more for debt service and perhaps $4 million more (up a whopping 13 percent) to fund the county’s share of Metro service.
"It’s the mass-transit and education parts of that equation that remain up in the air. “We’re sort of holding” in search of more concrete data, County Board Chairman Libby Garvey said.
"There seems no sense of panic; County Manager Mark Schwartz said staff was looking at a budget gap of about $5 million, under present assumptions, in the spending plan that starts next July. Any shortfalls will need to be filled by a combination of revenue increases and/or budget cuts.
"John Vihstadt, the most strenuous budget hawk on the five-member County Board, pressed Schwartz to look for ways to trim spending that now tops $1.2 billion."
Vihstadt has also pointed out:
"(T)he Manager’s recommendation spends all but $1.5 million, rather than (a) setting aside anything to help moderate the tax rate, (b) paying down our growing bonded indebtedness, or (c) deferring consideration of the remaining funds (other than for true emergency needs) to be considered with everything else in the context of the larger FY 2018 budget process next spring."
It's worth noting that the county press release, the same one mentioned above, devoted five paragraphs to the "projected $5.4 million funding gap for FY 2018. Thus the importance of using much of the $17.8 million surplus to moderating a future real estate rate rate increase in2018.
If you need additional budget information, both items (#34 - FY 2016 closeout and #35 - FY 2018 budget guidance) on the October 18, 2018 recessed meeting agenda included staff presentations to the County Board. In addition, item #35 includes a draft of the budget guidance.
So, again, take a few minutes, use the link above to tell the Department of Management and Finance how the Arlington County Board should use the FY 2016 surplus funds. If you are unable to e-mail your thoughts to the Department of Management and Finance, then attend the Board's recessed meeting on Wednesday, November 9 (remember Tuesday, November 8, 2018 is Election Day). If none of those work for you, then use the link below to write directly to the Arlington County Board. Just click-on the link below:
- Call the County Board office at (703) 228-3130
And tell them ACTA sent you.