County Board Provides FY 2020 Budget Guidance

Published on November 27, 2018

• Directs Manager to maintain AHIF funding, APS revenue-sharing principles
• Tax hikes, service cuts, staff reductions to be considered to close budget gap

The Arlington County Board today directed the County Manager to provide options for tax increases and service and personnel cuts, if necessary to prepare a balanced Proposed Fiscal Year 2020 Budget.

"We face the reality of a $20-$35 million gap between anticipated expenditures and anticipated revenues," County Board Chair Katie Cristol said. "The Board is committed to meeting increased funding needs for Metro, Medicaid expansion and Schools, and to maintaining our funding level for affordable housing, while remaining responsible and responsive to the impacts any tax rate increase will have on Arlington residents. In the coming months, this Board will work closely with the Manager and the community to stay true to our values and maintain core services while finding the right balance, if necessary, of service cuts and revenue increases."

The Board voted unanimously to approve the guidance. The overarching guidance asked the Manager to  "provide for long-term financial sustainability; preserve the County's triple-AAA bond rating; and fully fund all debt, lease and other contractual commitments," in his proposed budget.

The Board directed the Manager to provide options for program and personnel reductions or eliminations and a possible tax rate increase, if he cannot present a balanced budget within the existing tax rate. If the Manager proposes a tax rate increase, the Board said, it should be to:

• Meet new legislative requirements, including Medicaid expansion and WMATA funding.
• Continue with the compensation and staffing adjustments for public safety and general employees that the Board adopted in April 2018;
• Maintain existing infrastructure by providing funds to maintain the state of good repair as outline in the adopted Capital Improvement Plan; and
• Provide operating funding for new Arlington Public Schools facilities opening in FY 2020.

The Board also asked that the Manager propose long-term efficiencies and improvements in service delivery.

To read the guidance, visit the County website. Scroll to Item No. 31 on the agenda for the Tuesday, Nov. 27, 2018 Recessed County Board Meeting.

Maintaining affordable housing funding

Funding for the Affordable Housing Investment Fund, the County's primary source for funding the creation and preservation of affordable housing, should be maintained at current levels, according to the Board's guidance. Both one-time and ongoing funds should be used, with an effort to shift more of that funding into the ongoing base budget.

Funding for APS according to revenue allocation agreement

The Board directed the Manager to provide funding consistent with the Revenue Sharing Principles between the County and Arlington Public Schools, and to apply the County/School revenue allocation reflected in the FY 2019 budget (53.4 percent County-46.6 percent Schools). Most of APS's funding comes from revenue sharing with the County.

Manager to present proposed budget to Board in February

Working with County departments and the community, and within the Board's guidelines, the Manager will build a proposed budget to be presented to the Board in February. The Board will review the budget through a series of work sessions, consider comments from the public and hold public hearings in March and April. The Board will adopt the budget in April. Fiscal Year 2020 year will begin on July 1, 2019.

To learn more about the FY 2020 Budget timeline; view budget-related documents; share your feedback with the County Manager, and learn about opportunities for engagement, visit the County website. You can share your thoughts on the budget with the County Board by emailing the Board at CountyBoard@arlingtonva.us.

Fiscal Year 2018 close-out

The Board also voted unanimously to close-out Fiscal Year 2018's budget and to allocate $21.9 million in funds not needed for reserves, restricted funding, allocations already approved by Board action, or for continuing projects that straddle fiscal years.

Excluding funds required for reserves, restricted funding, allocations already approved by Board action, or for continuing projects that straddle fiscal years, the balance was $21.9 million in discretionary funds. The $21.9 million is 2.6 percent of the revised FY 2018 County General Fund budget, excluding schools. Adopting the recommendations of the County Manager, allocation of available funds was made to three areas:

• $16.5 million set aside for FY 2020 budget deliberations.
• $6.4 million to increase the General Fund Operating Reserve from 5.0 percent to 5.5 percent, a critical step in ensuring the County's triple-AAA rating.
• $2.0 million to an operating contingent to respond to needs not budgeted during the current fiscal year.

Board Member John Vihstadt praised the action, noting that the $16.5 million set aside for the FY 2020 budget deliberations, (approximately 75 percent of the total surplus), would be an invaluable source of one-time funds during next year's challenging budget deliberations.

To read the staff report and view the staff's presentation on the FY 2018 close-out, scroll down to Item No. 30 on the Agenda for the Tuesday, Nov. 27, 2018 Recessed County Board Meeting.

About the budget

Each year, Arlington County adopts a balanced operating budget that provides a blueprint for spending on County services and administration for the coming fiscal year, which begins July 1. Budget priorities are set by the County Manager and the County Board, through engagement with the Arlington community.

Arlington's sound financial management practices have earned the County the coveted Triple-AAA rating from bond agencies for the past 18 years. By maintaining the highest possible bond rating, Arlington County saves taxpayers millions of dollars by ensuring it receives the lowest possible interest rate on the debt it incurs to finance public infrastructure and other projects.

In April 2018, the County Board adopted a $1.276 billion balanced budget with no increase in the real estate tax rate. Arlington's tax rate, at $1.006 per $100 of assessed value (including the stormwater tax), is one of the lowest in the region.