R&E Report on Resolution Introduced by Tim Wise, Arlington County Taxpayers Association (ACTA)

The R&E Committee has reviewed the resolution, offered several changes to clarify it, and supports the recommendation that the County cut the tax rate by $0.03, basically returning to the 2012 tax rate of $0.97. Even with the suggested reduction, proposed tax and fee revenues would increase by at least $24 million, and likely more. State and Federal contributions are projected to increase by 6.5% and 4.8% respectively for FY 2015.

In the first six months of FY 2014 the County generated a surplus of $27.6 million, whichalonewould more than cover the recommend tax rate reduction of approximately $20 million. This surplus will likely increase by the end of the current fiscal year. TheCounty consistently underestimates revenues, resulting in a significant amount of end-of-year surplus available for spending on lower-priority items not included in the proposed regular budget.

R&E believes the rate reduction can be accommodated within present and anticipated revenues without any significant disruption to operations or level of support for core functions. Some discretionary and/or non-core expenses could be reduced or deferred, depending on decisions of the County Board and County Manager.

1)  Washington Post Graphic “Tax bills climb with home values”

(See Attachment #1)

Comment: Increases in Arlington property assessments result in highest regional property tax bills, even as tax rate remains the same.

2)  Real Estate Tax Payment (Average Single Family Home)

(See Attachment #2)

Comment:In past years as property assessments increased, the County reduced the tax rate. For example, the County reduced the tax rate by 6 cents in 2006. Since then, the tax rate has increased from $0.818 to $1.006, an increase of 23%. Even if the tax rate is reduced by 3 cents in CY 2014, real estate taxes would still increase by $88 per household.

Source: County Manager’s Fiscal Year 2015 Proposed Budget, p. 105

3)  Arlington County Fiscal Year Closeouts, FY 2009 – FY 2014 (mid-year)

Fiscal YearSurplus/(Deficit)

2009$27.8 million

2010($1.4 million)

2011$16 million

2012$15 million

2013$25.6 million

2014  $27.6 million (mid-year)

Comment: The County has generated a surplus in each year since FY 2009 with the exception of a small deficit in FY 2010. These surpluses would have allowed tax rate reductions in each surplus year ranging from 2.4 to 4.5 cents. Note that in virtually every year, the County’s ‘adopted’ and actual budgets are higher than the Manager’s ‘proposed’ budget, often substantially higher.

Source: DMF reports on previous fiscal year closeouts

4)  Tax & Fee Increases – FY 2015 Proposed Budget

Tax/FeeTotal Amountph/per year*% Increase

Pers Property $108.6 MM Varies +2%

Meals $36.8 MM Varies +6%

Res. Utility $1.7 MM $36 +7%

ART $4.8 MM Varies +15%

Recreation $9.99 MM Varies +9%

Refuse/Recycling $9.95MM $300.72 +4%

Water/Sewer $92.6 MM $912.80 +3%

*(per household/per year)

Comment: The County projects that the above non-real estate taxes and fees will increase in FY 2015.

Source: Manager’s Proposed FY 2015 budget, pages 65-107

This report and recommendation was approved by a committee vote of 6-1. One member of the R&E Committee believed the recommended residential tax rate cut should be 1 cent, with an additional cut to the commercial tax rate surcharge of 12.5 cents.

Burt Bostwick

Acting Chair, Revenues & Expenditures Committee