The Arlington County Board unanimously approved a balanced $1.5 billion annual budget on Tuesday night.
The FY 2023 budget represents a 7.6% revenue and spending increase over the current fiscal year, which ends on June 30.
The new budget follows County Manager Mark Schwartz’s recommendation to hold the real estate tax rate steady at $1.013 per $100 of value, which is an effective tax hike of 5.3% on homeowners given a steep rise in assessments amid a hot local real estate market.
Weakness in commercial property values, given the pandemic and work-at-home trends leading to elevated office vacancy rates, put pressure on the revenue side of the budget. Assessments were flat for commercial property, which makes up more than a third of the county’s property tax base.
“Although I am glad that we could hold to our property tax rate… among the lowest in the region, I know that we all would prefer to be in the situation of our peer jurisdictions who are less dependent on commercial revenue sources and are therefore entertaining rate cuts this year,” County Board Chair Katie Cristol said at the meeting.
She continued: “But by investing in our people, specifically investing in retention and recruitment for the positions and divisions where quality of service is most threatened” — including law enforcement and the fire department — “and prioritizing the urgent as well as important issues of housing equity and climate, I am optimistic that this budget will be one that doesn’t just bridge the pandemic but begins our journey on the other side.”
Increased costs attributable to inflation, meanwhile, while not mentioned in the county press release (below), will likely put pressure on the expense side of the budget.
The new budget represents a 50% increase in spending over the FY 2012 budget approved 11 years ago, when the county budget first hit the $1 billion mark. During that time, the U.S. has seen inflation, as measured by the Consumer Price Index, of 29%, while the county has seen a population increase of roughly 15%.
The FY 2023 budget largely follows Schwartz’s proposed budget. It includes pay hikes for county employees, and even steeper pay increases for the police department, Sheriff’s Office and fire department.
Other local priorities targeted for increased spending include affordable housing and the environment, with the budget funding a new “Office of Climate Coordination and Policy.”
The climate office will be run out of the County Manager’s office and will “focus on advancing key climate policies and strengthen[ing] interdepartmental coordination across government.”
While many will see a tax hike given rising property values, vehicle owners will see a bit of relief with the new budget.
“The budget also includes vehicle tax relief by adjusting the assessment tax ratio to 88 percent of a car’s value and the elimination of the regressive $33 Motor Vehicle Fee for Arlington residents,” notes a county press release. “These changes are in response to a surge in vehicle valuations, directly related to supply chain issues and rising market prices impacted by the COVID-19 pandemic.”
More details about the budget, from the press release, are below.