taxes

County Plans Hiring ‘Slowdown’ to Cope With Mounting Budget Pressures

By Alex Koma

County Manager Mark Schwartz is calling for a “hiring slowdown” for Arlington’s government, choosing to leave dozens of positions vacant while county officials mull how to cope with a yawning budget deficit.

Schwartz told the County Board last Tuesday (Nov. 27) that he isn’t planning a full hiring freeze for the county workforce, but he will nonetheless direct 10 department heads to hold off on hiring across 45 different positions for the foreseeable future.

The county’s budget picture for fiscal year 2020 is still coming into focus, but Schwartz projects that the county and its school system could combine to face a $78 million budget gap next year. That means that some mix of tax increases, staff layoffs and program cuts are likely in the offing, after the Board declined to raise taxes this year, and Schwartz is working to get ahead of some of those unpleasant measures with this slowdown.

“It may not be immediately noticeable to people, but we will see increased caseloads for some employees,” Schwartz told the Board. “It’s not something that, unless you’re going around and really trying to appreciate it, you’d notice.”

Schwartz said that the positions left unfilled include roles like librarians, code enforcement and housing inspectors and cultural affairs staffers with Arlington Economic Development. He added that the county generally has roughly 200 positions left unfilled at any given time, out of its workforce of about 3,500 employees, and he’d like to leave some spots open in case the Board does indeed pursue layoffs.

“We want to keep some positions vacant for some employees who might be affected by any reduction in force,” Schwartz said.

At the same meeting, the Board did direct Schwartz to present it with options for both layoffs and tax increases as he develops a proposal for the new budget. Even with Amazon’s impending arrival, and the tax windfall the company’s expected to generate for the county, Arlington leaders are gearing up for what Board member Libby Garvey termed “the toughest budget I’ve had to deal with in my 24 years in elected office.”

“We are looking at a path toward a resolution for a long-term structural budget deficit… so our outlook is so much better than it was even just a few weeks ago,” said Board Chair Katie Cristol. “But this will still probably be one of largest gaps between revenues and needs we’ve seen since the Great Recession.”

The county is indeed projecting that Amazon won’t generate substantial new tax revenues for several years yet, leaving Arlington officials with some lean budgets in the meantime. Schwartz projects that new expenses associated with the statewide Medicaid expansion, to the tune of about $1.2 million a year, and rising costs to fund Metro service, with expenses nearing an additional $10 million this year, will put a particular strain on county coffers.

“This is just a different situation than the county has faced before,” Garvey said.

Schwartz is set to present his first budget proposal to the Board in February.

With Budget Gap Looming, County Board Set to Ask for Proposals on Tax Increases and Staff Layoffs

By Alex Koma

Arlington leaders now say they’re ready to start studying unpleasant budget measures from tax increases to staff layoffs, as they gear up to confront next year’s hefty budget gap.

The County Board is set to sign off today (Tuesday) on new budget guidance for County Manager Mark Schwartz, as he gets to work on a new spending plan for fiscal year 2020. The memo directs Schwartz to develop a range of possible options for the Board to evaluate next year, including “a range of potential tax increases” and “proposals for program and personnel reductions or eliminations” if Schwartz can’t develop a balanced budget while relying on the existing tax rates.

The Board made a handful of spending cuts in the budget for fiscal year 2019, but opted not to raise any of the county’s tax rates.

Since then, Schwartz has frequently called for the Board to give him the flexibility to pursue such budget measures, given the county’s gloomy near-term financial prospects. Though Amazon’s arrival in Arlington could well pour millions in new revenue into county coffers, officials project that their budget challenges won’t vanish overnight. In all, the county’s combined budget deficit could be as large as $78 million next year.

All on its own, Schwartz expects that the county will need to close a gap of anywhere from $20 million to $35 million, a gap driven by factors including Metro’s increasing expenses, the new raises for public safety workers the Board approved in the 2019 budget and new spending associated with the statewide Medicaid expansion.

But the county school system could tack on another $43 million in unmet needs, as it works feverishly to build new schools and keep pace with the county’s influx of new students. Without any tax rate hikes, staff currently projects that the county will be able to send about $7.7 million to Arlington Public Schools than it did last year. But that increase, driven by rising real estate assessments, likely won’t be enough to solve all of the school system’s funding woes — the School Board only narrowly avoided class size increases last year, and will face similar challenges this time around.

The Board’s budget guidance does identify one program that it hopes Schwartz will be able to protect from budget cuts: the Affordable Housing Investment Fund, a loan program designed to incentivize the construction of reasonably priced homes. The memo to the manager suggests that Schwartz craft a proposal to maintain the $14.3 million in funding the Board sent to the fund last year, and recommends making more of the funding “ongoing” rather than subject to the Board’s appropriation process each year.

The latter change was one championed by Board member John Vihstadt in his losing bid for re-election this year, and the entire Board has emphasized the importance of funding affordable housing programs to prepare for Amazon’s projected impacts on the housing market. As part of its deal to land the tech giant, the county even committed to directing about a third of the money it spends on affordable housing each year to specifically serve the areas around Amazon’s new headquarters in Crystal City and Pentagon City.

The Board is set to vote to approve the new budget guidance today, setting the stage for Schwartz to deliver his proposal to the Board in February. The County Board and School Board are also set to hold a joint work session next Tuesday (Dec. 4) to kick off their initial budget deliberations.

Tax Hikes and Service Cuts Look Increasingly Likely Next Year, County Leaders Warn

By Alex Koma

Arlington officials expect a mix of across-the-board service cuts and tax rate increases is the surest way for the county to tackle its widening budget gap next year.

With a funding gap that could ballon as large as $78 million for fiscal year 2020, County Manager Mark Schwartz has repeatedly warned that some tough times are ahead for the county government. He repeated those gloomy projections at a budget-focused town hall with community leaders last night (Wednesday), noting that factors ranging from swelling school enrollment levels to dwindling county revenues to increasing Metro funding obligations will all squeeze county coffers once more.

The question Schwartz (and soon enough, the County Board) is looking to answer is: how should Arlington balance cuts with new tax increases? The answer will set the tenor of the Board’s upcoming budget deliberations, particularly when considering that the county has avoided tax increases in recent years.

“New tax increases are certainly a tool we should be looking at this year,” Schwartz told the group. “It depends on what the Board gives me as guidance, but I’m hoping that they carve out some room for tax increases.”

That’s not to say that Schwartz is only looking at jacking up tax rates — he says he’s asked all of his department heads to sketch out what an 8 percent budget reduction would look like for them, even though he tends to “hate across-the-board cuts” and would much rather “apply a set of principles to choose among departments and decide where to spend our marginal dollars.”

Nevertheless, Schwartz believes the county’s funding squeeze is such that simply slashing expenses can’t be the only answer. In addition to opening three new schools in the coming year and digging deep to cope with money pulled away from the county as part of the new Metro funding deal, Schwartz says the county needs to get creative to address the new costs of public safety pay increases the Board approved last year and new expenses associated with the state’s Medicaid expansion.

“People really have a problem finding something in the budget to get rid of or do less of,” Schwartz said. “It’s not a complaint, but in many cases, we’ve not had a really hard conversation about what we don’t want to do. And at a certain point, efficiencies won’t cut it, and this is one year where it won’t.”

He suggested that both the real estate and personal property tax rates could go up to address those budget concerns, though it’s difficult to know by how much just yet. A great deal depends on the budget the school system delivers to the county, considering that initial estimates suggest a $43 million budget gap from Arlington Public Schools alone — Schwartz encouraged the School Board to consider the hard question of bumping up class sizes and formulating a “revenue-based budget versus a needs-based one,” but the final decision will rest with APS leaders.

Eventually, Schwartz expects that the county’s office vacancy rate will shrink to a point where Arlington isn’t constantly facing such pressures. He noted that the rate has shrunk from 20.8 percent in 2015 to 18 percent as of last month, and as “outdated buildings” in neighborhoods like Crystal City are increasingly refreshed or converted into apartments, he expects the county will soon enough be back on sound financial footing.

In the meantime, however, he urged a focus on more than “nibbling a little bit here and there” and a real focus on “looking at how we do things” to bolster the county’s financial picture.

While the sentiment among county taxpayers is another story entirely, the town hall participants, at least, seemed broadly receptive to paying a bit more to avoid drastic cuts.

“I’m a old, retired coot living on a fixed salary… but Arlington has absolutely fantastic programs for everybody,” said Bill Braswell, a member of the county’s Neighborhood Complete Streets Commission. “I’m ready, willing and able to support a tax increase, because I’m getting far more than I pay in tax increases, and I enjoy it.”

Photo via Facebook

Arlington’s Car Decal Requirement Set to End Next Year

By Alex Koma

Starting next year, Arlington drivers won’t need to display a car decal on their vehicles for the first time in decades.

The County Board voted unanimously yesterday (Tuesday) to end the requirement that owners of vehicles parked in Arlington use a sticker to prove they’ve paid personal property taxes.

The “motor vehicle license fee” associated with the decal, which helps the county pull in about $5 million each year, will remain under the Board’s plan. But starting July 1, 2019, the county will now rely entirely on license plate readers to track whether drivers are up to date on their taxes.

“This is truly the end of an era for Arlington,” County Board Chair Katie Cristol said in a statement. “The decal is going the way of the horse-and-buggy.”

The county first began requiring drivers to display a metal tag on license plates all the way back in 1949, moving to a decal system in 1967. Yet, as other localities across the state have increasingly abandoned similar decals, pressure on the county to follow suit mounted.

“It’s been a long time coming,” Board member John Vihstadt said at the meeting Tuesday. “We’re not getting rid of the fee, it’s important to our tax base and enforcement of motor vehicle regulations and so forth. But this will eliminate the nuisance of having a decal.”

County treasurer Carla de la Pava remains confident that Arlington will be able to maintain its low tax delinquency rate even with this change, though it will also mark the end of her office’s annual design competition for the decal, which featured art from local high school students.

“The decal competition was a great collaboration between art, teens, and local government, and I am sorry to see it end,” de la Pava said in a statement.

File photo

School Board Warns of More Budget Challenges Ahead

By Alex Koma

The School Board is warning of more tough budget times ahead for the county’s school system.

In a memo to Superintendent Patrick Murphy to be discussed at the group’s meeting tonight (Thursday), the Board urges Murphy to be wary of the fact that the county’s planned revenue transfer to Arlington Public Schools “is not sufficient to meet our critical needs” as “cost pressures” for the system only continue to increase.

The school system only narrowly avoided class-size increases as it set its last budget, thanks to the County Board finding some additional money to keep classes at their current levels. But as APS gears up to start the budget process for fiscal year 2020, the Board expects that, as the school system opens five new schools and programs over the next two years, the change will “increase baseline operating costs significantly.”

“We anticipate that, as budget deliberations continue, additional funding for APS’s critical needs will be a top funding priority,” members wrote.

As Murphy works up his new budget, the Board is also directing him to “if possible” avoid additional class size increases, and find funding for other cuts the school system was prepared to make if the county hadn’t come through with the additional revenue last year.

“No new, major initiatives should be presented,” the Board wrote.

The Board expects that its decision this year to cut back on devices offered to second graders will save some money, and it’s also directing Murphy to “explore longer-term strategies for efficiencies, such as collaboration with the county on swimming pools reimbursement and Transportation Demand Management funding.”

County Board members have frequently spoken about their commitment to finding more money for schools, yet the county’s own tight budget picture, brought about by complications stemming from the Metro funding deal and persistently high office vacancy rates, will likely complicate the debate. County Manager Mark Schwartz has repeatedly warned that more tax hikes will likely be on the table in 2020 and beyond.

Morning Notes

By ARLnow.com

Ballston Mall LED Screens Nixed — Developer Forest City is, for now, withdrawing a request to install two large, high-definition LED video screens above the main entrance to its still under-construction Ballston Quarter mall. The screens do not comply with Arlington zoning rules. Attorneys for Forest City say they are still hoping that the County Board will eventually amend the zoning ordinance to allow such screens. [Washington Business Journal]

Free ART Bus Rides Thursday — “Think there’s no such thing as a free ride? Not if you take the bus in Arlington, Virginia, and you’re traveling on Sept. 20. Arlington Transit is letting passengers ride free Sept. 20 as a way to celebrate the transit agency’s 20th anniversary.” [WTOP]

Tax Delinquency List — Arlington County Treasurer Carla de la Pava has released her office’s annual list of residents and businesses that have not paid their taxes. The list includes nearly $200,000 in delinquent real estate taxes, $1.3 million in delinquent personal property taxes, $1 million in delinquent business license and property taxes, and more than $500,000 in delinquent meal (restaurant) taxes. [Arlington County]

Celebrating Community and Elders in Nauck — “Celebrating the lives and achievements of the community’s elders was a centerpiece of the 2018 Nauck Civic & Community Pride Day, which brought food, music and fellowship to Drew Model School on Sept. 15. Four community residents who had reached, or were set to reach, the centennial mark – Elizabeth Cole, Novella Cummings, Mary Lockett and Thelma Russell – were honored by the Nauck Civic Association.” [InsideNova]

Critic Praises Shirlington’s Signature — “The Tony Award-winning Signature Theatre — the Arlington troupe known for musicals — shapes up as my favorite D.C. company. I’m not saying Signature is hands-down the best theater in Washington… But Signature showcases a lot of assets, from its singular glam factor to plain old ease of use.” [Washington Post]

Late Night Storms — Thunderstorms that rumbled through Arlington around midnight last night brought a period of frequent lightning and thunder that set off car alarms and awakened some residents from their sleep. [Twitter, Twitter]

Flickr pool photo by Tom Mockler

Morning Notes

By Alex Koma

More School Renaming Committees on the Way — Though the Washington-Lee controversy gets all the headlines, the School Board will also soon kick off the process of naming two new buildings and renaming two others. Patrick Henry ES will likely draw the most scrutiny. [InsideNova]

Former Gov. Terry McAuliffe Fundraising for de Ferranti — Virginia’s last chief executive will help Democratic County Board hopeful Matt de Ferranti fill his campaign coffers later this month. McAuliffe, a potential 2020 presidential hopeful, joins Attorney General Mark Herring as another statewide politician lending de Ferranti a hand in his bid against John Vihstadt. [Twitter]

County Treasurer Slashes Tax Delinquency Rate Again — Carla de la Pava has hit new highs by ensuring that more taxpayers are keeping up with their payments than ever before, recording the lowest delinquency rate in county history. [InsideNova]

Arlington Centenarians Still Dancing — The county has at least 47 residents who have passed the 100-year mark, and they say they feel as young as ever. [WAMU]

Flickr pool photo via Erinn Shirley

Real Estate Tax Break Program for Seniors Set to Change Next Year

By Alex Koma

(Updated at 1 p.m.) Some changes are on the way for Arlington’s real estate tax relief program for seniors, though officials declined pursue the sort of sweeping overhaul favored by some in the community.

The County Board approved a series of tweaks to the program’s eligibility criteria Saturday (July 14), in a bid to better realize the county’s goal of helping older Arlingtonians stay in their homes even as values, and associated tax bills, creep upward.

Starting next year, the program will be open to homeowners age 65 or older and people with disabilities, with an annual income of up to $99,472 and household assets — excluding the home itself — up to $400,000, a slight increase from the old $340,000 limit. The county is also now letting people apply for an exemption from 75 percent of their tax bill, when the program previously only let homeowners try for an exemption from their full bill, half of it or a quarter of it.

“This is important not just for a compassionate community, but a community that works,” said Board Vice Chair Christian Dorsey.

To make up for some of this expansion in eligibility, the newly revised program stipulates that the top earners eligible to apply for tax relief — households making anywhere from $80,000 to $99,472 per year — can only apply for deferrals on their tax bills, not exemptions. Yet even that change frustrated some in the county, who would’ve preferred to see the Board move to a deferral-only system instead.

“I absolutely cannot understand why we want to help out the heirs in Spokane of people who are receiving an exemption,” Dave Schutz, a local activist and ARLnow comment section veteran, told the Board.

Caitlin Hutchison, an assistant director in the county’s Department of Human Services, said staff and a working group convened on the issue considered such a policy change, but ultimately decided against it. She noted that the city of Hampton moved to a deferral-only system, only to change course after many homeowners with reverse mortgages “almost immediately received notice that foreclosure proceedings would initiate” when tax bills came due.

“I have no interest in protecting inheritances,” said Board Chair Katie Cristol. “I am concerned that folks can stay in their home without a notification of eviction or having to leave the county.”

Hutchison also noted that the program broadly does not serve the wealthiest Arlingtonians — 76 percent of households who applied for the program last year had an annual income of $60,000 or less, and total assets of $100,000 or less. Since the tax relief changes were first proposed, the Board also added new limits on the eligibility of owners of properties valued at $1 million or more.

But Kathryn Scruggs, a longtime affordable housing advocate and member of the working group discussing the issue, argued that the program needs an even more substantial makeover to serve solely homeowners with “low incomes, low asset levels and lower than average home values.”

“There is no justification for increasing the asset limit, that just diverts resources from the people who need it most,” Scruggs said.

The revised program is indeed likely to cost the county an extra $154,000 in tax revenue each year. But Hutchison argued that the asset limit changes will help homeowners keep pace with rising home values, and stay in the county longer.

The tweaks will also help Arlington keep pace with its neighbors, Hutchison said, as both Alexandria and Loudoun County have higher asset limits for similar programs.

And as the county struggles to manage a surge in its student population, Dorsey argued that it can only be a good thing for Arlington to keep older residents in their homes for as long as possible.

“Typically when seniors leave their homes, they’re not replaced by seniors,” Dorsey said. “The more we concentrate our housing stock on families with children, the more it creates pressures in other areas.”

Arlington’s Car Decal Program Could Soon End, Though Its Fees Would Stick Around

By Alex Koma
Decal design competition presentation in 2018 (file photo)

Arlington’s personal property tax car decals coon soon be a thing of the past, even as the tax associated with the tags looks set to stay.

The County Board is now considering eliminating the requirement that vehicles garaged in Arlington display a decal to demonstrate its owner has paid the necessary property tax on the car, effective July 1, 2019.

The county would instead rely entirely on workers using a license plate reading system to determine whether the owner of any given vehicle is up to date on their taxes. Vehicle owners will still need to pay the annual property tax, as well as the “motor vehicle license fee,” commonly known as the “decal fee.”

Commissioner of Revenue Ingrid Morroy’s staff will use the license plate reader technology, which the county first purchased back in 2004, “to more efficiently and effectively ensure personal property tax compliance without vehicle owners displaying a decal,” according to a county staff report prepared for the Board.

Staff also believe the change will “relieve an unnecessary burden on taxpayers,” ending a requirement that’s been in place in the county in one form or fashion since 1949. The move would also mark the end to the annual design competition for the decals, which has given high school students the chance to feature their artwork on the tag since 2005.

Arlington is one of 21 localities around the state to still require the car decals, according to the staff report, and Loudoun County recently eliminated its requirement for the tags.

A decision on the matter is still a ways off, however. The County Board will vote at its Saturday (July 14) meeting whether to call for a public hearing on the question, which would then be set for September 22.

File photo

Morning Notes

By ARLnow.com

Simple Greek Now Open — Fast-casual restaurant chain The Simple Greek has opened its new Rosslyn location in the Colonial Plaza shopping center. A ribbon cutting ceremony yesterday was followed by long lines at lunchtime. [Twitter, Twitter]

WiFi Available in Underground Metro Stations — As of today, free wireless internet service should be available in every underground Metro station. Per yesterday’s announcement from Metro: “Customers can log-in by selecting the ‘Metro-Public’ network in their device’s Wi-Fi settings.” [WMATA]

Signs Up for Sfoglina — “Coming soon” signs are up for the new Rosslyn outpost of the acclaimed Fabio and Maria Trabocchi restaurant Sfoglina Pasta House. The restaurant is located on the street level of the office building at 11oo Wilson Boulevard. [Twitter]

Water Rescue Near Chain Bridge — D.C. police and firefighters rescued two people whose kayak overturned in the Potomac River near Chain Bridge last night. Both were evaluated by medics but “neither have physical injuries,” per DCFEMS. [Twitter, Twitter]

Fox News Coming to Iwo Jima Memorial — On Sunday, Fox News Channel will broadcast a portion of its America’s News Headquarters program (noon-2 p.m.) from the Marine Corps War Memorial near Rosslyn. Elizabeth Prann will co-anchor “ANHQ” from the Memorial, “where the nation will be preparing for the Fourth of July fireworks celebration,” according to a Fox press release.

Arlington Has Millions in Prepaid Taxes — “The Arlington treasurer’s office still has about $8 million sitting untouched in its coffers, waiting to be applied to future tax payments. But that’s less than half the $17.2 million in total prepayments submitted by Arlington taxpayers in the waning days of 2017, hoping to beat changes to federal tax law that made some mortgage-interest payments non-deductible in 2018.” [InsideNova]

Morning Notes

By ARLnow.com

Arlington Ridge Power Outage — Updated at 9:25 a.m. — A few dozen Dominion customers are without power in the Arlington Ridge and Pentagon City neighborhoods this morning due to an outage cased by “power line damage,” according to the utility’s website. Electricity is expected to be restored by 1 p.m. A tipster says the the Riverhouse apartments and some of the Pentagon Row shops were affected by the outage. Meanwhile, per Arlington County: “Arlington Ridge Road access from Washington Blvd as well as SB Arlington Ridge at S. Lynn Street will be closed for approximately 2 hours while Dominion Power repairs a damaged power line.” [Twitter]

APS Extended Day Website Survey — Arlington Public Schools is conducting a survey regarding its Extended Day management system. APS is considering a new system that would include an interactive parent portal, online registration, access to family accounts, and a database for family and staff information. [Arlington Public Schools, Google Forms]

Tax Delinquency Rate May Reach Record Low — “Arlington’s treasurer is optimistic that the county’s tax-delinquency rate could fall to another record low when it is reported later this summer… The delinquency rate to beat is the 0.226 percent reported last year, representing the amount of real-estate and personal-property taxes unpaid out of the roughly $800 million that flows through the treasurer’s office each year.” [InsideNova]

New Kettler Iceplex Sign — There’s a new sign on the parking garage in front of Kettler Capitals Iceplex: “Ballston / Home of the Washington Capitals / 2018 Stanley Cup Champions.” [Twitter]

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