Oh, you can think about it. But doooooooooooon’t do it.
That’s Arlington County Manager Mark Schwartz’s advice to County Board members, urging them to resist any temptation to disregard the government’s self-imposed, and for the most part sacrosanct, debt guidelines.
The guidelines, long in place to help the county government retain AAA bond ratings, call for the cost of servicing municipal debt to remain less than 10 percent of the total overall county-government budget in any given year.
“I would never recommend” going above 10 percent, Schwartz said during a fiscal briefing May 22. “I don’t want to go there.”
But the Arlington government will be tiptoeing close to that ceiling under the $2.8 billion, 10-year capital-spending package proposed by the county manager on May 22. According to county data, the percentage of debt-service spending compared to the overall budget would be 9.9 percent in 2022, 2023, 2024 and 2025, dip slightly to 9.8 percent in 2026 and rise again to 9.9 percent in 2027.
Those figures are at best guesstimates, as nobody has a crystal ball to see what economic conditions or interest rates will be like years into the future. But keeping the debt ratio below 10 percent long has been a mantra of County Board members, who likely would hold off on spending (or raise taxes) to ensure it is not exceeded.
Schwartz’s briefing came several days after the nation’s three largest bond-rating houses – Fitch Ratings, Standard & Poor’s and Moody’s – affirmed their AAA ratings on Arlington’s general-obligation debt.
While the rating agencies were “just a little bit concerned” about debt levels and the county’s reserve funds, Schwartz said agencies were in general pleased with fiscal management of Arlington’s $1.25 billion annual budget and its long-range initiatives.
Schwartz, who has been county manager since 2015, said having the debt-service sword of Damocles hanging above the heads of Arlington officials enforces a degree of fiscal discipline.
“Having limitations, having a box, making us make decisions, is very, very important,” he said.
Regardless of what other spending local residents and elected officials want, “the first thing we always have to pay is our debt service,” Schwartz said.
County Board members are slated to adopt their own version of a capital-spending plan over the summer. While these plans have a 10-year outlook, in reality they largely serve as two-year planning tools as they are updated every other year.