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Arlington homeowners are facing a prospective double whammy of higher assessments coupled with an increased tax rate under the fiscal 2022 budget proposal unveiled Feb. 18 by County Manager Mark Schwartz and the maximum tax rates set two days later by County Board members.
Schwartz is recommending no change to the general tax rate, but is seeking an increase in the mandatory surcharge all property owners pay for stormwater infrastructure.
That increase, coupled with assessments that grew on average more than 5 percent from 2020 to 2021 due to the hot real-estate market, means typical homeowners will have to dig deeper to the tune of hundreds of dollars to fund government operations, assuming County Board members enact tax rates similar to those proposed by Schwartz.
The budget blueprint represents “a path forward” to a post-pandemic world, “ensuring we have a strong, resilient county government when we emerge,” Schwartz said in a statement.
Schwartz’s proposal calls for a tax rate of $1.03 per $100, up from $1.026 per $100. The regular tax rate would remain flat at $1.013, while the stormwater surcharge would rise from 1.3 cents to 1.7 cents.
When coupled with an average home-assessment increase of 5.6 percent over the past year, the owner of a home assessed at $900,000 in 2020 – and had a tax bill of $9,234 – would see that assessment rising to $950,040 and the tax bill up to $9,789. That’s an increase of 6 percent.
County Board members on Feb. 20 voted to advertise a maximum real-estate tax rate in line with Schwartz’s proposal – no increase in the general tax rate but a prospective 0.3-cent increase in the stormwater rate.
The higher rate, if ultimately adopted, would generate an additional $1.6 million in funding that would go to stormwater projects, bringing the annual budget for stormwater to $15.1 million.
“Arlington has seen the damage that flooding can cause,” County Board Chairman Matt de Ferranti said.
(Setting the higher tax rate does not mean County Board members ultimately must adopt it, but it does set the ceiling – board members cannot retroactively enact a higher tax rate than the one they have advertised for public hearings slated for early April.)
In all, Schwartz’s proposal calls for $1.36 billion in General Fund spending, a 1.4-percent increase over the current year, including a transfer of just under $530 million to the county school system, up $5.1 million from the pared-down total school officials received for the current school year.
(How that increase will impact per-student costs remains to be seen; about 5 percent of parents have fled the county school system this year, presumably over the lack of in-person learning, and how many will ever come back remains at best a guesstimate.)
The county manager’s proposal calls for elimination of 56 positions that have been vacant since the onset of the pandemic, plus $16.4 million in cuts and the use of holdover funds to fill in gaps.
ARE GOVERNMENT’S PRIORITIES ALIGNED WITH FISCAL REALITY?
While some areas of the budget will take a budget licking, others that critics deride as playthings of county leaders like “missing-middle” housing and equity programs, will keep on ticking.
In addition, Schwartz has proposed a minimum wage of $17 for county-government workers and a number of other benefits for those still on the government payroll when the budget dust settles. County workers also would get a new paid holiday – Juneteenth.
“While these initiatives conform with the county’s social-justice agenda, they come at a price,” said Audrey Clement, a former and potentially future County Board candidate and veteran budget-watcher.
“Twenty vacant police and sheriff positions are to be gutted,” Clement noted after perusing the voluminous budget plan. “A host of other police-related positions will be frozen. Of particular concern are reductions in the 911 call center.”
The likelihood that homeowners were going to take it on the chin this year was apparent when assessments were released in January. While home prices were up substantially, values in the commercial sector were down 1.4 percent, led by a steep decline in the valuation of hotels – no surprise, perhaps, given the impact of the pandemic, but resulting in the need for the county government to get the additional budget money somewhere else.
“I could say I was surprised, but I’m not,” Arlington County Republican Committee chairman Andrew Loposser said of the higher tax bills on the horizon.
“While families and small businesses across Arlington continue to budget through economic uncertainty, county leaders are doing what they always do – growing government on the backs of homeowners,” he said. “I’m disappointed voters continue to reward Arlington Democratic insiders with unquestioned one-party rule.”
Real-estate taxes account for nearly 60 percent of all county-government tax revenues, and growth in assessments has helped fuel growth in a budget that now tops $1.3 billion a year and in fiscal 2022 will be closer to $1.4 billion.
County leaders predict a “difficult” budget season, but that phrase is used almost every year no matter the conditions. The final budget will be adopted, and the tax rate will be set, in late spring.
The county government’s fiscal 2022 budget goes into effect July 1, although the real-estate tax rate set by the government will cover calendar-year 2021. Property owners pay their real-estate taxes in two equal installments in June and October.
Over the past half-century, Arlington’s real-estate tax rate has varied widely, from 76.5 cents per $100 assessed value for several years in the early 1990s to $1.532 per $100 for several years in the early 1970s. But that’s only half the equation, as the tax burden is dependent both on the rate and a property’s assessed valuation.
WILL STORMWATER-RATE RISE ADDRESS THE CORE PROBLEMS?
Most Arlington residents are unlikely to bark too loudly about the proposed stormwater-tax-rate increase incorporated into the proposed fiscal 2022 budget submitted by County Manager Mark Schwartz – an increase that almost assuredly will be enacted by the County Board.
But there likely will be some criticism that the county government can’t, or won’t, tighten its belt a little more in troubled economic times.
Voters last fall easily approved a nearly $51 million stormwater bond by a healthy margin, a response in part to recent storms that have shown the county’s nearly century-old stormwater system may not be up to the current task.
Clement said it was no surprise that more funds were being allocated on stormwater matters – “voters need to know that when you approve every bond measure in sight, your taxes will go up” – but said there were more cost-effective ways to address the issues.
“McMansions built to the street generate more runoff than the modest homes they replace,” she told the Sun Gazette. “A far less expensive way to eliminate excess runoff [would be] to revisit the setback provisions of the zoning ordinance.”
While acknowledging that the stormwater-tax-rate increase “signals the county’s long-delayed acknowledgment that it can no longer ignore the significant and recurring overland flooding problem,” veteran budget-watcher Suzanne Sundburg also has some concerns.
“Raising the real-estate tax rate to increase stormwater funding is a blunt instrument,” she said. “Property owners who have kept building footprints small, limited or reduced impervious surfaces, preserved or planted trees and who have otherwise made efforts to keep rainwater where it falls are forced to subsidize those who have massively increased building footprints and impervious surfaces covering the ground and who have destroyed all natural assets that keep rainwater onsite and out of our beleaguered stormwater system.”
“Holistic, reality-driven, environmentally sensitive planning must be implemented,” Sundburg said. “Thus far, the county still seems to be operating in reactive mode – waiting until flooding becomes a crisis in certain spots and only then designing relief measures. This whack-a-mole response to a systemic problem won’t work.”