FY 2016 Year-end Summary

October 18, 2016

FY 2016 Year End Summary

• Year Ended With a Balanced Budget

• Fund Balance Continues to Decline from FY 2014

• Majority of funding is restricted (91% in FY 2016)

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$155.0

$174.0

$203.3

$178.5 $173.4

$36.50

$25.60

$29.80

$21.80

$17.80

$100.0

$120.0

$140.0

$160.0

$180.0

$200.0

$220.0

$240.0

2012 2013 2014 2015 2016

Year-End Fund Balance

Restricted Funding Discretionary Funding

$191.5

$199.6

$233.1

$200.3

$191.2

Historical Operating Savings

$18.8

$10.1

$6.4

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

$18.0

$20.0

2014 2015 2016

$'s

mill

ion

s

Operating Department Savings ($ millions)• Amounts of

department and

program savings vary

from year to year

(1.0% - 3.5%)

• Examples of variable

factors

• Winter Weather

• Hiring Slowdowns

• Program Utilization

(e.g. DPR programs)

• Program Service

Demands

3

FY 2016 Year End Tax Revenue

4

1.6%

1.3%

1.1%1.0%

1.6%

0.0%

0.5%

1.0%

1.5%

2.0%

750

800

850

900

950

1,000

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Mil

lio

ns

3rd Quarter Budget Estimate Actuals Actuals to 3rd Quarter

On average, actual tax revenue has been 1.3% higher than 3rd Quarter projections.

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Allocations of Fund Balance

Allocations of Fund Balance ($191.2 million):

– Over 91% ($173.5 million) of fund balance restricted or already allocated per current Board policy or prior Board action

• Funding to reserves ($67.9 million)– Required to maintain the County’s triple AAA

• Continue commitment to Schools ($25.2 million)

• Affordable Housing Investment Fund ($53.5 million)– $27.5 million Allocated to projects

– $26.0 million Unallocated

• Legally restricted funds ($8.2 million)

• Projects the County Board has already taken action on ($18.7 million)

County Manager Recommendations

Affordable Housing (AHIF & Housing

Grants), $9.1

Operating Contingent, $1.0

Economic & revenue Stabilization , $1.0

Life / Safety, $1.0

Capital, $1.7

Land Acquisition / Temporary Facilities for

Fire Stations, $2.5

Unallocated, $1.6

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Remaining Funding Recommendations: $17.8 million ($ millions)

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Allocating the Balance of Funding

County Manager’s Recommendations ($17.8 million)

– Affordable Housing• Housing Grants: $2.1 million

– Continue the multi-year effort to include additional ongoing funds for this program

• AHIF: $7.0 million

– Critical Life Safety Needs: $0.95 million• Police equipment for first responders, replacement of generators at key 24x7 facilities, and

one-time funding needed for the Northern Virginia Emergency Response System (NVERS)

– Land Acquisition & Possible Temporary Facility Costs: $2.5 million• Fire Stations 8 (Lee Highway) & 10 (Wilson School)

– Economic & Revenue Stabilization Contingent: $1.0 million

– Capital Projects: $1.7 million

– Operating Contingent: $1.0 million

– Unallocated for consideration in the FY 2018 budget: $1.6 million

Department Closeout Funding by Fiscal Year

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-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2013 2014 2015 2016

Mill

ion

sCloseout

Department Project Funding

44 Projects

45 Projects

8 Projects

13 Projects

Note: Does not include projects funded in Non-Departmental, such as planning projects

AHIF Pipeline

FY 2017:

$37.7M projected unallocated &

$36.2M - $39.5M in projects

• Buckingham Village 3 Debt Service / AHIF Housing Services: $2.0M

• Westover (County Board approval in Sept. 2016):$11.0M

• Culpepper: $9.9M

• Berkeley: $4.5M

• Other potential acquisitions: $8.7M to $11.6M

FY 2018:

$16.0M to $19.4M projected

unallocated & $53.5M to $59.0M

in projects

• Central United Methodist: $3.0M to $3.5M

• Berkeley: $19.0 to $19.5M

• Trenton Street Apartments: $9.5M to $10.5M

• Queen’s Court/WRAPS: $22.0M to $25.5M

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FY 2016 Close-out

FY 2018 Budget Forecast Overview

October 18, 2016

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Arlington Outlook

• Arlington Continues to Grow – Population

– Service Demands

– Real Estate Assessment Base / New Construction

– School Population

• Real Estate Trends– Residential – slightly positive – 2016 sales & prices

up

– Apartments – slower growth in rents, some

concessions

– Commercial Office – continues to be under pressure -

vacancy rate still key concern

Arlington Real Estate

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9.5%

12.7%

16.2%

20.1%21.3%

20.3% 20.3% 19.7%

19.9% 20.2%

20.3%

5.0%

10.0%

15.0%

20.0%

25.0%

Countywide Commercial Vacancy Rate

Real Estate Trends & Forecast

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2.9%

5.0%

3.0% 3.0%

2.4%

1.0%

6.1%

5.7%

2.8%

1.9%2.0%

5.6%

4.3%

2.9%

2.1%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2013 2014 2015 2016 Budget PlanningCY 2017

Growth in Assessments

TOTAL COMMERCIAL TOTAL RESIDENTIAL TOTAL ASSESSMENTS

Preliminary FY 2018 Outlook

• Other taxes showing slow but positive growth– Personal Property & Business Tangibles: increasing

– Business, Profession & Occupational License (BPOL): increasing

– Sales, Meals, & Transient Occupancy Tax: flat to slow growth

– Other local taxes: up 1%

• Minimal growth in fee revenue

• State & Federal flat– Concerns about the impact of potential state cuts

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Impact on the Residential Taxpayer

County Expenditure Assumptions

Preliminary Continuing Services

Budget Development Assumptions

• Metro: 13.2% (+$4.0 million)

• Debt: 3% (+$2.1 million)

• Contractual Cost Increases (e.g. multi-year contract

agreements): 1.5% (+1.1 million)

• Healthcare (rates +7.5%): +$1.2 million

• Retirement: flat

• Other Post Employment Benefits (OPEB): flat

• Employee Compensation

– Pay Changes: $7.5 million

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FY 2018 Funding Pressures

• Schools Budget Gap: Unknown at this time– Continuing enrollment increases

– Capacity needs

– Normal inflationary pressures of compensation, healthcare, retirement, OPEB, etc.

• County Budget Gap: $5.4 million– Retirement Costs & Retiree Healthcare (OPEB) could change

– Metro pressures – uncertainty until the WMATA budget is adopted in April 2017

– State budget uncertainty

• One-Time Funding for a Variety of Programs Included in the FY 2017 Budget

Metro Budget Pressures

• WMATA funding gap of $200 - $275 million - declining

ridership, lower fare revenues, and contractual increases in

wages and benefits.

• 2 Primary funding sources for WMATA’s operating budget:

fare revenues & jurisdictional subsidies

• Timing: General Manager proposes his budget in November

2016, with an expected budget adoption no earlier than April

2017.

• Impact to Arlington County:

– $4 - $6 million estimated increase

– Will be an estimate until the WMATA budget is adopted – unsure of

action that will be taken by WMATA Board and jurisdictional partners. 19

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County Support of Schools

• Sharing Local Tax Revenue (46.6%)

• FY 2018 Ongoing Revenue Transfer:

$474.8 million (up from $464.5

million in FY 2017)

– Increase of $10.2 million over FY 2017

– Funding gap still remains (projected

based on Schools forecast)

• Additional Support (approx. $7-$8

million) Through:

– School Resource Officers

– School Health Nurses & Services

– Crossing Guards

– DHS Programs Helping Children &

Families

– Fields, & Maintaining Safe Routes to

Schools

County Board Guidance

County Manager to Receive

Board Guidance

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