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Arlington, Loudoun Offer Tax-Rate Cuts to Offset Increases

By Michael Laris and Annie Gowen
Washington Post Staff Writers
Wednesday, February 16, 2005; Page A01

Officials in Arlington and Loudoun counties proposed budgets yesterday that included modest tax-rate reductions and continued spending increases made possible by soaring property values.

Arlington County Manager Ron Carlee proposed a $745 million budget that would increase spending 3.7 percent and called for a tax-rate cut of at least a nickel. Loudoun County Administrator Kirby M. Bowers's $969 million operating budget represented a 14 percent increase over last year's budget and called for a rate cut of 3.75 cents.

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The funding plans follow a series of sharp increases in real estate assessments that have more than doubled the value of homes in both counties since 2000. The swelling values have, in turn, underwritten a rise in government spending that has fueled philosophical and pragmatic debates about public services, the role of local government and the impact of the region's increased prosperity on everything from family budgets to housing affordability.

Fairfax and Prince William counties have not yet announced their assessment increases for the year, which are expected to be substantial. Spending proposals in those counties, as well as in the city of Alexandria, also have not been released. But as Northern Virginia's local budget season unfolds, homeowners, parents of schoolchildren, social service advocates and tax-cut promoters are joining the annual push to set priorities.

Loudoun County Treasurer H. Roger Zurn, a budget hawk, sought to cast the debate in historical terms yesterday with recollections of the region's real estate bust in the early 1990s, which left governments slashing their spending.

"Don't go crazy when things are good," Zurn cautioned, "because they are not always going to be good."

Many argue that the spending increases they are proposing are anything but crazy.

Carlee's proposal would increase spending by $26 million, and his budget adds no new programs or staff members. If the County Board reduces the tax rate 5 cents, Arlington homeowners on average will pay about $4,160 in taxes, $619 more than last year.

The proposed Arlington budget also includes the county's contribution to local schools, $289 million, up 5 percent from last year. But Arlington officials said Carlee held down the overall spending increase to 3.7 percent -- compared with last year's 7.2 percent increase -- at the urging of board members and a citizens fiscal advisory group, which issued a stern warning late last year that the county could not rely on the region's hot real estate market and its increased property tax revenue forever.

"They've cut spending very significantly," said Peter Rousselot, chairman of the county's Fiscal Affairs Advisory Commission. "With a much smaller growth rate of 3.7 percent, it will be much easier to cope with if the bubble bursts and the real estate market cools off."

Arlington County Finance Director Barbara Donnellan said that although residential property assessments have increased 24 percent over last year, the county's overall revenue is projected to rise only 9 percent because other revenue -- including personal property tax revenue, fines and business license fees -- is falling or is rising less sharply. Much of the additional money will go to support increased county and school operating costs.

Loudoun's Bowers said the spending increases are needed to serve the county's burgeoning population. During the current board's four-year term, the county's population is expected to increase by about 62,000 people, Bowers said, adding that today's population has already hit 247,000. That is up from 86,000 in 1990.

Under Bowers's proposal, the real estate tax rate would be cut by 3.75 cents, to $1.07 per $100 of assessed value. But the average property tax bill still will rise by $580 because homes in the county are worth so much more than last year and because the proposed tax-rate cuts are comparatively modest.

The tax rate would have to be cut to 94 cents to keep tax bills from increasing, Bowers said. While some county officials said they hope Bowers's proposed tax rate will be reduced further, the steep cuts in school spending and other popular services that would be necessary to reach a 94-cent rate are seen by many in the county as politically impossible.

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