Your Dollars, Your Values

From Mayor Kate Stewart

“Don’t tell me what you value, show me your budget, and I’ll tell you what you value.” – Joe Biden

The City Council has just concluded one of its most important functions – passing a budget. The City’s budget is a quantitative expression of our plans for the upcoming year. It embodies in dollars and cents the goals and priorities we are working toward.

Each year we look to improve the budget process. This year in addition to the scheduled meetings and work sessions we held an open house for residents to come and ask questions about the budget. The Council also passed a Resolution expressing its intent on specific items in the budget. This will help ensure we have an easily accessible record of why we made certain decisions as we discussed the budget.

The Process: How We Get a Budget

Every year in early April, the City Manager submits a recommended budget to the City Council for the upcoming fiscal year beginning July 1. The Proposed Budget is considered by the City Council through a public process of hearings, Council work sessions, and final adoption in late May. The Adopted Budget sets the tax rates and guides the expenditure of funds by the City throughout the fiscal year, July 1 through June 30.

The foundation for our budget discussions began back in January when the Council established the 2017 Priorities. The Priorities document also provides a listing of major projects, initiatives, and ongoing activities that the Council and City staff will continue to work on and established a framework for the Council as it looked at the budget.

Setting the Tax Rate

During our many discussions about the budget, we debated trade-offs and considered the best ways to address residents’ needs and priorities given the resources available.

The City’s main source of revenue is property taxes. And this year, after much deliberation, the Council set the rate at 53.48 cents (per $100 of assessed value).  This is lower than last year’s rate of 56.75 cents. The current tax rate is also lower than the constant yield tax rate of 53.58 cents which means the City will have $22,397 less in property tax revenue than we had last fiscal year.

All of us on the Council understand that while we are setting the budget for the City, individuals and families are doing the same for their own households. Therefore, it was central to our discussions to ensure fiscal responsibility while delivering on the services residents rely on and have come to expect, and at the same time address the needs and priorities for the future.

A concern I raised during our budget discussions is the amount we have available in reserves. Reserves provide options for the City in case of the unexpected. Given the current federal context and likely cuts to funding and programs to help those most vulnerable in our community, I would have liked to have healthier reserves that are more in line with governmental standards which is why I voted against the tax rate but for our FY2018 budget. I am looking forward to a more in-depth discussion of reserves and establishing a formal policy this year.

Priorities

So what is in the budget? In FY2018 the City is moving forward on three major projects: 1) Flower Avenue Streetscape, 2) Ethan Allen Gateway; and 3) Renovation of the library. More details on each of these projects can be found on the City’s project page.

The budget advances the following established priorities of the City Council:

• A Livable Community For All
• Fiscally Sustainable Government
• Environmentally Sustainable Community
• Engaged, Responsive & Service-oriented Government
• Advance Economic Development Efforts
• Racial Equity

A number of budget items help provide financial assistance to those in need in our community. These items include, but are not limited to, the following:

• Continue rent stabilization program to help keep rental units affordable for our residents.
• Provide a total of $150,000 in assistance to 146 lower-income homeowners who qualify for the Homestead Tax Credit.
• An addition of $300,000 to the City’s new Housing Reserve to be used to further affordable housing initiatives.
• Funds for emergency assistance to residents for tree removal services
• Scholarships for the Recreation Department’s many programs, and many programs in the Recreation Department and the Library are free.

Ensuring we have programs like these for those who need it, will help keep Takoma Park the mixed-income, diverse community we value. For more details please see the City website’s Budget & Financial documents page.

Stormwater Fee

This year the Council voted to raise the base Stormwater Management Fee from $55 to $92. This user fee is assessed to all property owners, whether they pay property taxes or not, and is used to finance all of the work done to clean and slow rainwater as it makes its way into Sligo Creek, Long Branch, the Anacostia Watershed, and the Chesapeake Bay. City staff requested the fee increase because the revenue generated in the past is no longer sufficient to pay for the work that is needed to be done.

The jump from $55 to $92 for owners of single-family properties is significant, but because nonprofit and commercial property owners are assessed based on the amount of impervious surface on their properties, nonprofits and commercial property owners pay about ten times the rate of single-family homeowners on average.

The Council did discuss that, instead of raising the stormwater fee, we supplement the Stormwater Management Budget with City tax revenue. However, that would mean that our community’s nonprofit property owners would not be contributing their fair share to the stormwater remediation that is needed and the City’s property tax rate would need to be increased, or more expenditure cuts made, to get the necessary funds.

The two largest accounts of our Stormwater Management Fee are Washington Adventist Hospital and Washington Adventist University. The amount that they pay equals the base fee for about 470 single family homes because of the large amount of impermeable surface they have on their properties, but they pay no property tax.

In the next fiscal year, we plan to conduct a survey to determine the proportion of individual properties that have impermeable surface. In general, the more impermeable surface, the more stormwater remediation is required. Under the current system, all households pay the same fee regardless of the proportion of impermeable surface in the future we look to change how the fee is assessed.

Council had in-depth discussions of the stormwater fee and not all the Councilmembers were in support of the increase this year. Some Councilmembers favored holding off on some projects and re-evaluating next year when we had the study completed. The final vote to increase the fee was 5 to 2.

Non-City Sources and the County Budget

While half of the City’s budget is paid for by real property taxes, 26% is paid for by intergovernmental sources, primarily from Montgomery County and the State of Maryland. Some examples:

Police Department. A case in point is the Takoma Park Police Department. Takoma Park tax revenue only pays for 36% of the Police Department budget. Revenue from the County pays for 39.7% and most of the rest comes from State and speed camera revenue.

Flower Avenue Green Street. Where we can, we use City funds to leverage funds from grants and other sources. For the wonderful Flower Avenue Green Street project, $1.2 million of City funds leverages $5.1 million in other funds. This project is remarkably complex, involving federal transportation funds, utility upgrades, County funds and other grant funds. The resulting “green street” will meet environmental and transit goals as well as provide an attractive gateway into Takoma Park. The mere fact that there will be good sidewalks on both sides of the street will be a major accomplishment for the neighborhood, and the low-impact stormwater facilities will be a major environmental improvement in a location built without any stormwater infrastructure. The project has received statewide attention already and will be a project for which I expect national attention once completed.

Library Renovation.  The City was successful in securing a bond from the state for $150,000 toward the project. We hope to again request funding in the next legislative session.

County Budget.  The City and residents were successful in lobbying the County Council for funding in the County’s FY2018 budget for a paramedic at our fire station.

I want to thank my colleagues on the Council for their hard work and thoughtfulness as we worked through the budget process, residents who provided valuable comments and input, and to our City Staff, especially the City Manager, Deputy City Manager and Finance Director who prepared the budget and answered Council and resident questions.