Arlington County Board members on July 20 formally requested the placement of four local-bond referendums on the Nov. 2 ballot, which if approved by voters – as seems likely – would lead to a further increase in the government’s debt-service payments.
The final decision on putting the referenda on the ballot rests with Circuit Court Chief Judge William Newman Jr., but that largely is a legal nicety, as the courts traditionally have not tinkered with such County Board requests.
If Judge Newman orders their placement, the following bonds will go to voters:
• $38.7 million for transportation and Metro.
• $23.01 million for schools.
• $17.035 million for community infrastructure.
• $6.8 million for local parks and recreation.
For approaching two generations, Arlington officials have sent bond referendums to voters in even-numbered years, the theory being that higher turnout for presidential and congressional elections would help ensure passage. (It has worked: No bond referendum has been turned down by the county electorate since the late 1970s.)
Last year, however, with the full brunt of the pandemic hitting and with county-government leaders unsure of the fiscal impact of the subsequent economic downturn, voters were sent a downscaled package of bond items – which were dutifully passed – with a promise of a similar restrained package in 2021. If all goes as planned, the every-other-year routine will resume in 2022.
Bond referendums do have an impact on the county government’s bottom line, and a wave of capital spending of the past two decades (much of it to address the community’s growth spurt and aging infrastructure) has sent the county government’s general-obligation debt higher.
For the fiscal year that began July 1, government officials expect to pay $127.9 million – or about $550 for every county resident – in debt service. That figure is anticipated to grow to $138.6 million in the next fiscal year.
To date, Arlington has been able to keep its debt-service costs to less than 10 percent of its overall budget, something that is key to maintaining its (to date sacrocanct) AAA bond ratings. But with the prospect of looming interest-rate hikes that will impact even blue-chip borrowers like Arlington, there could be challenges ahead.
If borrowing costs rise substantially, Arlington officials would have a number of unappetizing options, including restraining new capital spending; continuing to impose higher tax burdens on property owners to keep the debt level below 10 percent of all revenue piling in; or by exceeding the 10-percent cap and putting the AAA bond ratings in jeopardy.