Fiscal feuding over budget set-asides

By Melissa Quinn

A public disagreement between city councilors over eliminating the set-aside for affordable housing has drawn headlines in recent days, but budget officials say the change does not actually cut dollars for the well-known need.

The controversy surrounding set-asides, which funnel a percentage of the real estate tax directly toward various funds, sprang up soon after city council unanimously approved the fiscal 2014 budget.

In earlier versions of the financial plan, six-tenths of a cent of the $1.038 real estate tax rate automatically went toward affordable housing, while three-tenths of a cent was designated for open space. But the approved document did not include the set-asides.

Vice Mayor Allison Silberberg and City Councilor John Chapman quickly raised concerns about the elimination of the designated dollars, particularly for affordable housing. Silberberg claimed not to have known about the change before casting a favorable vote.

“It wasn’t on the radar. It was never publicly discussed as something being considered as a cut, an elimination,” Silberberg said. “[The elimination] wasn’t out of left field — it was out of nowhere.”

Despite the controversy, city staff said dollars still would go toward the fund, with the only difference being in how the money is appropriated. City staff has chalked up the controversy to a misunderstanding.

“The funding is there,” said Nelsie Smith, director of the city management and budget office. “The funding has to be appropriated. It’s whether or not they remove the set-aside.”

Designated funding would have raised approximately $2.1 million for affordable housing. While the set-aside might not exist when the budget goes into effect July 1, council voted to bolster affordable housing funding by $174,000 this year.

That means the city will put around $2.2 million toward preserving inexpensive housing in fiscal 2014, regardless of how the money is appropriated.

“It just changes where [the money] comes from,” Smith said. “It’s still tax-funded … but not set aside from the beginning. It’s just part of how we fund everything.”
Still, Silberberg and Chapman remain apprehensive.

“My disappointment with this move is that we are moving toward finally having a real [affordable housing] plan with goals and directives and all the creative tools that we have in our local government toolbox,” Chapman said. “And we’re taking away that dedication of consistent funding.”

The vice mayor criticized the way staff handled the change. She feared, along with Chapman, that it eliminated opportunities for public discussion, which happened with other controversial budget items, like the Warwick Pool and funding for Alexandria City Public Schools.

“Not one [work session] was focused on the set-asides [nor did] we have any public input supporting the set-asides, because we didn’t know it was on the chopping block,” Silberberg said. “It’s like walking outside on a clear blue sky, and then all of a sudden, you’re hit by lightning.”

Silberberg — who worries this change could result in little or no funding in the future — raised these issues at a meeting earlier this month. Mayor Bill Euille assured the duo that city council could always vote to restore set-asides.

The city council retains the authority to switch back before the budget goes into effect, Smith said.

“The motion council did a few weeks ago was just an intention,” she said. “It didn’t actually change anything.”

Chapman, though, is not hopeful.

“It’s an uphill battle with the dynamic we have on council,” he said.

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