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Alexandria faces stark budget choices
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Alexandria (Map, News) - The bad news just keeps coming for Alexandria elected officials who learned this weekend the city will face a $10 million operating deficit in fiscal 2009 unless they make some tough financial choices.
The city also faces an $85.3 million shortfall in the separate construction budget for fiscal 2009 and 2010. More than one-third of the work the council planned for 2008 to 2013 has no funding, city staff revealed in September.
The $10 million operating deficit assumes the city’s property values grow at just 3 percent and expenses rise 4.7 percent year over year. Expenses are being driven by a 2 percent raise to city employees and rapidly rising health care costs for staff and city retirees.
“This is the dilemma,” Bruce Johnson, the city’s director of management and budget, told the City Council during its budget retreat Saturday. “Personnel costs are driving expenditure growth.”
Most of the city’s income comes from real estate taxes, with about 70 percent of that from homeowners. In fiscal 2007, which started July 1, growth in commercial property values of more than 10 percent made up for the drop in residential property values. Such growth may not continue, warned assessor Cindy Page-Smith
“This is the chart that screams the most,” she said, displaying the growth rates of Alexandria’s commercial and residential property values. “Wherever the residential market goes, the commercial market follows.”
By city law, Alexandria’s budget must be balanced, which leads to some tough choices: cut spending, put off projects, increase the property tax rate, levy new taxes and fees, or borrow more —which is allowed for capital projects.
A one-penny increase in the city’s tax rate of 83 cents per $100 of assessed value would likely bring $3.5 million to city coffers, Johnson told the council.
The council could also levy a new tax on commercial properties — up to 25 cents per $100 above the residential rate — to raise new money for transportation projects.
Three council members said Saturday they wouldn’t support raising the new tax unless it was for new projects.
Comments from Examiner Readers
10:25 AM MST on Tue., May. 6, 2008 re: "Alexandria City Council approves wide-ranging tax, fee increases"
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Alexandria Rocks! Fairfax SUX! said:
Congratulations to the Alexandria City Council which wisely avoided imposing a new Gerry Connolly Commercial Property Add on Tax! Fairfax businesses: Move into Alexandria, our commercial property taxes are substantially lower than yours!
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