By Melissa Quinn
While property owners still might be reeling from City Hall’s proposed 5.5-cent tax hike, officials hope the extra dollars — combined with increased fees — will cover a multimillion-dollar shortfall.
Alexandria faces a $31 million deficit as officials finalize the city’s latest budget. Last year, city council covered the gap by dipping into rainy day funds rather than raising taxes on residents. Though city council capped the maximum real estate tax increase at a slightly lower rate Tuesday evening — a maximum of 4 cents — taxpayers don’t look likely to get off as easy this time around.
With mounting transportation costs and increased enrollment at Alexandria City Public Schools, tax and fee hikes are a necessary evil, said Nelsie Smith, director of the Office of Management and Budget. Virginia law requires municipalities to balance their budgets.
“Local government has a responsibility to have a balanced budget,” Smith said. “We tried to create a good balance between both [expenditures and revenue].”
While the city supports transit services such as DASH and Metro, officials then must help make up the organizations’ increasing costs — including upgrades to facilities and operational fees. City officials have a limited say in how the transit services are managed, Smith said, and often simply must respond to their monetary requests.
Though City Hall offers services beyond DASH and Metro, including the increasingly popular Capital Bikeshare program, many residents rely on public transportation to travel.
Aside from transportation costs, ever-increasing financial demands from the school district have played the largest role in creating City Hall’s shortfall. Together, they leave officials with little flexibility.
“We can control what we invest in the city from a capital side, but we can’t necessarily fully control the improvement on the transit side and the school side,” Smith said. “We have a lot of influence, but we can’t control it.”
While City Manager Rashad Young’s fiscal 2014 operating budget gives the district $3 million less than Superintendent Morton Sherman requested, the ballooning student population forces the city to allocate more dollars to the schools, said former City Councilor Frank Fannon, who lost a re-election bid in the fall.
As such, the ACPS budget likely will see an increase of $9.2 million over what the district drew from city coffers this year.
“If you have more kids going to your schools, the cost of providing more service to them goes up,” Smith said. “You have more kids, you have to provide more service.”
Young’s original proposition called for a 2.5-cent tax increase on residents but eventually bumped it up at city council’s request.
“Any time there’s a tax rate increase, that doesn’t feel great, particularly for us,” Smith said. “But with the economic downturn, every local government nationally has been hurting and had to make severe cuts … and we’re no different than that.”
Along with the proposed tax hike, residents could see parking fees raised between 20 percent and 25 percent citywide, as well as the addition of three automated parking facilities along Thompson’s Alley and Cameron, St. Asaph and Henry streets.
While residents were spared from a tax increase last year, a budget shortfall is not abnormal for Alexandria. With expenditures consistently outpacing revenue, the city is forced to turn to its residents to help fund the services that the city uses.
“The question comes back to the policymakers as to where is the threshold a homeowner can afford to pay,” Fannon said.
City councilors will hold a series of public forums on the budget — the first happened earlier this week — before approving the fiscal roadmap in early May.