Now that the dust has settled from this years city budget debate, I would like to share with Alexandrians some thoughts on this years budget, next years budget and the city budget process.

I talked to thousands of Alexandria residents last year when I campaigned for office and I concluded that the top three issues on their minds were: property taxes, property taxes, and property taxes. 

The average Alexandria homeowners property tax bill had doubled in the preceding six years and it made residents angry and worried. Many people told me they loved living in Alexandria but they were afraid they might have to move if their property taxes kept increasing at that rate. 

I am very pleased that, this year, the average Alexandria homeowners property tax bill will actually go down. Not by much, but what a welcome change from double-digit percentage increases every year.

The operating budget for the city will increase by only 1.9 percent over this years projected expenditures and the operating budget for the Schools will increase by only 2.8 percent over this years projected expenditures. The total number of city employees will decline by 15 positions, while the schools payroll will drop by 71 positions. 

CIP
The biggest cost driver in our city budget is our Capital Improvement Program. In my opinion, the City Councils of the 1980s and 1990s did not spend enough on capital programs, both maintenance and new construction. As a result, we are now faced with a huge backlog of important capital projects, including badly-needed sewer improvements, school renovations, and a new police facility. The fiscal demands of these projects are projected to grow even larger over the next couple years. We should defer a lot of the nice to have capital projects and we will have to borrow more than usual, but we cannot ignore essential maintenance or stop construction projects in progress. These capital needs will force us to be even more parsimonious with our operating costs if we want to keep property taxes under control.

Of course, nothing this City Council does will satisfy our most conservative critics. They believe that government is the problem not the solution, so that government governs best that governs least.

Some other critics find fault with Councils decision to slightly exceed the budget target we set last fall. They view the failure to meet the target as prima facie evidence of fiscal irresponsibility. But this target process was a goal-setting exercise that, in my opinion, resulted in a much more fiscally-constrained budget than if we had set an easy target. 

Last year, Council set two targets, 7 percent and 6 percent growth in city spending, and met them, but increased spending more than we did this year, were they more fiscally responsible because they met their easier targets?
I think we might be well-served by setting certain permanent benchmarks rather than (or at least in addition to) setting an annual target. Thats what we do with city borrowing we have target and maximum levels on two indices debt per capita as a percentage of per capita income, and debt as a percentage of fair market real property value. 

Spending and taxing
On the spending side, I think we should look at the municipal cost index, published for many years by American City and County Magazine, which incorporates the U.S. Labor Departments consumer price index (CPI) to help measure personnel costs; producer price index, to help measure purchasing costs; and the U.S. Commerce Departments construction cost index.

On the taxing side, I think we should compare the increase in the average residential property tax bill to the CPI and average income growth. In this case, the CPI alone is useful because we would want to compare the change in property taxes to the change in other expenditures facing households.

If we return to big spending and tax increases next year, this years positive news will mean little. City Council needs to maintain a policy of fiscal restraint in the coming years, especially because of our large capital needs. We should also look for budgetary tools that will help us maintain fiscal restraint and enhance community understanding of our city budget decisions.

Tim Lovain is a member of Alexandria City Council.