Our View | Budget Calls for Strategic Planning

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The real estate market is abating throughout the city after years of booming that previously comforted residents and city officials alike. The real estate assessments mailed last week to every homeowner in the city reflected this slowdown. Though not unexpected, the citywide decline in property assessments left city officials scrambling to make up the budget deficit. While the deficit presents an immediate problem i.e. a budget shortfall it provides a long-term opportunity to put the city on sounder financial footing.

Alexandria, like most municipalities around the country, relies heavily on real estate taxes as a revenue source. About 56 percent of the citys revenue is projected to come from real estate taxes in the coming fiscal year. In booming times thats fine, but in a recessive economy and stressed budget year it can be extremely difficult to balance the budget. We believe there is no time like the present to tackle difficult problems: lets explore ways to diversify the citys money reservoir into varied revenue streams while examining, as a community, what we can live without.

Surely commercial and residential real estate taxes should and will continue to supply a significant share of Alexandrias revenues. But with the value of the average home dropping almost $24,000 since last year and a continued downward pattern expected, residential real estate is not the investment it used to be. Commercial real estate is not far behind. Vacant storefronts dot the citys business districts and small business owners are getting hit hard despite blowout sales and special incentives.

The city manager made it clear with his proposed budget that maintaining a static tax burden for homeowners is a priority, evidenced by the proposed tax rate increase which would do just that. Raising taxes to inch out of a recession is not an ideal method, but when property values are down the city is left with little choice.

In the short-term, city officials will seek revenues from almost any source. But making minimal budget cuts off the top while shuffling taxes around is a short-sighted approach. The times we find ourselves in with the global economy in freefall and our countrys future economic structure uncertain call for more than short-sighted, short-term solutions. We urge our city officials to think big, think strategically, and think long-term.

Step one would be to find ways to diversify revenues (officials have expressed interest in the idea) and become less dependent on the real estate market. This needs to be done, but done without placing an undue tax burden on our small businesses that are struggling to survive.

A long, difficult look must be taken at all entities that the city funds. The city managers proposition to cut 121 city positions and freeze pay is a painful but necessary start. But this is only a very small first step toward the kind of overhaul that is probably necessary. Now is the time to look at city agencies, to see if some can be eliminated and others consolidated. To examine if the city needs to be providing all of its current services. To see if some services might be provided more efficiently if they are privatized.

A long look also needs to be taken at the capital improvement program, in which $128 million in unfunded projects loom large. These projects took time, money and human productivity to plan and now remain just that plans. Some of these developmental plans, while noble, lack the funding to become reality and should be shelved indefinitely.

As desperate times call for desperate measures, we need to be taking steps now to avoid desperate times down the road. City officials took some measures preparing for the current downturn starting a few years back. What we need now is the same kind of premeditated planning only on a much larger scale rather than reactive undertakings.

The city needs to find ways to diversify the revenue base soon, make deep, strategically planned budget cuts, and undertake efficiency measures. These steps, rather than distant capital improvement wish lists, would better serve the city and its residents. Progress in the future can only be achieved by solving todays issues with immediacy.

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