Tax less, talk more?

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To city officials, the idea of an additional three-cent tax on commercial real estate to fund transportation projects was just an option to discuss.

To Alexandria business leaders, it appeared to be anything but that and perilously close to causing another blow to their bottom lines in an already trying economic climate.

Now, after an aggressive campaign by the Alexandria Chamber of Commerce against the add-on tax option one of the groups most pointed efforts in recent memory it appears any new revenue source like it is still months away from becoming an official piece of the citys tax code.

Chamber President and CEO Tina Leone said she strongly opposed the tax because were just coming out of a recession and were raising the residential and commercial rates anyway, uniformly.

City Manager Jim Hartmanns initial budget proposal for the upcoming fiscal year proposed (but has not enacted) a seven-cent property tax increase to offset the citys $44 million budget deficit and offered the City Council an additional option for the three-cent add-on to commercial real estate.

The extra three cents per $100 of assessed value would raise an estimated $2.7 million and be used to fund new transportation projects in the city, according to a budget memo.

However, between public feedback and the new projects suggested for funding, it looks like the extra tax is not in the cards for the 2011 budget.

There have been a lot of emails that have come in from the Chamber of Commerce and the business community questioning why do this now at this time, said Mayor Bill Euille.

We discussed it at great length and concluded that this isnt ready for primetime, he said.

Euille, who also runs W.D. Euille and Associates, said that as a business owner he will not support the add-on tax, adding that now is just not the proper time to do it.

Originally Hartmann said that he and his staff thought it would be important to put that out there for discussion this year because we know we have very significant transportation issues that will remain unfunded for years in the current budgeting scenarios.

I think its a viable option for consideration, whether its this year or future years, Hartmann said.

I didnt think that it would be favored by many folks in the business sector, but it is part of my responsibility and I think the City Council feels the same way we need to be talking about these things as options, he said.

A similar tax exists in both Arlington and Fairfax counties. According to a city budget memo, in 2009 the Arlington add-on tax for business properties was 12.5 cents and 11 cents in Fairfax. Alexandrias commercial tax rate for the current fiscal year is the lowest in Northern Virginia.

For the Chamber, that inequity would be a non-starter as the city also has the highest business licensing taxes in the region for professional service.

If they were to invoke a commercial add-on tax right now, that could seriously hinder our competitiveness with Arlington or Fairfax County because we have other taxes, other fees that are much higher than those jurisdictions, Leone said.

With the citys proposal, the Chambers mobilization apparently effective is what dues-paying members would hope for, Euille said, but also may have been a little bold considering the situation.

Euille thought there was an overreaction on the part of the Chamber in terms of their aggressiveness, he said. The idea that Council was really moving to do this was not fair. The Council was only discussing it.

The Chamber used a series of local op-eds, advertisements and an email campaign to air its message, part of a delicate balancing act, according to Leone.

Were going to continue to press the Council not to invoke the three-cent add-on tax and we are absolutely open to discussing how we can make this work next year, she said.

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