The Alexandria City Council held a budget work session recently to discuss the potential implementation of an additional real estate tax for the 2,700 commercial properties in Alexandria to fund local transportation projects.
The proposal would result in the average commercial property paying an additional $6,000 a year in taxes if the maximum 12.5 cents per $100 of assessed value is levied. The maximum tax increase would cost businesses more than $12 million in the next year.
The questions facing the council are: Should the tax be implemented? And which projects need to be funded at this time?
After the budget hearing it became very clear to me that there are not any urgent projects requiring funding with local money (the West End BRAC projects will be funded with federal and state money). One of the lead projects on the list is to spend $21 million over the next two years for an entrance on the north side of the Eisenhower Avenue Metro station. Currently, the only entrance is on the south side. This is a far cry from an urgent project.
Last month the council learned of an unused $11.5 million available from state urban funds money that could be used immediately for local transportation projects. This is roughly equal to the amount that would be generated if the commercial tax passes.
In the most challenging economy of our lifetime, where we have seen the worst job losses in 70 years, now is not the time to increase the tax burden on anyone. The financial tsunami of the past few years has touched the lives of every American.
The commercial vacancy rate is improving in Alexandria but is still over 10 percent. An additional tax on commercial properties would result in higher vacancies due to lease taxes and insurance costs passed on to many cash-strapped tenants. Job losses will result from business owners paying higher taxes instead of retaining employees.
Alexandrias business community is unique, and is comprised of many small businesses. About 80 percent of businesses have less than 20 employees. Our city needs to promote an environment where businesses can flourish. It is up to the council to put the correct policies in place that will promote entrepreneurship and make Alexandria a desirable destination for businesses to reside. Other jurisdictions in our region have implemented this onerous add-on tax, but rather than copying them, we should use this fact as a recruitment advantage
A positive budget proposal on the table is to reduce the business taxes for companies that gross less than $750,000 annually. This would generate savings of $1.6 million for more than 2,000 of our businesses and free up capital that owners can reinvest in their enterprises.
Profitable businesses contribute to the health and vibrancy of our community and help take the financial burden off of homeowners.
The public budget hearing is March 7 at 4 p.m. at City Hall. This is an opportunity for the city council to hear your thoughts on all budget-related matters.
As for the add-on tax, I think reasonable minds can appreciate that folks can continue to cross Eisenhower Avenue to ride the metro, as opposed to our business community being additionally taxed to fund this project and others like it.
The writer is a member of the Alexandria City Council.