There is no doubt the Alexandria City Council will pass a brand new tax on every commercial property in the city when it adopts the budget on Monday night. The question is how damaging this inequitable levy will be, and whether elected officials will wield their power and severely soften the blow to small businesses.
Necessity is the mother of this unfortunate invention. Alexandria needs $110 million over the next 10 years to deal with major transportation issues, according to City Hall, in a region deemed worst in the country for traffic congestion. Virginias legislature provides a loophole to localities in the form of this tax, which could charge commercial property owners up to 12.5 cents for every $100 of that propertys value. Every cent of subsequent revenue would fund transportation projects.
Everyone businesses, residents, tourists, commuters would benefit from transportation improvements. Others should share the burden with commercial property owners. The very essence of the taxs structure is unfair: it singles out businesses, 90 percent of which have fewer than 20 employees, to fund incentives for all. Elected officials have the authority, and duty, to spread the pain around. Heres how.
Take a bigger rake from tourists. Alexandria becomes better known as a tourist attraction each year. Its not just a byproduct of Washington tourism, but its own, distinct destination, thanks in large part to the Alexandria Convention and Visitors Association and the taxpayer funds that buoy it. But the city could squeeze more out-of-state money from visitors by increasing taxes on hotels, while leaving residents unaffected.
Alexandrias current hotel tax rate is 6.5 percent plus $1 per nights stay. Compare that with National Harbors 10 percent rate (plus a $15 fee for staying at Gaylord), and youve got some wiggle room to work with, without scaring off visitors. The rate gets passed directly to the consumer, leaving residents wallets closed. Frankly, hotel rates in Alexandria being what they are, the difference to consumers would be negligible.
Another option is to fund transportation projects with transportation-related revenue. A Metro station is coming to Potomac Yard and will become the nucleus of a vibrant, transit-oriented area, according to plans for the last major undeveloped space in Alexandria. City Hall could fill a fund with revenues from this transit-driven redevelopment, and use the money for much-needed transit projects. Its not a new idea; the city created a special tax district for residential dwellers in the area. Why not try something similar with new businesses moving to Potomac Yard? If property owners agree from the onset, there are no surprises down the road.
The government could also create a less aggressive transportation agenda, prioritizing needs more conservatively. A free trolley in Del Ray mimicking the Old Town version would be great, but it is far from paramount. The city could postpone projects, and $110 million over 10 years could be diffused over a 15-year period, lessening payouts today.
The commercial add-on tax is inherently unfair. Unfortunately its all but certain to pass at some rate or another. But elected officials need to heed the voices of business owners and others who have spoken against it, while deciding how to balance the citys needs on the backs of everyone, not just on the very backbone of our economy small businesses.