In its quest to make housing affordable in Alexandria, city hall may have been its own worst enemy. An astonishing 74% of residents are now challenged by housing affordability, according to data from the fiscal year 2023 budget that City Council approved a few weeks ago. Not just those in the lower income levels are struggling, but nearly three-quarters of everyone.
While market forces have been the major driver again recently, a consistent contributing factor over time has been city hall’s financial management. As in many recent years, residents will feel the pain as dramatic increases in property assessments and fees are driving tax bills way up, making Alexandria even less affordable for residents.
Officials explained this as a difficult budget year within the context of high inflation and the COVID-19 pandemic, but this year is no aberration. City budget data over the past decade betrays an ongoing trend of large increases in tax and fee burdens on residents. That burden for the average homeowner in Alexandria has increased from about $5,200 to more than $8,000 over that timeframe. This reflects an average annual increase of 4.4%, more than double the average 2.1% inflation rate over the same period.
So, how has this happened? For decades now, city councils have habitually deferred big-ticket budget items like updating roads and stormwater systems, renovating or building schools, or buying body cameras for law enforcement officers in favor of current year programmatic priorities. In doing so, they were able to keep budgets from rising even more than twice the inflation rate.
The tipping point on deferral has crept up on city hall in recent years and can no longer be ignored. The 10-year capital improvement plan has grown at an average annual rate exceeding 9% since 2013. The cost of servicing the city’s debt, which pays for most capital improvements, is projected to increase by an average of 13% annually over the next five years. Both are clear indicators of the city’s deferral of important capital projects over many years.
Then there are fees. Two have the biggest impact on residents. The stormwater fee affects both homeowners and tenants, who pay it indirectly through their rent. Established just five years ago to address federal and state mandated reductions in pollution from runoff, it is now being used for flood mitigation too. The fee was doubled just last year and then increased by another 5% in this year’s budget. The refuse fee, paid by many homeowners, has also increased faster than inflation over the years.
Finally, the city’s “rainy day fund” has consumed many a resident tax dollar. Unreserved funds have grown by an average of 13% annually over the past 10 years. Yet, when the rainy day came in the form of the pandemic, reserve fund accounts recovered quickly, partly through the largesse of the federal government, but mostly through dollars collected from residents.
At the same time, the tax burden continues to shift from commercial to residential taxpayers, and it’s likely to rise further in the years to come as our commercial sector continues to falter. City hall’s performance in other aspects of the budget is no better. Personal property tax, meals tax and business license tax rates are the highest in Northern Virginia. As for our economic development spending, we have fewer employers in the city, not more, and there is little in the form of new commercial development that has brought any significant new revenue to the city.
Some might say, “But we are getting more for our money.” Questionable. Crime has increased dramatically, while felony indictments are way down. The quality and safety of our schools are declining. Many residents are flooded out every time we have a hard rain. The worst part of commuting is getting out of – or back into – our own city. And we keep getting threatened with destruction of our scarce natural parkland.
Interestingly, the ever-increasing financial burden on residents corresponds with an astounding 14% increase in Alexandria’s population – 19,501 net new residents – between the 2010 and 2020 census reports. That fact seems to contradict the claim from city officials that density would pay for itself. It has not.
Perhaps the only reasonable conclusion is that city councils of the last 12 years, and probably much longer, have been complicit in creating the problem they now characterize as an “affordable housing crisis.” Based on the city’s own financial data, it certainly seems that way
The writer is a civic advocate, management consultant and long-time Alexandria resident.