City Hall Watch with Bill Rossello: No one pays a tax rate

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City Hall Watch with Bill Rossello: No one pays a tax rate
Bill Rossello. (Courtesy photo)
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By Bill Rossello

It’s budget season in Alexandria, the time when city officials try to put
the best face on the city’s growing financial challenges. The news is not good. The city manager’s operating budget calls for an increase of 5%, but the burden on residential taxpayers continues to grow. Just 13 years ago, in 2010, residents who owned or rented bore 70% of Alexandria’s real property tax bur-den. In fiscal year 2024, it will grow to 81%, versus just 19% for commercial taxpayers.

City Manager Jim Parajon’s proposed budget calls for no real property tax rate increase, but leaves open the possibility of a one cent hike from $1.11 to $1.12. Betting people will certainly go with the $1.12 or more to be the rate adopted by City Council this spring. But no one pays a tax rate, they pay a tax bill.

What will tax bills look like this year? Due to increased assessments – and including stormwater and refuse collection fees – the average homeowner bill will increase 4.3% from $8,075 to $8,423. Add a penny to the tax rate and that will be 5.2%. Not mentioned by the manager, but possible, is a two-cent increase to $1.13, a level the city charged just a few years ago. That would make the tax bill increase 6%.

Regardless, our politicians will continue to speak as if the tax rate is all that matters.

“We have not increased the tax rate in six years, and I am hopeful we can avoid any increase this year,” Mayor Justin Wilson said in November.

He is factually correct, but he does not seem to talk much about tax bills. And for good reason. Over the 10-year period between fiscal years 2013 and 2023, average tax bills increased by 54% while the tax rate increased by just 13%.

But the mayor is no tax rate hawk. Six years ago, then City Councilor Justin Wilson led the charge to increase the tax rate by 5.7 cents. The vote was 6-1 with only then-Mayor Allison Silberberg voting ‘nay.’ That increase was not needed at the time. In fact, its only significant impact since 2018 has been a dramatic 131% increase in the city’s reserve or “rainy day” fund.

Worth nothing is that the rainy day actually came in the form of the pandemic in 2020. But with plenty of federal assistance, the city dodged a fiscal bullet and socked away another $135 million of your money in reserve funds. 

Now guess how the city is balancing this year’s budget with only a 4.3% tax bill increase in a high inflation year. You guessed it, the rainy day fund. Fully $28 million will be drained from the fund if the city manager’s proposal is adopted. While you may feel good that your taxes are not increasing this year at more than the rate of inflation – for a change – you should feel like you overpaid for the last six years.

So, no matter what happens when council adopts the budget the first week of May, you will hear city councilors tout their ongoing financial stewardship, particularly if the tax rate stays the same. Even if the rate is increased, the word will be that they only raised it a penny or two. No big deal, they will claim. But to homeowners, that will be on top of the 4.3% proposed increase, not instead of it.

Wait for the next time a city official only talks about the tax rate. It’s coming soon. And when it happens, tell them you weren’t born yesterday; you have been overpaying for years; and that the thing that matters to you is your tax bill, not the tax rate.

The writer is a civic advocate, management consultant and longtime Alexandria resident.

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