By Caitlyn Meisner | cmeisner@alextimes.com

City Manager Jim Parajon released his proposed budget for the 2025 fiscal year to City Council on February 27, which included stormwater fee growth, city employee pay increases and massive funding toward road maintenance. 

Parajon proposed an operating budget of $911.3 million, a 3% increase from the FY 2024 budget, which he said is in line with national inflation rates. According to the U.S. Bureau of Labor Statistics, the inflation rate was 3.1% in January 2024. 

In Mayor Justin Wilson’s monthly newsletter, he acknowledged the importance of the budget. 

“There is no more important process than the adoption of our annual budget,” Wilson wrote in his March newsletter. “The budget is a reflection of the values of our community and I look forward to working with our residents and my colleagues to craft a budget that is reflective of those collective values.” 

Parajon said his mindset going into this fiscal year is “maintenance,” as he believes many of the fiscal policies laid out by Council are strong and cautious. 

“Those fiscal policies guide us not just in the short term, but long-term,” Parajon said. “That allows us to look out a decade from now and try to make sure that we are continuing to provide the types of services and programs that our community wants.” 

Parajon, who is a city resident himself, said the community’s input has been fundamental in his process for crafting the budget, namely regarding stormwater utilities and maintaining existing facilities. 

“I don’t lose sight of, ‘Who are we trying to provide for, who are we trying to help?’” he said. “And I think that’s really important.” 

The single largest source of revenue that funds the operating budget comes from residential real property taxes, totaling nearly 37% of the proposed budget. All property taxes – residential and commercial real property – plus personal property taxes, will constitute an estimated $614.5 million of the proposed $911.3 million budget – or 67.4%. 

“With a coinciding drop in the commercial tax base – which is a challenge for us – we as a city need to consider and continue to try to grow commercially as well as residential,” Parajon said. “Because the bulk of our funding to support all our city services, as well as school services, is through the property tax and sales tax. A significant portion of that comes from our residents.” 

Parajon has proposed the real estate tax rate remain at $1.11 per $100 of assessed value, which has been the rate since FY 2021. The budget maintains 2.2 cents to be set aside for transportation improvements and 1 cent for affordable housing. 

Despite the tax rate remaining stable in the proposed budget, the average Alexandria household will pay 3.5% more in FY 25 in local taxes and fees – which include real estate taxes, personal property taxes, utility taxes on gas/electricity/ water and a communication sales and use tax, plus fees on trash removal, sewers, stormwater, decals and investment and maintenance. This data is available on the Residential Tax and Fee Burden chart in Parajon’s proposed budget. 

This increase in the average residential tax burden outpaces the percentage rise in the FY 25 city budget even without an increase in the tax rate. 

While it is unknown how the increase in Alexandria’s city budget and the residential tax total will compare to the inflation rate when the new fiscal year begins on July 1, the last few years the tax rate increase has tracked that of the inflation rate. 

For instance, last year, the average amount of taxes and fees paid by Alexandrians increased by 3.4%, which outpaced the 12-month consumer price index – also known as the CPI – inflation rate as of July for the region, which was 1.8% according to the U.S. Bureau of Labor Statistics. But the prior year, in FY 2023, which began July 1, 2022, Alexandria’s average tax burden increase of 6.2% lagged well behind the 12-month regional CPI inflation rate of 7.5%. 

In FY 2022, the average Alexandria tax burden rose by 3.6%, compared to the 12-month July 2021 CPI rate of 4.4%. 

“I have a fiduciary responsibility on behalf of the city to look as tightly, as closely at where we are spending our dollars so that every dollar is used most effectively,” Parajon said about the increase. “I felt this year we could provide good, positive services and programs throughout the city without a tax rate increase.”

Parajon said he tried to fit funding for essential city services into the current tax framework. 

“We try to equate the level of revenue coming from taxes to what services are necessary to provide,” he said. “We have a tremendous nonprofit environment that provides amazing successful services that frankly, if they weren’t there, we might have to provide those.” 

Parajon has also proposed the stormwater fee increase to an average of $324 per year for single-family households to maintain flood mitigation efforts. This increase is consistent with previous plans for 5% growth each year. 

Additional revenue can be found in the proposal across departments. Notably, the Finance Department proposed a 25% personal property tax delinquency penalty after 30 days in addition to the existing 10% penalty for the first 30 days. This is expected to generate $150,000 in FY25, which is .02% of the proposed budget. 

Some city departments may experience cuts, which Parajon said is based on efficiency; he emphasized that residents will not experience service cuts. 

“We look[ed] at opportunities where there might be a better way to save a few dollars and still be able to do the same things,” Parajon said. “We did quite a bit of looking at some of our contracts, looking at how we operate, maybe a little bit more efficiently, maybe using technology a little bit more aggressively.” 

Despite some cuts, the city is dedicating more funding to pay city employees. Parajon proposed a $10.4 million increase from FY2024 – totaling $281 million – in the personnel budget to fund salary enhancements, new full-time employees and changes in benefit rates. 

The average salary for a full-time employee is $86,037, with 46% of employees earning more than the average and 26% earning more than $100,000. Notable salary increases stem from the collective bargaining agreements reached between the city and local fire, police and labor and trade unions. 

Parajon proposes those involved in the police and fire collective bargaining agreements from 2022 and 2023, respectively, see scheduled enhancements totaling $2.7 million. He also proposes the labor and trade unit receive a total of $700,000 in pay increases, including a one-time bonus of $300,000 for members of the bargaining unit. 

Alexandria City Public Schools is also fully funded in Parajon’s proposal, totaling $314 million between operations and capital projects. This is a 4%, or $10.3 million, increase from FY24. The bulk of this funding goes toward step increases, pay raises and additional staff positions. 

“What I’ve not been able to do is what the School Board has requested in addition to all that … another roughly $11 million for additional compensation, and I think several new positions,” Parajon said. “I just don’t have the room given the limited revenue increase that we have, primarily through our property assessment on the residential on the commercial side.” 

He said while he wasn’t able to find enough room for ACPS itself, there were lots of additional programs he tries to support to benefit “the whole child.” 

“Things like additional services and programs that help the whole child grow into hopefully a very successful adult … that’s one of the Council’s top priorities,” Parajon said. “If you look throughout the budget, both in school and out of school, there is substantial investment, not just this past year, but the last two years.” 

The proposed budget also included more than $5 million for road repaving in FY25 and more than $64 million for the next decade. Dozens of roads across the city are proposed to be repaved based on the Transportation and Environmental Services Department’s Pavement Condition Inventory Score. 

“Everyone goes on our roads, whether you’re a bicyclist or a walker or a driver,” Parajon said. “It’s sort of an indication of the healthiness of a community. It’s one piece and certainly a well-kept roadway system is helpful.” 

Parajon said ultimately, the budget is not just about dollars and cents, but what is beneficial to the community. He said he’s looking forward to the discussions with Council as the deadline approaches to approve a final budget. 

The first public hearing about the budget will be held on March 16 at 9:30 a.m. and another on April 13. The budget adoption will take place on May 1.