Revised Alexandria Budget Proposal Cancels Real Estate Tax Hike

ALEXANDRIA, VA — City Manager Mark Jinks released a revised budget proposal Tuesday for fiscal year 2021 to address shortfalls related to the coronavirus crisis. The proposed $753.3 million operating budget is a 5.8 percent decrease from the $799.9 million operating budget Jinks proposed in February and a 1.6 percent decrease from the current year's budget. The revised budget no longer calls for a 2-cent real estate tax hike.

Jinks told reporters in a conference call Tuesday a "lot of uncertainty" about the budget remains. The full impact will depend on how long the economic impact of the coronavirus lasts.

"The COVID-19 pandemic has triggered the biggest health crisis in a century, and caused what may be one of the biggest, most sudden economic downturns the nation has ever seen," said Jinks in a message to City Council and Alexandria residents. "While we don’t yet know the full extent to which this deadly virus will impact Alexandria residents, businesses and City government, I am recommending significant budget changes to continue the City’s record of prudent fiscal management, while relieving some of the burden on taxpayers and focusing on delivering core services to our community."

Jinks revised his proposal due to anticipated declines in revenue causing budget shortfalls. The city expects $35.8 million less revenue for the current fiscal year and $56.4 million less for fiscal year 2021, which begins on July 1. The revenue projections account for the expectation that consumers will spend less, impacting the city's sales, meals, transient occupancy and personal property taxes. In addition, business struggles will affect business license and business equipment tax revenues.

The cancellation of the proposed real estate tax increase would impact several city and school capital projects. The first phases of the city's Waterfront Park and flood mitigation plan and the high school project at the T.C. Williams Minnie Howard Campus would be rescheduled to fiscal year 2023. The new Douglas MacArthur Elementary School project would continue as planned. The school district notified residents of construction work happening outside the old Patrick Henry school building, which will be a swing space for Douglas MacArthur Elementary School students from fall 2020 through winter 2022-2023.

Another strategy Jinks proposed to address the budget gap includes a hiring freeze with certain exceptions for the rest of fiscal year 2020 as well as fiscal year 2021. Jinks also called for proposed pay increase for city employees to be canceled. Around 1,200 of the city's 3,000 employees are currently working on-site to provide essential services and are receiving a supplemental $4 per hour as emergency response pay.

Jinks recommended reducing the proposed operating transfer to Alexandria City Public Schools by $7.4 million. This amount equals the cost to ACPS for merit step pay increases, a 2 percent bonus for top of scale, targeted market rate adjustments, and a 1.5 percent decrease in the employee contribution to the supplemental retirement plan. The decision on how to allocate the city's operating transfer lies with the Alexandria School Board.

Jinks also proposed deferring 20 proposed program enhancements to future fiscal years, saving $2.1 million. The city anticipates $0.8 million in program enhancements can be funded by the federal CARES Act. An additional $1 million in CARES funding and potential state funding would be allocated to the Alexandria Health Department to fulfill its request for more epidemiological staff.

Jinks will present his revised budget proposal to City Council on April 14, and the council's public hearing on the budget and real estate tax rate is scheduled for April 18. Budget work sessions will follow on April 21 and 27, and adoption of the budget and tax rates is slated for April 29. All meetings will be held online. Residents can view the revised budget and provide online comments at www.alexandriava.gov/Budget.