Thoughts on the Budget and Property Taxes

While assessment valuations are mandated by law, City Council can lower the tax rate and this is clearly something we must do.  During this year’s budget process we will look at every program, every spending plan and the overall effectiveness and efficiency of government.  We started a process of audits and program review last year and that will continue this year. All of this will be done with an eye towards lowering our tax rate by a substantial amount. 

A number of people have asked about capping the rate of tax increases. While the idea of tying tax rate reductions to a fixed cost of living number is tempting, I want to point out that it could lead to dramatic cuts in City services.  About 30% of City revenues come from personal real estate taxes.  That number has been growing in recent years due to the rise in property values.  The other 70% of City income comes from the car tax, business and commercial taxes as well as some State and Federal dollars.  In recent years, real estate values have been the areas of growth, while the other areas have not shown strong increases. In other years, the opposite has been true.  The net result is if you cut back the tax rate to a fixed cost of living index, while other revenue sources are showing little or no increases, we are forced to make major budget cuts. 

We are always working to improve efficiency and operations, but those type of improvements won't produce tens of millions of dollars.  Major cuts in the tens of millions of dollars would have to include most every major department -- Police, Fire, Schools, Parks & Open Space, Housing, Senior Services, Transportation and Human Services.  We likely need to cut back on some programs, but I don't think we want to stop investing in the areas that make Alexandria a special place to live.

Another thing to consider is how Alexandria can increase business revenues, restaurant and hotel revenues, as well as commercial real estate values.  Growing those revenue sources mean more tourism, more restaurants, stronger and more commercial businesses.  Without growing those revenue sources, any cap on the property tax rate will require major program cuts. 

I am a tax payer, and like you, these increases are a mixed blessing.  We are obviously happy with the increasing value of our property and the potential to use our new equity to support our family.  But, since we have no plans to move, the increases do impact our family budget.  Residents on fixed income are stretched even more by these property value increases. 

I am committed to working to both lower the rate and also to expand our senior, disabled and low-income tax rebate programs. 

I encourage you and your neighbors to participate in the City budget process which starts this March; you can find materials and dates for meetings on our web site at www.alexandriava.gov.

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