Drop in Real Estate Tax Part of Proposed Budget

Drop in Real Estate Tax Part of Proposed Budget

Alexandria City Manager Philip G. Sunderland proposed a FY2003 budget of $373.3 million for next year, an increase of 6.6 percent over this year’s budget.

The budget includes a two cent rate reduction in real estate taxes, which Sunderland said would not detract from the city’s ability to deliver quality services to residents and businesses, even though this revenue pays for more than 47 percent of the general fund expenditures.

“It is a budget that has very few new initiatives but also has no cuts in the current level of services,” Sunderland said. “The growth in our real estate assessments was larger than we projected, so now is the right time for a tax reduction.”

There were a few new initiatives. First of all, Sunderland is proposing to set aside $1.5 million for the redevelopment of the Samuel Madden Homes, better known as The Berg. “We made a commitment to support this project financially and we will put aside $1.5 million from general fund money and another $2 million from the Housing Trust Fund,” Sunderland said.

Another $300,000 will also be set aside for affordable housing initiatives. “Alexandria is one of the few jurisdictions that is actually doing something about affordable housing,” said Mayor Kerry J. Donley. “I am glad to see some funding for these programs in the proposed budget.”

Sunderland would like to add 10 police employees and nine sheriff’s department employees. “Four of the sheriff’s deputies are needed to staff the 24-hour guard houses because of the extra security needed at the detention center,” Sunderland said. “We expect to be fully reimbursed by the federal government for this expense which comes to around $400,000. The additional police officers are needed because of the growing number of people who live and work in the city as well as for responding to increased security concerns since Sept. 11.”

Staff will also be added to the Police Department’s Division of Security and Intelligence. This three-person office works closely with federal intelligence and other law enforcement officials on matters related to national, regional and local security.

City and school employees will get a 2.5 percent cost of living pay increase. In addition, the city will add two new steps to the career ladder. “A number of our senior employees are at the top of the pay scale now,” Sunderland said. “This will give them the potential to earn a little more money.”

The city will also increase the amount of money that retirees receive as a reimbursement for healthcare expenses. The city will also increase its contribution to employee health insurance premiums.


The proposed budget fully funds the operating budget request from the city’s school system. “I am really pleased that we can fully fund the schools’ operating budget,” Sunderland said. “We have also fully funded the CIP request except for elementary school expansion which is uncertain due to unclear student enrollment projections.”

The $23.1 million increase will be paid for through increased revenue from residential real estate; a larger fund balance than projected; the car tax and commercial real estate growth. Seventeen percent will come from residential real estate, five percent from commercial property, and seven percent from the car tax and the remainder from the fund balance.

The city will also go back to the bond market in 2004 for an additional $55 million in bonds to pay for capital projects. “This in no way will affect our AAA bond rating,” Sunderland said. “The city has been served well by Council’s adherence over the years to the city’s financial policy guidelines. This discipline has played a significant role in enabling the city to obtain and retain our AAA bond rating. It is essential that compliance with each of these Guidelines be continued, even in difficult economic times. The proposed FY2003 operating budget and the FY2003—08 CIP do this.”

On the capital side, Sunderland has added $3 million to the already approved $8 million for relocation of the city’s health department. “Frankly, we just weren’t able to find a suitable facility for $8 million,” Sunderland said. “The additional funds should help us in purchasing a suitable building very soon.”


Council members were briefed on the proposed budget shortly before Tuesday’s legislative meeting. They had not had an opportunity to review the five-inch thick document.

“I was taken by surprise in the staff presentation this evening in terms of what the budget would look like,” said Councilman Bill Euille. “In my years on Council, I don’t believe I have ever seen anything like the two cent reduction that is being proposed in the real estate tax rate. However, we want to be cautious that we don’t balance the budget at the expense of needed human services for our citizenry. While we have the luxury of looking at a tax rate reduction because of the unexpected growth in our real estate assessments, we should not lose sight of the fact that there are pending needs that will have to be carefully reviewed.”

Councilwoman Joyce Woodson is concerned about spending today’s windfall and not preparing for tomorrow’s diminished growth. “The real estate market is artificially inflated because of the low interest rates,” she said. “We are not going to continue to see the kind of double-digit increases in assessments that we have been seeing. We need to be cognizant of the fact that we are getting to a plateau. I hope that the citizens will think about this when they realize how much of our budget is driven by revenue from residential and commercial real estate.”

Councilwoman Redella S. “Del” Pepper is pleased but cautious. “It looks like a pretty solid budget as far as I can tell,” she said. “I can live with it. However, I want to withhold judgment until we get through the process.”

Councilman David Speck was reflective. “Six months ago, I’m not sure any of us thought we would be looking at a tax rate decrease,” he said. “It’s been a function of two things – the demand for real estate in this area and our response to the economic crisis. We reduced our operating expenses and have worked hard to restore revenues that disappeared or declined in tourism.”

Vice Mayor Bill Cleveland summed it up. “As we start this budget season I would like to thank the city manager for providing a good footprint,” he said. “There are no new initiatives but we have some dividends for the people. It’s a good budget to start out with.”