Rate Down, Taxes Up

Rate Down, Taxes Up

A different Budget Process Next Year?

On Monday, the City Council passed a $562.8 million budget for fiscal year 2006, which begins on July 1 — a 6-percent increase in spending over last year. City Council members voted for a property tax rate of $0.915 for every $100 of assessed value, which would increase the average tax bill by 12 percent to $4,043 — an average tax bill increase of $418.

The City Council also approved an increase in the Affordable Home Ownership Program that was created last year. The program will increase cash grants for homeowners from $250 to as much as $675 for low and moderate income home owners whose incomes are $40,000 or less, $475 for homeowners whose incomes are $50,000 or less, and $275 for homeowners whose incomes are $62,000 or less.

The city's new budget also includes 14 new police officers positions, $47 million in debt service and cash capital contributions to finance a new high school, $138.8 million for city schools, $2.5 million to offset the decline of federal and state assistance, $150,000 to increase Head Start teacher salaries, $2.5 million for traffic-calming measures and pedestrian access and a 2 percent cost-of-living increase for city and school employees.

But not everybody was happy with the budget. Rising property tax assessments have created a raucous budget season in which City Council members have been swamped with calls and e-mails from citizens who were upset — some were very angry — about rising tax bills. After the real-estate assessments were mailed out in February, a movement began to persuade City Council members to lower the tax rate to a level that wouldn't produce such dramatic tax-bill increases.

THE MOVEMENT was bolstered by a feeling that the city had several fat years in which rising tax assessments have created huge revenues. Leaders of the movement decided to ask the city government to operate within a 3 percent spending limit — a tax rate of $0.86.

More than 5,000 citizens signed a petition asking for a 3-percent cap on spending increases. Fourteen civic associations and homeowner groups endorsed a petition asking for a 3-percent cap on spending increases. Because Mayor William Euille won his 2003 election by a margin of 2,200 votes, leaders of the 3-percent movement speculated that City Council members would be persuaded by 5,000 angry voters.

But they were not.

Instead, City Council members decided to set a tax rate that would increase the average tax bill by $418. But they vowed that things would be different next year, which is also an election year for council members.

"I realize that this is not the budget that everybody had hoped for," said Vice Mayor Del Pepper. "But we're putting everybody on notice that we will have a leaner, meaner machine next year."

POTENTIAL CHANGES to the budget calendar could allow for more time for members of the council to make major changes to the city manager's budget — a task some say cannot be accomplished in two months. City departments and the school system have been notified of the advanced schedule for next year, and the budget crunchers are already working toward getting their work done ahead of the present schedule.

"It's like turning a ship — it can't be done on a dime," said Pepper. "I hope that many of you will withhold judgment."

Many of the council members praised advocates of the 3 percent compromise for bringing budget issues to the public conscience.

"I want to thank the citizens who took the time to come to City Hall or call us," said Councilman Ludwig Gaines. "The budget defines what a city's priorities are, and I am not sad when I look at this budget because I share its priorities."

Gaines recounted a recent experience he had at the Kennedy School of Government at Harvard. He was part of an international group that investigated the concept of affordability. When he told a friend from Nigeria about the problem of rising property tax bills in Alexandria, the man responded by telling the City Council member that he was lucky that his problems weren't much worse. Gaines said he gained some perspective on Alexandria's situation that day.

Peter Dykhuis, who was wearing a red "3 % makes sense" sticker during the meeting, said, "What is called for more than anything else is a cost-benefit analysis over the major budget items."

Dykhuis was not alone. Several citizens with red 3 percent stickers met in the hallway after the City Council's vote to share their frustration.

"We're going to have a city of patricians," said Joe Fischer, who noted that rising tax bills would make it increasingly difficult for moderate-income or low-income people to live in Alexandria. "They voted tonight, and everybody else gets to vote next spring."

COUNCILMAN Andrew Macdonald was the only City Council member to vote against the budget. The audience in the council chamber erupted into applause as council members looked visibly agitated.

"My vote was cast with regret," he said, saying that he was not voting against the budget because of the property tax rate. "I object to the capital spending programs."

In the add/delete process, Macdonald proposed several changes to the Capital Improvement Program. They included eliminating or reducing funds for a new fire station, Fort Ward repairs, the Wilkes Street tunnel project, stream maintenance, citywide sign programs and space management. Instead, Macdonald proposed adding $698,000 to the city's contingent reserves and increasing funding for other Capital Improvement Programs — including the Windmill Hill Park Waterfront, the Old Town utility undergrounding project, Gadsby Tavern improvements and a Maritime History Museum Study.

"There are a lot of things that you push for, and when they don't happen you want to vote against the budget," said former City Councilman Bill Cleveland, who is now running for sheriff. In his years on the council, Cleveland voted against several budgets.

"It made me unpopular with the City Council members, but it made me very popular with the people."

EUILLE, who won against Cleveland in the 2003 race, was pleased with this year's budget.

"What council sought was a balance," said the mayor. "We have heard from many residents urging council to adopt a lower tax rate, and we have heard from many residents urging us to continue to fund programs that serve all walks of life in Alexandria and to keep us a caring and safe community, ensuring the continued quality of public services."