With a full year under his belt at City Hall, City Manager Jim Hartmann has completed his new budget for fiscal year 2007 — a $503.5-million plan for 7-percent growth in city spending which he released Tuesday evening. But his Valentine’s Day gift to Alexandria residents might not cause hearts to swoon. Under Hartmann’s proposed budget, the average residential property tax bill will increase $427 from $4,035 to $4,462. The proposal would institute a tax rate of 84.7 cents per $100 of assessed value, increasing the average tax bill by 10.6 percent — yet another increase for taxpayers who have been swamped for the past few years as assessments and tax bills have grown.
“We’ve built a pretty responsible budget,” Hartmann said. “Ultimately, a budget represents the collective decision of the community, as expressed by council actions, about what is most important for us to accomplish together as well as how to finance those accomplishments.”
Under the city’s new budget process, created after criticism during last year’s budget cycle, the city manager has given City Council members several options to lower the city’s increased spending to 6 percent. Elected leaders will be working with moving parts, which create opportunities to reduce the budget by $5.8 million. These options include reducing capital projects, lowering the cost-of-living increase for city employees and cutting the School Board’s budget.
“These options have been very carefully considered,” Hartmann said. “Although they are not painless, I believe they are reasonable ones to consider.”
HARTMANN DESCRIBED his proposal as a “status quo” budget, leaving major features and assumptions unchanged. It adds the equivalent of 6.75 new employees, which represents a 0.3-percent increase in personnel. City and school employees will receive a 3-percent cost-of-living increase — unless City Council members choose to reduce it under Hartmann’s alternative 6-percent budget increase.
“We’ll all have an opportunity to roll up our shirtsleeves and look at this,” said Mayor William D. Euille. “This is what we’re hired to do.”
Hartmann proposed $2.1 million “expenditure reductions” and $2.1 million for “discretionary spending,” essentially canceling out any savings from downsizing and reorganization. Officials from the city’s Department of Management and Budget described several “budget drivers” that are working to increase the cost of government, including staffing compensation, transit subsidies, debt service, rent and facility maintenance and grant-match increases. The biggest burden to the city is the steadily increasing cost of health care, with health-insurance premiums rising 17 percent this year.
“This is a trend in every segment of society,” said Councilman Paul Smedberg. “Our neighboring jurisdictions are also dealing with this.”
Hartmann’s proposal cuts the School Board’s budget by $1.8 million, a correction to an overstated assumption about health-care costs. Unlike last year, the city manager’s proposed budget did not remove extra funding from the General Assembly that was not available when the school division’s budget was written. School Board members took the lesson from last year and used the money to give raises to teachers with master’s degrees.
“We would have planned to take it if they hadn’t,” said Bruce Johnson, director of the City’s Office of Management and Budget. “But they already took it.”
RISING REAL-ESTATE VALUES have created a windfall for the city government in recent years. This year, for example, real-property taxpayers will kick in $19 million more than last year. Residential property taxpayers will continue to bear the brunt of the burden, representing 62 percent of the tax base.
“We need a paradigm shift,” said Councilwoman Joyce Woodson, adding that taxpayers are bearing too much of the city’s burden. “Clearly, we need to take a look at doing things differently.”
Overall, the assessed value of real property has increased by 20 percent this year. The average single-family home increased 18 percent to $667,386 and the average condominium increased 23 percent to $363,592. These escalations are similar to last year’s assessment increases, which were 19 percent for single-family homes and 29 percent for condominiums. Since 2000, property values have doubled for single-family houses and tripled for condominiums.
“I wish I bought a house in 2000,” Hartmann said. “It would be better than being in the market now.”
ASSESSMENT NOTICES were mailed to property owners earlier this week, and appraisers will be available to discuss the notices at City Hall during normal business hours. Taxpayers who wish to formally question their assessments may file an appeal with the Alexandria Board of Equalizations. Requests for a review by the Department of Real Estate Assessments must be filed by April 1 and appeals to the Board of Equalizations must be filed by July 1. Until City Council sets the tax rate on April 24, the amount of taxes to be levied for the year cannot be determined.
“Residential properties that were sold in the city of Alexandria did, in fact, typically stay on the market longer than in prior years,” said Cindy Smith-Page, director of the Department of Real Estate Assessments. “However, these same properties sold closer to their asking price, and the final sales prices indicated another year of double-digit appreciation.”