In a split vote, City Council raised the maximum real estate and personal property tax rates, above those proposed by the city manager in his FY 2020 budget, on Tuesday, March 12.
Midway through the annual budget process, council caps the tax rates that it may ultimately adopt with the budget in May. They can decide later to set the rates lower, but not higher. The city draws revenues from myriad sources, including over 40 taxes (on real estate, cars and other personal property, utilities and other consumption, business income) and nearly 600 fees (especially related to development and construction). But the major ones are real estate and personal property taxes, together generating over half-a-billion dollars, roughly two-thirds of all General Fund revenues.
In his budget proposal published last month, City Manager Mark Jinks recommended maintaining these taxes at their current rates: $1.13 per $100 of assessed value for residential and commercial real property; and $5 per $100 of assessed value for automobiles. Council opted to bump the possible rates it may adopt in these categories up to $1.135 and $5.56.
Council set these rate caps in a single comprehensive ordinance. The ordinance passed on a 6-1 vote, with Vice Mayor Elizabeth Bennett-Parker dissenting.
But the process leading up to that final decision was incremental, with separate votes to amend the real and personal property components of the total tax-package proposal individually. Some council members voted differently in these preceding amendments.
The process began with Councilwoman Redella “Del” Pepper moving to accept Jinks’ proposal to keep rates flat. She believes council may be too tempted by extra cookies in the cookie jar: Even though it doesn’t have to adopt the maximums that it sets, council has a history of doing just that, she said. Bennett-Parker seconded Pepper’s motion.
Councilman John Chapman subsequently moved to bump the real estate tax rate component of the proposal up by a half-cent. If adopted, that would raise about $2 million in additional spending money. He says he’s not inclined ultimately to adopt the higher rate. Nevertheless, he wants “to allow ourselves that flexibility” to make additions with new revenue, rather than by necessarily trading off something else with a cut. While he’d prefer that council members exercise default “self control” by proposing offsetting cuts for anything they want to add, he wants to leave some wiggle room.
“There’s probably going to be a greater conversation [throughout the remaining budget deliberations] around public safety pay and employee pay,” he said. And “I don’t believe our discussions have finished with our school system.”
Councilman Canek Aguirre seconded Chapman’s motion, saying: “This is a new council. We have the potential to buck trends, where, if it’s dangled in front of us, we don’t necessarily have to take it.”
Council voted 4-3 to accept Chapman’s amendment, with Mayor Justin Wilson, Bennett-Parker and Pepper dissenting.
Though he voted in favor of the upward-amended total tax-package proposal, Wilson said: “I still believe we can live within $1.13 [for the real estate tax rate].”
Council voted unanimously to incorporate the second amendment to bump up the car tax rate by 56 cents.
Currently, the city draws two revenue streams from cars: the tax on assessed value and $33 per vehicle in decal fees. Jinks proposed eliminating the decal, as other jurisdictions have, and instead incorporating newer technologies, like license plate readers. But in order not to lose the nearly $4 million revenue stream, the city would either need to retain the fee without the decals, or else offset the loss with an increased car tax (or some other source). In the latter case, the city would shift the revenue burden off owners of less valuable cars and onto owners of more valuable cars. But either way, the city wouldn’t generate net new revenue.
For more, visit www.alexandriava.gov/Budget, www.alexandriava.gov/Finance, www.alexandriava.gov/Budget/FeeCompendium/index.html.