Alexandria Takes Stock of Millions in Lost Sales Tax Revenue

In the middle of the ongoing budget season, the City Council is looking back at the dramatic drop-off in tax revenue over the last year, yet another reflection of the dramatic toll of the coronavirus pandemic.

A financial report to the City Council includes a summary of the $17.4 million consumptive tax revenue — taxable revenue from the sale of goods or services, like sales taxes — lost since March 2020.

The chart shows a 25% decline in consumer spending in 2020 compared to 2019, with taxes on admissions being particularly hard hit with an 84.3% decline, from $562,660 collected in taxes on admissions in 2019 and only $88,548 in 2020. Last April, tax revenue showed that only four people in the entire city purchased movie theater tickets.

Transient lodging (hotels) took a similar hit, down 69.5% from 2019 to 2020. Some of the city’s hotels may not survive the pandemic, and the city and the Alexandria Economic Development Partnership (AEDP) are currently looking into converting closing hotels into affordable housing units.

The decline in consumer spending accounted for part of the budget’s initial $41 million budget gap that was eventually resolved into the proposed FY 2022 budget. City Manager Mark Jinks proposed a 2 cent real estate tax rate reduction, though some in the city have noted that taxes are still likely to go up for local residents as they shoulder the burden of the decline in commercial revenue.

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