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Alexandria City Council will consider raising taxes in upcoming budget

Facing inflation, a $17 million budget shortfall and fewer federal economic recovery funds, the Alexandria City Council will consider a tax increase in its upcoming fiscal year 2024 budget.

City Manager Jim Parajon has been tasked with presenting Council with two budget alternatives — one with a tax increase and another without.

“This year’s budget is going to be tight,” Parajon said at a recent Del Ray Business Association meeting. “We’re also predicting a much slower growth rate than we’ve done in the past. As you can imagine, property tax and the growth in our real estate is what drives a lot of our revenue. And we projected that’s going to be a little slower this year.”

Parajon said that city staff is expecting a shallow recession to impact the city this spring, and is eyeing expenditure reductions. So far, the $17 million shortfall is mostly attributed to an increase in city operations, the annual transfer to Alexandria City Public Schools and city debt service.

Mayor Justin Wilson hopes to not increase taxes, and said that inflation pressures impact city government, just like everyone else.

“We have not increased the tax rate in six years and I am hopeful we can avoid any increase this year,” Wilson told ALXnow.

The city is also contending with collective bargaining agreements with the police and fire department unions. Additionally, ACPS faces a $12 million budget shortfall, and wants to give employees raises.

The current FY 2023 budget saw a $445 (6.5%) increase to residential real estate taxes, although the tax rate of $1.11 per $100 of assessed value did not change.

City staff are also working on re-timing projects in the city’s 10-year $2.7 billion Capital Improvement Program to “better align with ability of operating budget to absorb costs increases and City’s ability to execute projects,” according to a presentation to Council on Tuesday night (Nov. 22).

Parajon will present his proposed budget on Tuesday, Feb. 28 — a week-and-a-half after the School Board approves its budget request. The budget will be approved in May and go into effect on July 1.