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Alexandria City Council advertises maximum 4-cent ceiling for tax rate increase

The Alexandria City Council at it’s March 12, 2024 meeting (staff photo by James Cullum)

Alexandria’s City Council set a maximum tax rate at 4 cents higher than the current $1.11 tax rate — a significant increase, but less than the 6-cent increase proposed earlier in last night’s (Tuesday) meeting.

The maximum tax rate, as was emphasized several times in the meeting by nearly everyone on the City Council, does not reflect what the tax rate will be in the final budget, it is only the highest tax rate the City Council can possibly go to in its budget.

A 4-cent tax rate increase would bring the tax rate up to $1.15 per $100 of assessed value.

While the City Manager’s proposed budget is based on keeping the current real estate tax rate, a higher maximum tax rate gives the City Council some wiggle room to include other priorities. Notably, a public hearing the day before the maximum tax rate focused primarily on calls for more funding for affordable housing programs and Alexandria City Public Schools.

“This will be a sacrifice no matter what happens in May [in the final budget],” Vice Mayor Amy Jackson said. “This is just the advertised ceiling, not being approved for what will happen. But when we’re hearing; and it was packed here last night listening to the public hearing about affordable housing issues and school issues, we have a lot that our city is challenged with right now. We certainly want a buffer in the coming weeks as we’re trying to make big, bold decisions.”

A 4-cent tax rate increase would be substantial, but not as much as the 6-cent increase proposed by City Council member Canek Aguirre, who said he wanted to set that as the maximum tax rate to make more Alexandrians pay attention to issues affecting the city. A 6-cent increase would bump the City of Alexandria’s tax rate to $1.17 per $100 of assessed value.

At the current tax rate, the Average Alexandria homeowner will see their tax bill go up by $210. A 6-cent tax rate increase would add $420 onto that increase, according to city staff.

According to Aguirre:

We need our community and residents to understand the situation we’re in. We have not been able to find new revenue. We are 20,000 residents larger with staff at the same level as 2010. We have to pay for services. Our schools are asking for more money. We still have a collective bargaining agreement to go with general services staff. We have our own infrastructure buildings for the city that we need to pay for. When we look at DASH, looking to expand service, not reduce. Again, just as a reminder to our residents, whenever we advertise something that doesn’t mean that’s actually what we’re going to do. That’s just setting a maximum cap.

I know six cents is extremely high but I want to signal to residents that we’re in a big situation right now. Admittedly I’ll say even if we don’t do the full six cents, if we choose something else, it may still require an increase after this year.

But the 6-cent increase faced some pushback from other City Council members, who said the maximum tax rate should still be something the Council would conceivably vote for. City Council member Alyia Gaskins said setting a 6-cent maximum may set false expectations for the community.

“I want to be honest though: what gives me pause is we are about to engage in conversations over the next few weeks with our residents… and I want us to go into that conversation with a good faith effort,” Gaskins said. “I wouldn’t want us to advertise something that is so high or so above what we would actually advertise that people come and they would submit ideas that are not going to be considered, because I don’t think that’s fair to their time, I don’t think that’s respectful of their creativity.”

The City Council worked the maximum tax rate down to a 4-cent increase, though the final budget could have a lower tax rate increase, no tax rate increase, or a very unlikely cut to the tax rate.

According to Mayor Justin Wilson

My view is: you raise the tax rate for a capital investment and you live within your means on the operating side. That’s generally what you do, and when you do that, you help yourself in the future. Generally, my view on tax rate increases is heavily dependant on how we’re going to spend the money. Particularly in an environment where you are looking at a really narrow revenue growth for the next several years, unless we are signing up for large tax rate increases every single year for the years to come, then we have to be restrained on the operating side or we’re really setting ourselves up.

Budget hearings will be held throughout March and April with final budget adoption scheduled for May 1.

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