Faced with uncertainty from the government shutdown and federal layoffs, Alexandria City Manager Jim Parajon says the city is facing a relatively flat Fiscal Year 2027 budget.
Parajon is asking all city departments for a 1% budget cut and 1.5% in growth for Alexandria City Public Schools. During Saturday’s annual City Council budget retreat, he said the city is “not in a negative situation” — but rather, aiming to adjust its sails in turbulent economic times.
“The message is basically, it’s essentially close to a flat budget, with trying to gain efficiencies inside our budgets to create opportunities to expand where it’s most critically important,” Parajon said.
In response, Mayor Alyia Gaskins said that at some point, with annual budget reductions of 1% across city departments, there will soon be little left to cut.
“It’s not an easy situation that we’re going to be facing,” Gaskins said. “I don’t think there’s a scenario where we can commit all of our growth to one partner.”
During the meeting, which was held at the Del Pepper Community Resource Center, Parajon spoke about how uncertainty at the federal level has a tangible effect on the city.
“We are seeing more projects asking for extensions coming forward to council,” Parajon said. “It’s hard to invest millions of dollars in a project when there’s uncertainty around how much it will cost to build because of the uncertainty around tariffs. And then if you look at the federal workforce drop in our local economy, that’s driving how we look at our residential sales market, which is still strong, but if that were to get more dire … [that] has an effect, too.”
He also spoke to a “loss of consumer confidence” that affects the city’s small businesses operating on tight margins.
“That’s a big concern of ours, and then obviously the residential real estate market, because our property tax is the biggest driver of our revenue stream,” he said.
With residential property taxes driving the city’s revenue, Parajon said the budget forecast, as it stands now, is “very tight.” The city is currently forecasting a 2.54% real estate tax growth rate, as well as a preliminary revenue forecast of $961.6 million, a $5.2 million increase, of 1% growth, over the FY 2026 approved budget.
In the meantime, ACPS is facing a $15.1 million budget gap. The school system is proposing step increases and cost of living adjustments for staff, while also experiencing increases in health care premiums.
City Council member John Taylor Chapman said the city doesn’t have the money to make up the difference and argued the state should provide additional funding.
“I think it’s nice to say we’re going to go over 1.5%, but even going over 1.5% a little bit doesn’t save that gap,” Chapman said. “It’s tough for this community and tough to understand that that’s the beginning … The assessment picture does not get better next year. This is not a one-year problem.”
The budget will be adopted on April 29, 2026.
Below is the city’s budget calendar for the Fiscal Year 2027 budget.
- February 24, 2026 – City Manager’s Proposed Budget Presentation
- February 25, 2026 – Budget Work Session #1 -City Capital Improvement Program
- February 26, 2026 -Public Presentation of FY 2027 Proposed Budget
- March 4, 2026 -FY 2027 Budget Work Session #2 ACPS
- March 9, 2026 – City Council Budget Public Hearing
- March 11, 2026 – FY 2027 Budget Work Session #3
- March 14, 2026 – City Council Budget Public Hearing
- March 18, 2026 – FY 2027 Budget Work Session #4
- March 25, 2026 – FY 2027 Budget Work Session #5
- April 18, 2026 – FY 2027 Add/Delete Public Hearing
- April 21, 2026 – FY 2027 Budget Work Session #6 Preliminary Add/Delete
- April 27, 2026 – FY 2027 Budget Work Session #7 -Final Add/Delete (if needed)
- April 29, 2026 – FY 2027 Budget Adoption/Tax Rate Adoption
- July 1, 2026 – Fiscal Year 2027 starts
