Alexandria, VA

For the second straight budget cycle, the pandemic is rearing its ugly head in Alexandria.

In a virtual town hall last night, Mayor Justin Wilson offered a look at the behind-the-scenes back and forth between local, state and federal agencies as the city works to get some assistance to help cover an estimated $41 million shortfall.

Last year, the city was the recipient of $23.9 million in CARES Act funding, which was put to use in things like rent and food assistance and couldn’t be used to cover other city expenses. The new federal assistance does not include local or state support, though, Wilson said, though he is hopeful a Democratic majority in the Senate can help to amend that.

“The Heroes Act adopted by house did include $87 million for Alexandria, which would have nearly replaced our estimated loss of revenue that we had assumed because of COVID,” Wilson said.

Last April, the pandemic forced Council to approve a drastically reduced Fiscal Year 2021 budget.

Beyond the immediate budget gap, concerns linger that it could be several years before the city’s economy fully recovers from a pandemic that permanently shut down businesses across the city and led to record unemployment that is gradually returning to normal levels.

“Right now, we’re facing a $41 million gap in the budget we will be working to adopt this spring,” Wilson said. “It’s a significant gap for us and we have more concerns down the line.”

Image via YouTube

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Alright, which of you went to a movie in April?

At the height of the pandemic, when nearly everything in the city was shut down, the city’s latest revenue report shows that the city still collected $2 in admissions tax. The city’s finance officials ran the numbers and said that meant that four people bought tickets at movie theaters in Alexandria while nearly everything in the city was shut down.

“I don’t have their names, but that is how little revenue we collected in admissions tax,” said Kendel Taylor, the Director of Finance. “There were four people who contributed to that.”

It was one of the few moments of levity in what was otherwise a particularly dour financial report at yesterday’s City Council meeting that showed millions lost in meals tax revenue and transient tax revenue. Sales tax remained high, but only because the figures were from March, before the shutdown started. The lack of tax revenue has led to a gutting of the city budget with projects like the redevelopment for T.C. Williams High School pushed back.

While Taylor said she was grateful that the city went into the pandemic with a strong economy, she was less optimistic about the rate the city will be able to recover. Taylor said there’s no guidebook or methodology for figuring out what happens next, and staff in cities and counties across the country are still working to figure out how deep the economic impact will be and how long it will take to climb out.

“One of the most prevalent theories right now is this recovery is going to be very long and slow,” Taylor said. “It is likely going to take us two years to get to where we ended in December 2019. The economy was really strong at the end of the year and all throughout the year. Everything was ahead of expected. We came into COVID in a really good position. That strength has helped us minimize the cut and the funds balance we’re going to have to use.”

Taylor said the city could benefit from additional federal funding currently in the pipeline — particularly since unlike the CARES Act that funding can be used more flexibly by local government. There were still concerns, Taylor said, that more federal funding for local governments will mean Virginia will feel less obliged to continue sending funding to localities. Alexandria has used CARES Act funding for programs like rental assistance and small business grants.

“The one concern about the federal government providing additional flexible monies is it might lessen the need from the state to push down the second traunch of CARES funding,” Taylor said. “[We’re] continuing to make the argument that the spirit of the CARES funding is direct that it impacts in localities and that the services provided closest to the problems are the best services.”

Staff photo by James Cullum

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Alexandria businesses struggled with poor sales during the shutdown, and now that drop in revenue is coming around to leave the City of Alexandria with little commercial tax support for an already strained budget.

According to information shared by Mayor Justin Wilson, the city faced a dramatic drop off in business taxes in April and May.

The city’s 5% meals tax — which in part goes to fund affordable housing and other city needs — brought back $1.7 million less this year than it did last year. Last April, the city collected $2.2 million in meals tax revenue. This year, it collected $570,984.

The transient tax — a tax on lodging in hotels and similar accommodations — fell from $2.2 million to $570,984.

The only number that increased from 2019 to 2020 was the sales tax, likely because the tax was collected in March before the shutdown was implemented.

Some budgetary losses were expected. The city had planned for substantial cuts to both its operating and capital budgets — $46.6 million for the operating budget and $140.6 million for the capital budget. But seeing the numbers in person still stung for officials.

“We are now receiving the gory details of the fiscal impact of COVID,” Wilson said in the Facebook post. “The difficult work of recovery awaits.‬”

Top photo by James Cullum, graph via Justin Wilson/Facebook

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Alexandria has spent $5 million on new expenses to combat COVID-19 related problems, and in a town hall last night, Mayor Justin Wilson said he expects that number to double by the end of the pandemic.

“[We’ve] spent $5 million on COVID expenses,” Wilson said. “That’s things like hotel rooms for quarantine, hazard pay, things like that; a lot of emergent expenses.”

Wilson said that will likely reach a total of $10 million before the pandemic’s end. Wilson said much of that is expected to be covered by $20-27 million in federal support, which must be dedicated to new costs rather than filling the sudden holes in the city budget.

How that support is allocated is expected to be discussed at an upcoming City Council meeting on Tuesday (May 12), Wilson said.

Additional expenses Wilson said the funding could go to address include food insecurity, rental assistance for local residents out of work and unable to afford housing, and small business assistance.

There are also investments in public health, as well as contact tracing, that Wilson said is likely to remain an investment in place for a long time.

In total, Wilson said 127 people have been hospitalized in Alexandria due to coronavirus and 29 have died. Hospitals are at 75% capacity.

While data broken down by zip codes showed high numbers testing high for coronavirus in Arlandria and the West End, Wilson said some of that is likely due to significant testing work being done in those areas.

“We have a much broader scope of people being tested there,” Wilson said.

Staff photo by James Cullum

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At the end of an exhausting emergency budget cycle, the City Council praised the work of staff for throwing together a $753.3 million fiscal year 2021 operating budget that fills a steep funding shortfall without curtailing city services.

In a 45 minute Zoom meeting, the City Council unanimously approved the budget with little discussion, following a week without any additions or deletions.

Mayor Justin Wilson said the City Council didn’t receive a lot of feedback during the budget process, which was conducted almost entirely online over the last few weeks, and that he believed it meant the community understood what was at stake.

“The cavalry’s not coming,” Wilson said. “There won’t be a big check that lets us cure all our problems. This is very much a stay-at-home budget. This is a budget that hunkers down and waits to see what the environment is like over the next couple of years.”

Wilson said Alexandria was fortunate to avoid some of the deeper, more damaging cuts cities are facing like in Nashville, Tennessee. He also noted that this will be the fourth year without a tax rate increase and the first negative budget since the recession.

The slashed budget came at some cost to city employees and city planning. City Manager Mark Jinks’ scaled-back budget nixed earlier pay increases planned for city employees and eliminated plans to hire many new positions. On the capital side, the redevelopment of T.C. Williams High School and several waterfront projects are being pushed back.

Specifically, the budget is 5.8% lower than the $800 million operating budget Jinks proposed before the COVID-19 pandemic, and includes $46.6 million in cuts to the operating budget and $140.6 million in the capital budget. It closes a nearly $100 million shortfall by implementing a city staff hiring freeze, and holding off on a number of capital projects.

Jinks also proposes reducing the transfer to the Alexandria City Public Schools system by $7 million, equating to a 2% staff bonus, merit step increases and a 1.5% decrease in the employee contribution to the ACPS supplemental retirement plan. The proposed Capital Improvement Project budget has been sharply reduced from $2.1 billion, and while the T.C. expansion at the Minnie Howard campus is delayed, the in-progress plans to renovate MacArthur Elementary School will proceed.

“This was an extraordinary year,” said Councilwoman Redella “Del” Pepper. “It was quite amazing our city manager was able to turn this around. I don’t know how long it is from one budget to another, but it seems like two weeks. That spoke well for him and his department. We can’t see them here, but they ordinarily look exhausted by this point. I’m really very impressed.”

Pepper referenced an op-ed in the Alexandria Times praising the new budget, saying it was representative of feelings in the community-at-large that staff had stepped up to the plate under extreme circumstances.

Jinks said all praise was due to department heads who submitted their own budget cuts and to the fiscal policies of previous councils.

“We were able to have not a budget of gimmicks, rubber bands and duct tape holding it together, but a sound structure able to hold it back and look at where we can make reductions,” Jinks said. “There are dreams we had to defer. It hurt not to put forward the employee pay increase, but compensations are the biggest part of the budget. I appreciate that employees understood that’s what we need to do.”

Staff photo by James Cullum

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There will be no tax increase on the city manager’s proposed fiscal year 2021 budget, as the City Council swept through its budget public hearing on Saturday, paving the way for approval next Wednesday, April 29.

Council also unanimously approved the plan for the construction of the southern access to the Potomac Yard Metro station. The access will be a bridge that connects to the northern entrance, and will open at the same time as the station in March 2022.

The remote meeting took an hour and a half, and had only a handful of public speakers tuning in on Zoom.

In February, the Council approved a 2.5 cent real estate tax ceiling, giving themselves some wiggle room for the addition of services and other budget additions. That was an increase from the City Manager Mark Jinks’ initial 2 cent tax increase proposal, but the coronavirus pandemic has since wiped out those plans.

Instead, Jinks released a substantially cut-back $753.3 million fiscal year 2021 operating budget, and on Saturday the Council bypassed its traditional add/delete process without any recommendations. In other words, council members did not add anything to the budget or make additional cuts — a timely process that requires staff to reconfigure the budget proposal before another council review.

“The city manager did revise his budget proposal, and removed his proposed 2 cent tax increase,” Mayor Justin Wilson said in the meeting. “Certainly Council, when we adopt our budget on April 29 could adopt a 2-and-a-half cent increase, which is the level we gave ourselves. We have now completed the add/delete process and there were no proposals for any changes in the proposed budget.”

The budget is 5.8% lower than the $800 million operating budget Jinks proposed before the COVID-19 pandemic, and includes $46.6 million in cuts to the operating budget and $140.6 million in the capital budget. It closes a nearly $100 million shortfall by implementing a city staff hiring freeze, and holding off on a number of capital projects.

Jinks also proposes reducing the transfer to the Alexandria City Public Schools system by $7 million, equating to a 2% staff bonus, merit step increases and a 1.5% decrease in the employee contribution to the ACPS supplemental retirement plan. The proposed Capital Improvement Project budget has been sharply reduced from $2.1 billion, and while the T.C. expansion at the Minnie Howard campus is delayed, the in-progress plans to renovate MacArthur Elementary School will proceed.

Staff photo by James Cullum

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Tying affordable housing funding to meals tax seemed like a safe bet in 2018, but with restaurants facing a dramatic loss in revenue due to coronavirus, affordable housing is out $1 million in the new budget.

According to the budget:

Due to the re-estimate of anticipated revenue from the Restaurant Meals Tax, the associated expenditure for the dedicated 1% for Affordable Housing will be reduced accordingly.

While the $1 million loss hurts, Helen McIlvaine, director of the city’s Office of Housing, said that there’s still some funding — notably $5.8 million (page 2.13) related to Amazon — that will allow the office to continue pursuing affordable housing goals.

“We’re not taking anything for granted, we’re pleased that the money we will start the year with is mostly intact,” McIlvaine said. “The million dollars, while we’re sorry not to have that, given the impact on local business it’s an accurate reflection.”

Alexandria is currently experiencing an affordable housing crisis, and the city has pledged to produce or develop 2,000 affordable housing units by 2025. The city has also agreed to produce an additional 1,950 units by 2030 in order to meet its regional housing goal set by the Metropolitan Washington Council of Governments, which aims for the region to produce 320,000 affordable housing units.

The $1 million budget loss doesn’t give the Office of Housing any room to slow down.

“Like we saw with the recession, there will be even more people who are in precarious positions,” McIlvaine said. “On Saturday there is a public hearing and one of the items on the docket is (that) we’ve received $671,000 in additional federal money as part of the COVID stimulus and we’re going to ask the council to allow us to use that to provide rental assistance to help sustain property operations at nonprofit properties.”

McIlvaine said her office has been working with nonprofit partners and property owners to buy time for payment plans and to get access to the right resources.

“We had been making calls this week and most of the property owners are doing that,” McIlvaine said. “People understand that this is a really hard time.”

Still, as much as the Office of Housing can work to try to keep people in their homes, McIlvaine said the economic impacts of coronavirus means there’s likely to be even more people after this is over who need access to affordable housing.

“We want to make sure we are poised to act if there are opportunities,” McIlvaine said. “This will shift the landscape, and sometimes that’s our opportunity. People say ‘I don’t want to be in this business anymore’ or whatever it is. There was some of that during the recession but we weren’t really in a place where we were able to be proactive.”

The budget is docketed (Item 3) for discussion at tomorrow’s (Saturday) City Council meeting.

Photo via City of Alexandria

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The City Council reviewed a substantially cut-back $753.3 million fiscal year 2021 operating budget at its meeting Tuesday night, and are now working through a months-long process that must be approved by April 29.

There were few budget surprises at the meeting, as the information was presented last week. The budget is 5.8% lower than the $800 million operating budget Jinks proposed before the COVID-19 pandemic, and includes $46.6 million in cuts to the operating budget and $140.6 million in the capital budget.

The budget will close an anticipated $92.2 million shortfall, and includes a hiring freeze, a drastic reduction in capital projects, and reverses a decision to increase taxes by 2 cents.

City Manager Mark Jinks and Budget Director Morgan Routt walked Council through the new budget, which is being finalized in a roughly two-week period starting with last night’s presentation and ending with scheduled for adoption on Wednesday, April 29.

Jinks is also proposing reducing the transfer to the Alexandria City Public Schools system by $7 million, which equates to a 2% staff bonus, merit step increases and a 1.5% decrease in the employee contribution to the ACPS supplemental retirement plan.

Additionally, the proposed Capital Improvement Project budget has been sharply reduced from $2.1 billion, and while the T.C. expansion at the Minnie Howard campus is delayed, the in-progress plans to renovate MacArthur Elementary School will proceed.

The budget revamp is being conducted at a breakneck pace that leaves the city council with only one week for the add/delete process, in which council members must not only find programs they would like funded but identify proportional cuts in other parts of the budget and get two co-sponsors. Those add-delete proposals are due tomorrow (Thursday).

This Saturday (April 18), the city is also scheduled to host a joint tax rate hearing, a revised budget hearing and an add/delete public hearing. Over the next week, the city will move through the add-delete process toward the final adoption in two weeks.

In-person participation at the April 29 budget adoption meeting at City Hall is possible, but the city is encouraging online participation.

Image via City of Alexandria

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(Updated 1:10 p.m.) As expected, this year’s $753.3 million city government budget will be significantly cut down — with a $46.6 million reduction from the operating budget and $140.6 million in the capital budget put forward in April.

City Manager Mark Jinks called the new document “Budget 2.0,” representing the possibility that its contents are subject to change at next Tuesday’s (April 14) City Council meeting and throughout the budget process. Jinks said the total projected revenue loss for the 2020 and 2021 fiscal year is $92.2 million, and that the sharp reduction in the budget is due to a deferral of the 2 cent tax residential tax increase initially proposed and a steep drop off in commercial tax revenue.

The main meat of the cuts on the capital side is the postponing or elimination of a number of construction projects. The proposed Capital Improvement Project budget has been sharply reduced from $2.1 billion, and while the T.C. expansion at the Minnie Howard campus is delayed, the in-progress plans to renovate MacArthur Elementary School will proceed.

“Capital projects will be deferred, specifically $30.5 million in waterfront park and flood mitigation costs,” said Jinks. “We’re deferring that to fiscal year 2023 as well as deferring, for two years, the $100 million funding of the Minnie Howard campus until 2023.” Read More

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City Manager Mark Jinks presented the City Council with preliminary estimates for a $743.5 million fiscal year 2021 budget on Wednesday night — a $56.4 million reduction from the budget he unveiled in February.

The COVID-19 pandemic has forced Alexandria to drastically change its budget over the course of the last month. Preliminary cuts include eliminating the previously proposed 2 cent real estate tax increase, implementing a city hiring freeze [except $2 million to hire new Health Department staff], deferring raises for city staff and reducing the multi-million dollar transfer to Alexandria City Public Schools.

The budget would be an $18 million reduction over the current FY 2020 budget of $761.5 million.

Mayor Justin Wilson, who presided over the meeting with his colleagues via conference call, said that the impact will be felt in the city for years.

“The seven of us [on council] as well as the staff need to communicate to the public and make sure our residents are prepared and ready for the types of choices that we’re going to have to make about the role and scope of government in the city of Alexandria over the next several years,” Wilson said. “I think it’s right that it’s not just a one-year [or] two-year conversation. This is a multiple-year conversation.”

The previously approved budget also covered the $241.4 million transfer to the Alexandria City Public School system and fully funded the renovation of Douglas MacArthur Elementary School and the expansion of T.C. Williams High School. City and ACPS staff will now have to iron out which projects will get deferred and where budget reductions can be made.

“I don’t have a number yet. We have to have discussions with the schools,” said Jinks, who asked staff to make $100 million in cuts. “If the city’s budget goes down by $56 million, that means that every part of the budget needs to be looked at and I think that means reducing the ACPS operating transfer is something that’s going to need to occur to some degree.”

The uncertainty of COVID-19 will likely also impact the state’s budget, including millions to the city for its Combined Sewer Outfalls project.

“We had a conference call with the governor with mayors and chairs in the region on Friday, and he made it very clear that the budget that he sends back to the General Assembly for the reconvened session would be radically different than the budget that was approved by the General Assembly,” Wilson said. “That certainly means that money that is in there for the city and specifically for the CSO project may be very well at risk… Obviously there’s an expectation that that pretty much anything that’s in the General Assembly’s approved budget is at risk.”

City Council will receive the budget proposal next Tuesday and then will have a meeting on the proposed budget on April 14. The budget will be adopted on April 29.

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