[Archived] City Council Adopts FY06 Budget with 8-cent Real Estate Tax Rate Cut

City Press Release


	For Immediate Release	For More Information, Contact
	May 2, 2005 PIO# 140-05/bg	Barbara J. Gordon, Public Information Officer, or Raynard Owens, Communications Officer, at 703.838.4300 Raynard Owens, Communications Officer, at 703.838.4300

City Council Adopts FY06 Budget
With an 8-cent Cut in the Real Estate Tax Rate

The Alexandria City Council adopted a budget for Fiscal Year 2006 which includes $12 million for affordable housing programs and additional tax relief for low and moderate income home owners, a 6.6 percent increase in funding for City schools over the current year, and the lowest property tax rate in Alexandria in more than 50 years. The new rate, which takes effect July 1, is $.915 per $100 of assessed valuation, an 8-cent drop from the current real estate tax rate and 4 cents more than the City Manager proposed in March. The City Manager’s proposed 4-cent tax reduction to 95.5 cents was the largest tax rate reduction proposed by the City Manager in 15 years.

For the average single-family detached home with a 2005 assessment of $441,823, the 91-cent real estate tax rate will mean a tax bill increase of about $418. While the adopted tax rate is reduced by 8 cents, homeowners’ tax bills will increase an average of 11.5 percent due to the increase in real estate assessments. The new rate of 91.5 cents will be the second lowest among major Northern Virginia jurisdictions.

In addition, the Council approved a major increase in the innovative Affordable Home Ownership Program that Council created last year. This first-in-Virginia program will have the cash grants for home owners increased from $250 to as much as $675 for low and moderate income home owners whose incomes are $40,000 or less, $475 for home owners whose incomes are $50,000 or less, and $275 for home owners whose incomes are $62,000 or less.

“We have heard from many residents urging Council to adopt a lower tax rate,” said Mayor Euille, “and we have heard from many residents urging us to continue to fund programs that serve all walks of life in Alexandria and to keep us a caring and safe community, ensuring the continued quality of public services. What Council sought was a balance. This budget expands property tax assistance for moderate/low income homeowners and provides funds for preservation and creation of workplace housing by dedicating 1 cent of the property tax.”

The adopted Fiscal Year 2006 budget includes a $562.8 million All Funds operating budget and a $467.8 million General Fund operating budget, an increase of $34.9 million, or 8.1 percent, over the FY 2005 General Fund budget.

The major elements of the FY06 General Fund budget include funding for:

• 14 new police officer positions to help keep City crime rates low by increasing the number of officers on patrol in Alexandria.
• $12.5 million as Alexandria’s share of transit subsidies for DASH and WMATA transit services.
• $47 million in debt service and cash capital contributions required to pay the costs of City and school capital projects including the construction of a new T.C. Williams High School.
• $138.8 million for the City schools, which is 1.4 percent less than requested by the School Board’s operating budget, but should be sufficient funding to meet requested in-classroom staffing and resource needs.
• $2.8 million for affordable housing programs from the dedication of 1 penny of the real estate tax rate, as well as $0.9 million from recordation taxes, has been budgeted for affordable housing.
• More than $2.5 million to offset the decline or flattening of federal and state assistance in order to continue providing essential services. Many of these increases in City funding are focused in the social services area, which are relatively more dependent on federal and state grant funding.
• $150,000 for “Head Start” pre-school education salaries.
• $2.5 million in operating programs and capital projects for promoting pedestrian access and safety along with traffic calming measures to mitigate the effects of traffic on Alexandria neighborhoods.
• $215,000 in additional funding to support economic development organizations including the Alexandria Convention and Visitors Association, the City Marketing Fund and the Small Business Development Center.
• A 2 percent COLA for City and school employees.

The Council voted to generate revenue from sources to help pay for a portion of the real estate tax reduction:

• a 50-cent admissions tax on certain events with exemptions for eligible non-profit events.
• a $3 per month per phone cell phone tax, similar to that in place in Loudoun, Prince William, and Fairfax counties.
• a 20-cent increase in the cigarette tax.
• an increase in the sanitary sewer use fees in order to create a fully fee-supported sanitary sewer system.

Major reductions from the City Manager’s proposed budget include:

• $4.9 million for new capital expenditures, including under grounding utilities in Old Town; information technology; and deferring improvements to Market Square.
• $1.2 million in operating transfers to the schools.
• $2.5 million in City operating budget reductions.

The Council also approved a new budget process for FY 2007 where the Council will establish formal fiscal guidelines in November as well as have the budget presented to them three weeks earlier.
A summary of changes made by Council to the proposed FY06 budget will be posted on the web site alexandriava.gov tomorrow (May 3) and printed copies of the adopted budget will be available in June.

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