[Archived] City Moves to Correct Utility Tax Error

The City of Alexandria is taking steps to correct an error made during the fiscal year 2014 budget process that caused some Utility Tax revenue to not be collected.

The FY 2014 Approved Budget included an increase to the Utility Tax that added $1.1 million to General Fund revenues, bringing the total Utility Tax budget to $11.4 million. The increase included raising the residential cap to $3.00 (a $0.60 increase per residential customer per month) for both gas and electric services, but not water. The increase also incorporated a 10 percent increase in the amount paid by commercial entities for electricity only.

During the June 11 City Council Legislative sessions, the Utility Tax increase was brought before Council for a First Reading, however the Second Reading and Public Hearing of the ordinance, which is required for passage of the increased tax, did not occur.  As a result, the tax rate increase that was supposed to be effective July 1, 2013 has not occurred. 

The fiscal impact of the error to the FY2014 budget is approximately $275,000.  The City plans to resolve this situation by monitoring revenue collections through the fiscal year and controlling expenditures where possible to ensure this does not cause any service impacts for our residents. 

City staff will bring the tax rate increase ordinance back to Council, through the normal process of conducting a First Reading, Second Reading and Public Hearing, when City Council resumes in September.  The revised tax rates will then go into effect at the beginning of October. 

To ensure similar errors do not occur in the future, City staff will make efforts to combine, where legally possible, all taxes and fee changes that are adopted in the budget into one or two documents that City Council reviews and approves during the Budget appropriation process each June.