Hartmann Proposes Tax Increase And Program Cuts To Close $44 Million Deficit

By Carla Branch and James Cullum
alexandrianews.org

Alexandria City Manager Jim Hartmann will balance the $534 million fiscal year 2011 budget by increasing the real estate tax rate seven cents, eliminating 55 full time equivalent positions, selling city property and reducing nearly all department budgets.

All spending cuts total $19.2 million plus an additional savings of $2.6 million in other financing. On the revenue side, Hartmann will close the budget gap by increasing the real estate tax rate from 90.3 cents to 97.3 cent per $100 of assessed value. This will result in $21.5 million in additional revenue in FY2011. The average Alexandria homeowner’s tax burden will increase $103 per year. By increasing fees, fines and other charges for services, the City will add $1 million in revenue. Hartmann proposes selling a mentor home for older youth on Columbus Street, which is assessed at $1.1 million. This money will be used to pay for capital projects.

“While we did not eliminate any entire department, we are taking a hard look at the way the organization does business. We are combining police and fire dispatch into one department of emergency communications and are proposing reorganizing our citizens assistance department. That staff will now fall under the communications department,” Hartmann said. “Also, we’re going to look at bringing mental health and human services under one umbrella to deliver those services more efficiently. These realignments may not result in cost savings but will improve the way we work.

“This year, we are filling a $44 million gap. Next year, we are looking at a $20 million hole and things are not going to get better for the next several years. We have to look at every function we perform and decide how to best serve the public,” Hartmann said.

The $534.1 million budget is a $4.1 million or 2.2% increase over the current budget. Of that increase, the Alexandria City Public School System will get $3.3 million while the City will increase spending by $800,000.

“We followed Council’s budget guidance and are proposing a two-percent increase for the schools. The superintendent’s proposed budget is about $700,000 over that but the school system could face substantial cuts in State funding. We won’t know what the State is going to do for at least another month and we will have to make adjustments when we find out,” said Bruce Johnson the City’s budget director.

The School Board is still considering the superintendent’s proposed budget. They will adopt an FY2011 operating budget some time in early March. City Council and the Board will hold a joint work session to discuss the school system’s budget request on March 15.

Inside The Budget

Personnel, which is the City’s largest budget item, absorbed the brunt of the cuts. Of the 55 jobs that are being eliminated, 50 are vacant. “The City will try to place everyone in vacancies assuming they can perform the jobs and funding is available for those positions,” Johnson said. “As it stands, ten employees may lose jobs through a reduction in force.”

While city employees will not get a market rate adjustment next year, they will receive merit-based step increases. “The average city employee will receive a pay increase of $2280 per year. These raises will range from 2.3% for employees at the higher end of the pay scale to 5% for those at the lower end of the pay scale,” Johnson said.

City employees will pay $192 to $868 a year more in health care insurance costs, depending on the plan. “There are plans in place to increase the employees’ contribution to 20% by FY2013. Next year it will increase from 10% to 13%,” Johnson said.

The Alexandria police department’s budget will decrease by $1.5 million. “Most of these reductions are in community policing in two neighborhoods. “These reductions are in areas where two officers have been assigned and now there will be only one. We will also reduce the number of officers assigned to the street crimes, vice and domestic violence units and reduce overtime costs. However, we have been very careful not to impact response time to calls for service,” Hartmann said.

The City will save $1.2 million in Comprehensive Services Act funding by bringing children back to Alexandria from treatment facilities outside the City. “The State actually pays a larger percentage of the cost of providing services to children in their own community,” Johnson said.

The planning and zoning department will be cut by $316,000. “In many cases, we have moved forward with more than one neighborhood planning process simultaneously. Next year, we will be able to undertake only one, probably Eisenhower West,” said Deputy City Manager Mark Jinks.

The marketing fund and funding for the Alexandria Convention and Visitors Association, the Alexandria Economic Development Partnership and the Small Business Development Center will remain where it is. “Council increased these budgets by about eight percent in June and we have maintained that level of funding for next year,” Jinks said. “Economic development is important if we want to diversify revenues.”

The Capital Budget

For the first time, Hartmann is proposing a ten-year capital improvement program as opposed to the six-year plans previously considered. “We are delaying some major renovation projects to later years, but largely all of those projects have been planned for some time in the decade,” Hartmann said.

A small number of new facilities and expanded or improved infrastructure projects will be undertaken on a staggered basis. In the first six years, the City is proposing projects totaling $366.9 million, an increase in 3.1% in local funding. Proposed capital projects include: rebuilding two elementary schools and four fire stations around the city. One new fire station is proposed for the Eisenhower Valley.

Not included in the base ten-year capital improvement plan were three additional projects with options for funding them. If the City increases its storm water management capacity, homeowners could be charged an additional $48 per year to fund the $19 million project. Hartmann suggested a 25-cent increase in the sanitary sewer usage fee to $1.25 per 1000 gallons of water used. The average residential user would pay an additional $17.50 a year. These funds and the borrowing they would allow will provide $13 million over the next ten years.

Finally, to meet severe transportation challenges, Hartmann proposed a three cent increase in the commercial real estate tax rate. This would generate $4 million in FY2011 and annual revenues of $2.5 million in FY2012, increasing to $3.5 million per year by 2020. This would pay for expanded transportation services and the operating costs associated with them by providing high capacity transportation corridors, increase peak period bus service, Metro station improvements and alternative transportation initiatives.

“None of these projects are included in the base CIP budget but we believe that they are so important that we have given Council some options for paying for them,” Johnson said.

City Council received Hartmann’s proposed budget this evening and immediately afterwards, held two scheduled budget work sessions to begin discussions. Over the next two months, Council will hold nine work sessions and three public hearings on the budget. Final adoption is scheduled for May 3.