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October 23, 2014 Published in Editorials

Better Or Just Different?

City Manager Rashad Young presented City Council with several proposals for altering the budget process. The first would bring the Manager’s proposed budget to City Council three weeks later than under the current schedule. The date of adoption would not change so Council would have three weeks less to consider the budget. The second and perhaps more intriguing idea would align the City real estate assessment process and real estate tax collections with the fiscal year rather than the calendar year.

The Manager’s rationale for submitting the budget three weeks later is to provide more advance time for citizen input. Unfortunately, examining citizen input in the budget process over many years reveals that the overwhelming number of citizens who participate either want more money for a pet project or want to pay less in taxes. Frankly, very few citizens are knowledgeable in the complicated details of city finances and cannot provide overall guidance that is useful.

With only six weeks to consider the budget plus do all the other regular business that City Council does looks like a prescription for chaos and poor decisionmaking. It appears that the Manager and city staff are trying to use “What’s Next Alexandria?” as a pretext to get into the political business of City Council. That is not what we understand the Council—Manager form of government to be.

The current system has served the City well and led to lively debate. We see little upside to this switch and urge City Council to be very careful of yielding their prerogatives to the Manager.

The idea of aligning the assessment year with the fiscal year is a very different story. The dirty little secret of municipal budgeting under the current system is that every time Council raises the tax rate they get a substantial windfall at the expense of the taxpayers. That windfall arises because the tax rate is increased not only for the next fiscal year but in the second half of the current fiscal year. For example, let’s say that when Council increases the tax rate by 1 cent they can expect to make about $3.2 million more for the next fiscal year.  But because the increase takes effect with the June payment of the current fiscal year, they actually get about $1.6 million on top of that in additional surplus for the current fiscal year.

This also works to the detriment of reducing the tax rate. If Council decided to reduce the rate by 1 cent they would not only lose $3.2 million for the next fiscal year but $1.6 million in the current one. Unless assessments are rocketing upwards, it takes a strong stomach to give up current year revenue.

Aligning the assessment year with the fiscal year would end this practice and would present a more transparent picture to Alexandria’s citizens. This does present a difficult choice for City Council because it is a comfort to be able to raise the extra cash without attracting attention. We believe, however, that the City deserves truth in government and that a change in the assessment year to coincide with the fiscal year is more than just desirable, it is long overdue.

Our Manager is not afraid to propose changes and City Council must consider them carefully. Some proposals will certainly improve processes and perception. Some will not. All will have unintended consequences that we must do our best to discover before we realize that a mistake has been made.

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