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December 4, 2014 Published in City Hall

City Of Alexandria Launches Five-Year Financial Plan

City Manager Rashad M. Young has announced the launch of the City of Alexandria’s first Five-Year Financial Plan, a tool to help City Council and the community better understand the City’s fiscal outlook and engage in long-term strategic resource planning.  The Plan is one of the first of its kind in Virginia.  It was developed by the City’s Office of Management & Budget in response to City Council’s request in October 2013 for a better means of evaluating Alexandria’s future financial performance.

“Like all localities, Alexandria has difficult decisions to make every budget year,” said City Manager Young. “The Five-Year Financial Plan helps provide context for these decisions and illustrates the fiscal consequences of each policy choice.”

Each year, the City produces a 10-year projection of revenues and expenditures based on historical trends of current policies and services. The Plan builds on this practice by incorporating more dynamic revenue and expenditure projections based on development trends, major capital projects, and known future opportunities. As a result, the Plan illustrates that while the City’s financial position is strong and its finances are well-managed, revenue in the current economic climate is insufficient to meet the demand for services at current tax and fee rates.

Annual revenues are projected to grow by three percent, but the cost of maintaining current services and policies is projected to grow by four percent. This will result in budgetary shortfalls of $16 million in Fiscal Year 2016 and $33 million by FY 2020 just to provide the services the City does today. Since City Council is required by law to adopt a balanced budget each year, these shortfalls must be eliminated through some combination of budget choices. The goal of the Plan is to replace short-term deficit reduction with long-term, sustainable budget approaches.

The Plan is designed to align with the City’s new budget development philosophy and the “Results Alexandria” performance and accountability system, each of which emphasizes producing outcomes over simply maintaining current spending.

The Five-Year Financial Plan does not recommend specific answers to the policy challenges it describes; rather, it presents the causes of projected imbalances and provides a tool for examining various policy options and facilitating community dialogue about those choices. The Plan addresses policy options such as reforming business taxes or increasing investment in stormwater infrastructure.

The City plans to hold a workshop in 2015 for the community to learn more about the Five-Year Financial Plan. The Plan will be updated annually and presented to City Council each fall. The Plan is available on the City’s website at www.alexandriava.gov/Budget.

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