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Next Budget?

Excerpt from Justin's December Newsletter

Our current Vice President likes to quote his father in saying, "Don't tell me what you value. Show me your budget and I'll tell you what you value."

There is no surer expression of a community's values than its budget, and no more important decision that Alexandria's City Council makes than the adoption of its annual budget.

Yet during its annual budget process, the City Council on average modifies no more than about 0.3% of the City Manager's proposed budget. That strongly suggests that the most important part of this process is the adoption of our budget guidance.

In the fall, the Council adopts a guidance resolution which provides directions to the City Manager as to how he or she must prepare the budget that is proposed to the Council.

Some years the Council is more prescriptive than others. Particularly in difficult years, the less flexibility the City Manager is given, the more difficult are the cuts required to propose a balanced budget.

Last year, the City Council adopted relatively restrictive guidance. While we allowed the City Manager to proposed increased revenues from fees and fines, he was not allowed to propose an increase in the real estate tax or the personal property tax.

Furthermore, he was required to maintain or increase the level of cash commitment to the City's capital budget. Said another way, he could not increase the debt incurred for future capital expenditures in order to avoid more difficult decisions on the operating budget side. The result of last year's guidance was a very tight budget that eliminated positions and made some significant service reductions to numerous City services.

This year, Councilwoman Pepper and I were asked to draft the budget guidance for consideration by our colleagues. Faced with revenue projections that continued the pessimism of the past decade, the primary question before the Council was to define the level of cuts required.

Councilwoman Pepper and I recommended a guidance resolution with several key features:

  • Continued scrutiny of each City service to determined its on-going value relative to the City's Strategic Plan.
  • A request that the City Manager continue progress aimed at addressing long-standing inequities in the City employee compensation structure.
  • A maintenance of the existing cash commitment to our capital budget (no increases in planned borrowing).
  • Appropriations to the Alexandria City Public Schools to support growth in student enrollment.
  • Proposals for growth-oriented tax policy changes designed to promote small business growth. Any such proposals should be derived through the recommendations of our recently concluded Business Tax Reform task force.

The budget guidance typically directs the City Manager whether to include an increase to the real estate tax rate in his proposed budget. This is the most consequential lever in the guidance resolution. This is the one important area that remained up for debate and decision by the Council.

In my opinion, the City Manager should be directed to present a budget without an increase in the real estate rate. Should the Council wish to increase the rate once the budget has been presented, it becomes much easier to communicate those priorities to the taxpayers.

A majority of the Council, by a vote of 4-3, felt differently and chose to give the City Manager the flexibility to propose a tax rate increase in his proposed budget.

On March 3rd, the City Manager will propose his budget to the Council. At that point, it will be time to translate the values of our community into a set of budget priorities. I look forward to your input in that process.

 

 

 

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