City of Alexandria could face nearly $100 million budget shortfall

The City of Alexandria, Virginia, stands to lose nearly $100 million through mid-2021 as a result of the coronavirus crisis.

Under new budget proposals, the city is considering hiring freezes at the city government level and deferring city projects and employee compensation increases, it said.

The city council received updated revenue projections during a budget work session on Wednesday.

“Alexandria’s economy is the engine that powers City services, and we must now carefully reprioritize available resources to balance the ability of residents and businesses to contribute substantially reduced tax and fee revenue with the need to maintain core services,” City Manager Mark Jinks said in a statement.

The City of Alexandria’s revenue is expected to severely decrease through this spring and much of this summer and then begin to gradually increase. It may “take 15 months until pre-pandemic revenue levels return,” Jinks said.

New revenue estimates now forecast almost a $36 million revenue shortfall for this fiscal year, which ends June 30, and a budget gap exceeding $56 million for fiscal year 2021.

For example, revenue from real estate before the coronavirus restrictions was estimated at $493 million for FY 2021. The new estimate is now $478 million, which shows a loss of $15 million.

Revenue from business, professional and occupational licenses was expected to be $37.6 million, and it is currently estimated at $22 million — a loss of $15.6 million.

And revenue from restaurants was estimated at $25.5 million and is now projected at $20.5 million, a loss of $5 million.

The City of Alexandria said it will need to revisit its current spending, as well as the proposed budgets for FY 2021 and capital plans for the City and Alexandria City Public Schools to determine areas for significant cuts.

Proposed strategies to address the budget gap include hiring freeze at the city government, deferral of city and school projects, deferral of the 2-cent real estate tax rate increase and deferral of employee compensation increases.

Adjustments to the FY 2021 will be published on April 7.

The council will hold a work session on April 14 and hold a public hearing on April 18. Both will be held online, and access instructions can be found here when dockets are published.

Find out more about the revenue shortfall and strategies to bridge the gap.

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