By Carla Branch and James Cullum
The first slide at Saturday’s City Council budget retreat read: “Grim, grimmer, grimmest.” After that, things just got worse.
On Sept. 28, Alexandria’s director of the Office of Management and Budget, Bruce Johnson, told City Council that there was an $8 million budget shortfall this year. “Because of a reduction in anticipated revenues, we have had to revise that estimate to a shortfall this year of $10.5 million,” Johnson said, “and that is based on what we know now, just three months into the fiscal year.”
The shortfall was caused by $8.2 million less than anticipated in revenue from real estate assessments, $1 million less in earnings from investments and $1.5 million less in a number of City fees. Johnson presented recommended reductions to account for the shortfall. The city manager can find $4.2 million in efficiency measures that will not impact services and $935,000 in fee increases. The remaining $5.3 million will mean reduction in services throughout the city, which will have an impact on residents.
The service reductions will come from various departments: $1.9 million will come form anticipated capital expenditures on the All City Sports Facility and from unused funds for the Visitors’ Center. Hardest hit will be the City’s health and human services programs, which will absorb $800,000 in budget reductions. The Emergency Shelter Fund will lose $78,000. This fund provides a safety net to prevent eviction and loss of utilities and to bury homeless individuals. The Interim Assistance Program will lose $28,000.
“This is a City/State matching program that we have been told is going to be cut at the State level,” said Deborah Collins, the director of the Department of Human Services. “We really need to begin to move clients who are receiving these funds into more traditional human service programs because the funds will not be available much longer.”
The Crisis Childcare program will lose $95,000. This program provides childcare to parents of children in homeless shelters while they look for employment. This reduction will result in this program ending in December or January, based on current spending. The City’s subsidized Senior Taxi Program will be reduced by $37,500, resulting in 2,242 fewer trips. Senior bus services will also be cut by $38,600. This means 3000 fewer trips this year.
Councilman Tim Lovain expressed his concern over these reductions. “It seems to me that we are reducing services to those who can least afford to lose them. While I appreciate your explanation, I am concerned about these service reductions,” he said.
While the police department was not asked to cut core services, Chief David Baker has recommended eliminating the Gridlock Reduction program for a savings of $100,000. This program costs $150,000 annually in overtime to post police officers at seven key intersections in the city to prevent traffic gridlock during evening rush hours. According to the police department, the elimination will have a marginal negative impact on traffic congestion in the city of Alexandria.
“I don’t know about the other intersections, but the elimination of this program is going to have more than a marginal impact on the intersection at Route 1 and Gibbon. The officer who is stationed there has prevented many traffic accidents,” said Councilman Paul Smedberg.
Vice Mayor Redella S. “Del” Pepper agreed. “Eliminating this program is going to have a huge negative impact at Duke and Telegraph. I really think we need to reconsider this cut,” she said.
City Council’s budget has also been reduced but not, according to Councilman Rob Krupicka, enough. “There are probably additional cuts that can be made to our budget,” he said. “With the rest of the city departments absorbing significant budget reductions, we certainly need to set an example.”
City Manager Jim Hartmann warned that, “This may just be the beginning if State aid is decreased or tax revenue sources decline further.”
Hartmann will make the $4.2 million in efficiency reductions immediately but will not implement service reductions until Council votes on the package on Nov. 19. “The potential cuts to programs and services for the current fiscal year will require the City to make some very tough choices in the coming weeks,” said Mayor Bill Euille. “While the rest of the City’s economy remains stable at this time, the drop in real estate values coupled with the City’s reliance on real estate taxes to fund city services creates the severe immediate problem we face.”
High Enrollment, Bad Economy Affect ACPS Budget
As the State and City economic forecasts have worsened, the outlook for next year’s Alexandria City Public School system’s budget has grown gloomier.
Schools Superintendent Dr. Morton Sherman delivered that message to City Council at its annual planning retreat Saturday. While the school system has not yet been asked to make cuts for Fiscal Year 2009, Sherman recognized that the outlook for FY 2010 and beyond is bleak.
“We know that we have severe issues, and we’re looking at very difficult decisions,” Sherman said.
Last month, staff presented a budget preview to the school board, outlining potential increases in the City’s allocation of funds to the school system. The board also saw various projections showing small percentages of growth.
Since then, “Boy, (staff’s forecasting has) changed since we started 6 weeks ago,” said Margaret Byess, ACPS Executive Director for Financial Services.
Each of the four scenarios presented to Council showed that ACPS budget cuts will be necessary. The first three scenarios included no salary step increases for staff or program additions. The first option also showed a $9.8 million, 1.9 percent budget cut, and a loss of 3 percent of the City’s allocation. The second option showed a $6.5 million, 0.2 percent cut and 1 percent loss of the City’s allocation. The third option kept the City’s allocation the same, but cut $4.8 million, or 2.4 percent, with growth of 0.6 percent. The fourth scenario included a salary step increase for all personnel, making for a mandatory reduction of $8.5 million of the school system’s budget, a 4.3 percent cut.
Since 2005, the school budget has increased an average of 6.7 percent per year, with an annual boost in the City’s appropriation of 7.94 percent. ACPS Staff expect a $1 million decrease from the State’s allocation this year.
Making the situation harder, “Enrollments have increased nearly 7 percent this year, and will continue to increase 3 percent annually for the foreseeable future,” Sherman said.
There were 688 newly enrolled students this Fall, roughly the population of an elementary school. That enrollment figure vastly exceeded the expectations of staff. So far, Samuel Tucker, Lyles-Crouch, Charles Barrett and Douglas MacArthur Elementary Schools are over capacity and ACPS is at 93 percent capacity overall. With a projected annual growth rate of 2.5 percent, staff said student enrollment will exceed the current elementary school capacity division-wide by 2011. By 2015, staff predict capacity will be exceeded by 11 percent, said Robert Watling, an ACPS budget supervisor. “An influx of new students is leading to acute needs of building issues that need to be addressed,” Watling said
Staff anticipate exceeding capacity at all but three of the City’s elementary schools by 2012. In the next five years, high rates of growth are expected in the City’s West End and in North Alexandria. Currently, West End school Samuel Tucker Elementary is 97 students over capacity. Staff estimate that by 2012, the student population at Tucker will be 726, a surplus of 166 students.
While staff outlined the impending necessity of new schools to accommodate growth, many aging schools are in need of renovation and replacement. Two elementary schools, Mount Vernon and Maury “are now older than 75 years, the recommended lifespan for schools,” said Watling. For years, other schools, such as the 39-year-old Minnie Howard, the 43-year-old James Polk and the 42-year-old John Adams have been on the list for capital improvements.
Traditionally when budget reductions are necessary, it means bigger classrooms and fewer teachers, but “Student needs are ongoing and perhaps increasing,” Sherman said.
“We will not accept 30 percent of our students not making proficiency, which is where we are now.”
The Superintendent will present his proposed FY 2010 budget to the School Board on Dec. 18.
Looking Ahead to 2010
In 2010, all city revenue is expected to decline by 6.5 percent or approximately $25 million less than was projected for this year. Revenue from real property taxes is expected to decline by 7.9 percent or approximately $15 million. Personal property taxes are projected to be 16 percent less than this year and recordation fees may be down as much as 31 percent. The fund balance will be down by $4 million or 60 percent.
The good news is that Alexandria’s economy is more stable than other jurisdictions in the region. Tourism remains constant, although the Alexandria Convention and Visitors Association has begun a regional marketing campaign geared toward encouraging those who live in neighboring jurisdictions to come to Alexandria. Unemployment remains low and the City will get seven thousand new jobs that were originally slated for Fort Belvoir, because of the Base Realignment and Closure process. The Army’s Washington Headquarter Services facility at Mark Center will also bring an influx of federal contractors. The economy of the city will be less negatively impacted than the finances of the city government, according to the budget forecast presented to Council.
Many Council members believe this is optimistic. “We know there’s going to be job cuts all around us, but it feels to me that there is a lay-off wave we haven’t felt yet and we’ll start seeing it in the next quarter or two quarters,” said Krupicka. “Maybe Alexandria will be insulated from it but I don’t see us being immune to it.”
As F Y 2010 budget preparations begin, Council may have to consider raising the real estate property tax rate, using money that is currently dedicated to the purchase of open space for the general fund or differentiating commercial property tax rates from residential. Last year, the Virginia General Assembly allowed jurisdictions to charge commercial property owners more than residential property owners. While Alexandria chose not to differentiate, Arlington and Fairfax counties made the change.
“F Y 2010 will be a very challenging year,” Hartmann said. “The city has not faced a budget decline of this magnitude in decades.”
Hartmann will present his proposed F Y 2010 budget, including schools, to Council on Feb. 10, 2009. After numerous work sessions and public hearings, Council will adopt an F Y 2010 budget on April 27, 2009, just before Council and School Board elections.