Updated Friday, April 3:
Alexandria City Manager Mark Jinks is getting a "do over" on the City's budget.
The effects of the novel coronavirus and the illness it causes, COVID-19, have changed revenue projections and costs significantly, and Jinks will present a new budget soon..
Instead of a surplus of $5 to $10 million that was estimated for the end of this fiscal year June 30, the City now expects a shortfall of $35 million. For the following fiscal year (July 1, 2020 through June 30, 2021), projections are event worse — City offiicials expect a shortfall of more than $56 million.
The budget shortfall will significantly change the way the city operates and the trajectory of planned capital projects. City Manager Mark Jinks will release new details about these changes on April 7.
Mayor Justin Wilson wrote in his monthly "Council Connection" email that residents received April 1:
"The carnage that the outbreak left on the City's current budget is sadly a preview for what is in store. With our current fiscal year ending on June 30th, the City was heading towards an expected surplus of $5 million - $10 million. The current estimates are that we are now projected to have a SHORTFALL of $35 million. This is a financial calamity without precedent in our City's history.
To conclude this current fiscal year in balance, the City Manager will immediately institute emergency measures, including:
- Hiring Freeze
- Reduction of discretionary operating costs
- Reduction/freeze of pending capital projects
- Draw-down on contingency funds
These measures will get the City through the current fiscal year, but revisions to the proposed Fiscal Year 2021 budget and the Fiscal Year 2021 - 2030 Capital Improvement Program will now be required."
Even the $2 trillion CARES act passed by the Federal government won't totally eliminate the financial harm of coronavirus locally.
The budget input process with community members will essentially start over, and City officials will announce new community meetings (likely to be hosted online) in the coming weeks.
Friday, April 3, the City of Alexandria released the following statement:
The Alexandria City Council received updated revenue projections from staff at a budget work session on April 1, which show a potential budget shortfall of nearly $100 million through mid-2021 as a result of the COVID-19 pandemic. The work session included a presentation from staff on how the City will reassess spending for the remainder of the current fiscal year and Fiscal Year 2021 (July 1, 2020, through June 30, 2021).
“The COVID-19 pandemic has created not only a public health crisis, but also an economic disaster for communities around the world,” said City Manager Mark Jinks. “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. We expect City revenue to severely decrease through this spring and much of this summer, and then begin to gradually increase. It may take 15 months until the City returns to pre-pandemic revenue levels.”
Revenue estimates now project a $35.8 million revenue shortfall for Fiscal Year (FY) 2020 (ending June 30) and a $56.4 million budget gap for FY 2021, representing a revenue loss of approximately 7% for the FY 2021.
This almost $100 million budget gap will require the City to revisit current spending, as well as the FY2021 proposed budgets and capital plans for both the City and the Alexandria City Public Schools (ACPS), in order to identify areas for significant budget reductions. On April 7, Jinks plans to publish adjustments to the FY 2021 operating and capital budgets he proposed on February 18. City Council will discuss the revised proposal at a work session on April 14 and hold a public hearing on April 18. Both meetings will be held online; access instructions will be included when the meeting dockets are published at alexandriava.gov/Dockets.
Proposed strategies to address the budget gap for the remainder of the current fiscal year include a City government hiring freeze with few exceptions; a focus on necessary spending for the provision of core government services; targeted spending reductions and opportunities for savings; deferral of targeted City and School capital projects; the use of the City’s Fund Balance; and the use of bond interest earnings.
Additional proposed strategies to address the budget gap for the upcoming fiscal year include deferral of the 2-cent real estate tax rate increase proposed prior to the pandemic; a continued City government hiring freeze with few exceptions; deferral of employee compensation increases; deferral of previously proposed operating and contingent funding additions to the budget; reduction in the City’s transfer of operating funds to ACPS; deferral of targeted City and Schools capital projects; service reductions; use of the City’s Fund Balance; and application of other financial tools.
For more information about the budget development process, including a link to budget documents, visit alexandriava.gov/Budget.
