Alexandria businesses would pay commercial property taxes for the first time if a 2012 budget before the City Council is approved next month.
Council members are considering a $553 million plan that raises general spending by 4.1 percent. The plan includes proposals that would require city employees to contribute more to their retirement funds and would create a commercial property tax to be used exclusively to fund transportation projects.
Neither proposal is proving to be popular. Dozens of city employees and business owners showed up at a recent public hearing to protest.
The so-called “Transportation Add-on Tax” would charge about 2,250 local businesses 12.5 cents for every $100 of assessed value and would generate more than $12 million, officials say.
Arlington and Fairfax counties approved similar tax measures, of 12.5 cents and 11 cents, respectively, after the General Assembly granted localities in Northern Virginia and Hampton Roads the power to levy such taxes in 2007.
To help offset the tax in Alexandria, the city also proposed cutting taxes on businesses’ gross receipts, also know as the Business/Professional/Occupational Licenses tax, Chief Financial Officer Bruce Johnson said.
If the commercial property tax isn’t approved, the council will consider raising the base-rate property tax that applies to residential and commercial properties, officials say.
Council members originally left open the possibility of raising property taxes as a way to send more money to schools but also use could such an increase to fund transportation.
The proposed budget does not include raising the property tax of 97.8 cents per $100 of assessed value, but city officials took the pre-emptive step of issuing a required public advertisement stating that it was considering raising the rate to $1 to keep open its options.
The proposal for city employees to contribute an additional 1 percent to their retirement funds would affect roughly 2,800 employees, not including teachers.
City and public school officials have agreed on an operating budget that is 4 percent more than last year’s — about the same as the increase in the city’s general fund spending. But the sides disagree on funding for capital projects that the school system says are required to meet the needs of a rapidly growing student population.
Superintendent Morton Sherman requested $372 million for capital projects but gets $158 million under the current plan.
One-time raises are proposed for about 300 to 400 city employees whose pay is below the going rate, but most employees will receive no cost-of-living raises for the fourth straight year. Some merit raises were offered this year.
The largest point of growth in the proposed budget is paying back debt for capital projects, which has increased 12 percent over this year. Mr. Euille said the increase is because of big projects, including the new T.C. Williams High School and a police facility on Wheeler Avenue.
In addition to smaller-scale projects such as park improvements in the works for next year, the capital budget includes money to begin construction on a new Metrorail station in Potomac Yard. To pay for the station, the council wants to create a special services tax district to levy a 20-cents-per-$100 real estate tax on a section of development in the surrounding the area.
“There are several smaller projects that have been delayed or deferred until we get these big-ticket items out of the way, but we’ve still got a long way to go,” Mr. Euille said.
Three more budget meetings are scheduled for April 11, April 25 and May 2 — when the council will give final approval. An April 16 hearing on the proposed property tax hikes also has been scheduled.