City of Alexandria Releases Updated Revenue Projections and Budget Strategies in Response to Fiscal Impacts of COVID-19 Pandemic

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City of Alexandria Releases Updated Revenue Projections and Budget Strategies in Response to Fiscal Impacts of COVID-19 Pandemic

­­For Immediate Release: April 3, 2020

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.

For inquiries from the news media, contact Craig Fifer, Director of Communications and Public Information, at craig.fifer@alexandriava.gov or 703.746.3965.

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This news release is available at alexandriava.gov/114549.

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