By Annie Gowen
Washington Post Staff Writer
Tuesday, April 25, 2006; B02

Days before voters head to the polls in municipal elections, the Alexandria City Council last night passed a $493 million spending plan with a 10-cent cut in the tax rate for residents concerned about rising property tax bills.

Mayor William D. Euille (D) called the budget -- with few new programs and a growth rate of 4.82 percent-- "lean and mean." He said that the council's decision to cut some health-care benefits for employees and defer some big building projects made sense at a time when the region's real estate market is slowing and tax revenue could dip.

"Looking forward, we're going to have tough challenges ahead," the mayor said. "While we do indeed have a hot real estate market here and throughout the Washington metropolitan area, it's not going to last. In two or three years, we could see a slowdown and assessments stabilize."

The council cut the real estate tax rate by 10 cents, to 81.5 cents for each $100 of assessed value, the second-lowest tax rate of major jurisdictions in the region, behind burgeoning Prince William County.

But residents of Alexandria, where the average home assessment is $526,852, will still see their tax bills increase an average of $259 this year, to $4,294. In addition to the tax rate cut, the council increased funding by $600,000 to a tax rebate program for seniors and the disabled and by more than $1 million to one for moderate-income homeowners.

To hold down spending, the city decided to ask its employees to pay more on their health-care premiums and put off or scale down $7.5 million in large building projects. Those include a fire station for the Eisenhower Valley neighborhood and the next phase of work on the city's $64 million public safety center.

The city also decided to give the Alexandria school system about $2.3 million less than the $148 million it had requested. The schools budget had included $6 million in pay raises for teachers and the addition of 33 staff positions, mostly teachers, according to John "Jay" Johnson, the outgoing assistant superintendent for financial and administrative services. School officials believed the pay raises were necessary to keep teachers' salaries competitive with such jurisdictions as Loudoun and Fairfax counties.

Johnson said it was unclear what programs will be cut to make up for the shortfall. "A reduction in our budget of that magnitude is huge," he said.

Approval of the budget came just eight days before the May 2 elections, in which five of six council members, all Democrats, are seeking reelection: Vice Mayor Redella S. "Del" Pepper and members Rob Krupicka, Ludwig P. Gaines, Paul Smedberg and Andrew H. Macdonald. Mayor Euille is unopposed.

Throughout the spring campaign season, the council has faced stiff criticism from Republican challengers and citizens at forums about city spending and rising real estate assessments. The average tax bill in the city has more than doubled in the past five years.

For the second year, lobbyist and civic activist Lou Cordia led an effort through e-mails and a petition drive to persuade the council to hold spending increases to 3 percent. The movement was dubbed "Alexandrians for a 3 Percent Compromise."

Pepper said the council's action "shows a good-faith effort . . . to respond to the many people who felt that the budget needed to be cut."

"We were very mindful of the need to keep the taxes down as far as possible and still have a sustainable, reasonable, sound budget," Pepper said.