By Kirstin Downey
Washington Post Staff Writer
Tuesday, April 8, 2008; B07

The Alexandria City Council is putting a raft of potential tax increases on the table tonight.

The council will consider proposals to raise hotel and restaurant taxes, boost parking-meter rates, charge people more if they are transported in an ambulance and increase sewer connection fees. Officials have already said they are considering raising the taxes on shopping centers and office buildings and increasing the property tax rate paid by homeowners.

The battery of tax proposals for the budget year that begins July 1 comes as Alexandria officials try to cover a shortfall caused by the nationwide economic slump and a gap of as much as $21.5 million for transit.

City officials knew that revenue was eroding, but they thought they would receive funding from a package of state transit taxes, which instead disappeared when the state Supreme Court said in February that the taxes levied by the unelected Northern Virginia Transportation Authority were unconstitutional.

Taxpayer activists, who learned about the plans this week, said they were outraged that the city would boost taxes as the region enters a recession, particularly after years when soaring real estate assessments allowed city revenue to surge.

"It seems no matter what the economic situation, Alexandria taxpayers are always facing a tax hike," said Alexandria resident Kristina Rasmussen, director of government affairs for the National Taxpayers Union. "We are being nickeled and dimed."

Alexandria resident Bud Miller called the proposals a "general shakedown of the population."

Deputy City Manager Mark Jinks said the council is not taking action at this time but is considering "some options" to help the city handle the budget deficit.

"It's unlikely they will adopt all these options. It's cafeteria style," he said.

The loss of the transportation funds caused "a huge hole to be blown in the budget," he said, at the same time that "there is not as much money available as we get to the end of the budget process as we'd thought."

In particular, he said, the Federal Reserve's decision to lower interest rates has cut the city's interest income in half, reducing it by $3 million this year, he said.

City officials started the year believing that they could balance the budget more easily. In February, City Manager James K. Hartmann proposed a $534.8 million budget with no tax-rate increase, maintaining it at 83 cents for each $100 of assessed value. Now the city is proposing raising the tax rate by as much as 3 cents, to 86 cents.

At tonight's meeting, the council will introduce a resolution that would allow it to increase the hotel tax from its current rate of 5.5 percent to 7.5 percent; a measure that would raise the restaurant meals tax from 3 percent to 4 percent; consider raising the maximum ambulance-service charge from $550 to $675; and boost parking-meter rates from 75 cents an hour to $1 an hour in some Old Town neighborhoods.

The city is also considering raising the commercial property tax by 2 cents over the general property tax rate, but officials have been concerned that small businesses would be harmed. For that reason, the city will also consider giving small businesses some other tax relief to compensate. Under the proposal, businesses that have less than $1 million a year in revenue could get a reduction in the business taxes they must pay.