In anticipation of sagging sales and property tax revenues and less federal and state aid in the coming fiscal year, Alexandria City Manager Douglas Harman has ordered all city agencies to prepare budgets with no projected increases over this year.
Harman calls the directive "simply an exercise." But Vice Mayor James P. Moran Jr. said city agencies could receive little or no budget increases for fiscal year 1983-84 and agency heads are warning that such a budget cap could lead to cutbacks in services.
"It is up to the city council to decide and we may decide for a zero increase budget," Moran said yesterday. "In effect, if we don't have the revenues then we can't pay it out."
Moran and Harman agree that for the City Council to fund all programs at their present level, it would probably have to raise property taxes for the first time in six years. "We have more reason to raise taxes this year than in recent memory," said Moran. "No one likes to see program cuts but residents are generally more concerned about what they have to pay out of their pockets in taxes."
Finance directors for city agencies said they will face substantial cuts in programs and services if their budgets are not increased.
For example, if the city school system budget remained level next year, two elementary schools probably would have to be closed within the year, said William F. Leonard, assistant superintendent of finance.
He also projected that the average class size would increase from 23 to 30, that summer school and adult education courses would have to pay for themselves and that field trips and junior high school sports programs would be eliminated and no new textbooks would be purchased.
Leonard said the schools will need a 9 percent increase, or $52.3 million, next year to operate its current programs. Other agency finance directors said they would face similar cuts in services, but they refused to elaborate.
"I can understand that some departments are concerned, but the zero increase budget is just one alternative we are considering," said Harman. "It is an exercise for the different departments to help them determine their priorities."
Harman said he also asked each department to prepare a budget based on increases ranging from 2 percent to 8 percent, depending on the department. Finance directors will present these two budget projections, plus their own budget requests, to the city budget office by the end of the month.
In March, the budget office staff will present a budget to the City Council for approval.
The city is bracing itself for a year of low revenues because, for the first time since the Great Depression, property values have fallen. The city collected $59 million in revenue, or about half its budget, from property taxes this year, said David Chitlik, director of real estate assessments in the city. He projects a zero to 2 percent increase in real estate revenue this year, compared to a 15 percent increase last year.
Moran said the city also is expecting a smaller increase in the revenue it derives from sales taxes than last year because of economic hard times, and a drop in federal and state aid.
"It is too early to say what's going to happen for sure, but some tough decisions will have to be made this year," he said.