Cigarette taxes in Alexandria would increase to 50 cents per pack -- matching the highest levy in the state -- under a proposal being considered this week by the City Council, which is looking for ways to fund several major projects, including a new city high school.
If approved after a public hearing Saturday, the tax per pack would rise 66 percent from its current level of 30 cents. Alexandria and Chesapeake would have the steepest cigarette surcharge in the state; Virginia Beach is also considering raising its cigarette tax to 50 cents. Across the commonwealth, many cities, towns and counties are looking for ways to fill budget holes and help fund local initiatives.
City Manager Philip G. Sunderland, whose tax proposal was to be presented last night at a City Council meeting, said the city can expect an additional $1.1 million in annual revenue if the tax is approved.
The money would help plug a projected $10 million budget gap the city is trying to close for fiscal 2004, he said. With plans for a new T.C. Williams High School and a police station in the Eisenhower Valley, officials say it is crucial to find funding alternatives to commercial and real estate taxes.
"We're currently going through belt-tightening and looking for ways of increasing revenue," said Mark Jinks, the city's assistant city manager for finance. "This will be a way of helping balance our books, because cigarette taxes are such a steady funding stream."
Alexandria's proposal mirrors the efforts of educators, special interest groups and several local governments across Virginia that are pressing Gov. Mark R. Warner (D) to seek an increase in the state tobacco tax as a way of minimizing cuts in health, education and other programs in tough economic times. The state tax is 2.5 cents per pack, lowest in the nation.
In Virginia, cities such as Alexandria can impose cigarette taxes in addition to the state's levy, but counties must get permission from the General Assembly before doing so.
Only two counties, Fairfax and Arlington, are allowed to impose such a levy, of 2.5 cents, and some lawmakers plan to push the General Assembly to give the two jurisdictions permission to increase their local taxes to as much as 40 cents.
"I think these kinds of local efforts will help put pressure on the General Assembly" to increase the statewide cigarette tax, said Sen. Patricia S. Ticer (D-Alexandria), referring to Alexandria's proposal. "Everybody is looking for revenue, and this bonus revenue would only help."
Alexandria's proposed initiative would be the city's second cigarette tax increase in six years. In 1996, Alexandria raised the tax by a nickel with little opposition, officials said. At least 23 cities and 21 towns in the state have adopted local cigarette taxes, according to the Weldon Cooper Center for Public Service at the University of Virginia.
Some Alexandria officials are concerned that raising the tax by 20 cents would discourage consumers from buying cigarettes in Alexandria and result in a drop in revenue.
"I would be concerned about what this would do to small businesses and think there are other initiatives we can cut," said Alexandria Vice Mayor William C. Cleveland (R), who generally has opposed local tax increases and was one of the few public officials in Northern Virginia not to endorse the proposed sales tax increase for transportation that was defeated in a referendum last month.
But several officials said yesterday that the city has few options to raise money, a situation faced by jurisdictions across the state. The city is also considering increases in sewer rates and other capital fundraising efforts.
"We have to find new funding sources," said council member Redella S. "Del" Pepper (D). "This is a tough time for us, and these are things we are forced to do."