Alexandria officials are projecting an $8 million revenue shortfall this year as property values and sales tax receipts decline more sharply than anticipated, and are bracing for a deeper gap should the state reduce its contributions to the city.
Alexandria budget director Bruce Johnson called the city’s projected budget dip a “preliminary assessment” based on a recent 5 percent drop in real estate values, which affect the city’s property tax revenues.
Alexandria’s budget was created on the presumption that real estate values would hold steady.
“Things could get worse before they get better,” Johnson said. “But it’s easier the sooner you get at it — the later you get in the year, the more drastic action you have to take.”
Eight million dollars represents 1.5 percent of the city’s general fund budget.
City department chiefs already have been instructed to identify cuts and bring plans back to the city council for approval, but the city could face further reductions if it does not receive an expected $21 million in state aid.
Virginia economists announced Tuesday that the state is staring at a budget shortfall that could reach $3 billion in the next two years, potentially hamstringing its ability to provide funds to counties and cities.
Alexandria made a last-minute, $1.1 million chop to its already reduced draft budget in the spring after the state abruptly withdrew some aid as part of larger cuts.
Arlington officials said they are closely monitoring the county’s real estate market, and sales- and hotel tax receipts and are preparing for a possible shortfall.
“We are concerned — revenues are off and we are going to have to make some adjustments,” said Mark Schwartz, Arlington’s director of management and finance. “But we haven’t been able to draw any firm conclusions.”
County financial staffers will prepare estimates next month and brief the county board in November, Schwartz said.
