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City manager proposes $956 million FY2026 budget, no tax‑rate increase
Summary
City Manager James Perjean presented a $956 million FY2026 operating budget and a $2.08 billion, 10‑year CIP that keeps the tax rate unchanged. The proposal prioritizes schools, housing and youth programs while setting aside reserves to guard against federal funding uncertainty.
City Manager James Perjean on Feb. 25 presented a proposed FY2026 operating budget of $956,000,000 and a 10‑year capital improvement program of roughly $2.08 billion, telling the City Council the plan seeks to protect services without proposing a tax‑rate increase.
The manager said the operating budget represents approximately a 3% increase, with about one‑third of the additional operating dollars going to Alexandria City Public Schools (ACPS). The proposal allocates $329,000,000 toward ACPS in FY2026 and includes a $30,000,000 housing allocation intended for new affordable housing, rehabs and eviction prevention. He said the proposal does not raise the real estate tax rate and instead relies on targeted investments and cuts elsewhere: the city has realized about $32,000,000 in base‑budget cuts over five years and proposes roughly $6,400,000 in reductions this year.
Perjean told council the budget also includes contingency measures to respond to federal funding volatility: $3,000,000 set aside for true emergencies and $1,000,000 assigned for potential loss of grants. He noted that roughly half of general revenue derives from property taxes and warned that shifts in federal employment or grants could influence local revenues.
On staffing and compensation, the proposal funds a 1% cost‑of‑living adjustment, funds merit steps and proposes nine new positions while eliminating seven vacant positions. The budget includes targeted additions — for example, two positions to stand up a pharmaceutical facility in the fire department to comply with shifting medical‑resource allocations — and limited growth in overall staffing.
Perjean framed the budget as a balance of preserving services and protecting fiscal stability. He emphasized adherence to the city’s fiscal policies, including maintaining reserve and debt parameters that contribute to Alexandria’s AAA bond rating.
Council members asked detailed questions about the capital program’s borrowing capacity and interest‑rate assumptions. Finance staff said the CIP was structured to keep long‑term borrowing levels similar to the prior approved CIP, that the city models conservative borrowing rates (around 4–4.5%), and warned a downgrade in bond rating could add roughly $30–40 million in borrowing costs over the 10‑year horizon.
Perjean said the proposed budget will move through the council’s add/delete process, with add/delete submissions due April 3 and an anticipated council adoption timeline concluding by April 30. Staff also announced public engagement events, including a Market Square “budget bonanza” and pop‑up meetings, and posted the full proposal and related materials on the city website.
