2 Va. suburbs expect losses in millions
Arlington and Alexandria hardest hit by attacks

By Ann O'Hanlon, Washington Post Staff Writer
Copyright 2001 The Washington Post
Article date: September 29, 2001
 

Leaders of the two suburban governments likely to be hardest hit by the events of Sept. 11 and the subsequent shutdown of Reagan National Airport say they will lose millions of dollars in revenue but assert that the pinch will not force draconian spending cuts, layoffs or any change in their premiere bond ratings.

As immediate neighbors to the airport, Arlington County and the City of Alexandria are losing money in myriad ways. Under the most optimistic scenario, both will lose hundreds of thousands in hotel taxes alone, given the dozens of hotels within a few miles of the airport. In addition, both are taking hits in their sales tax and meal tax revenue, as well as their Business, Professional and Occupational License tax. Arlington, home to the airport and its many car rental agencies, was expected to reap nearly $5 million from the car rental tax in this fiscal year. An estimate by the Metropolitan Washington Airports Authority, which operates National, is that the county government makes $8.5 million a year -- or roughly $700,000 a month -- from airport businesses alone.

An Alexandria official said the city's conservative scenarios do not take into account likely state cuts in disbursements to localities, the drop in their investment income or smaller losses, such as lower parking meter revenues due to quieter streets.

"My estimate is that we will lose at least a million a month in tax revenue," said Mark Jinks, assistant city manager for financial affairs. "And the question in my mind is: How much more above a million will it be?"

Arlington County Manager Ron Carlee said that the worst-case scenario, which assumes permanent closure of the airport and other pessimistic hypotheticals, would mean a loss of $18 million annually for the county.

Suburbs farther away from the airport are analyzing their losses as well.

Montgomery County Executive Douglas M. Duncan (D) said he is concerned about the effect on the county's unemployment rate and a subsequent increase in the need for social services from the government.

"We haven't seen any major announcements of job layoffs from companies in the county yet, but we're nervous about the hospitality industry," Duncan said. Montgomery County is home to the headquarters of Marriott International Inc. in Bethesda. The company said it is considering laying off as much as 10 percent of the 3,900-member workforce at its headquarters.

Fairfax County spokeswoman Merni Fitzgerald said it would be premature to draw conclusions about the county's fiscal health.

"Some of our revenues are down slightly," such as sales tax and investment interest, she said. "The large retail season is still ahead. We can't predict a trend."

Both Jinks and Carlee cautioned that their estimates of losses to Alexandria and Arlington were very rough and that they would not have a good grasp of the true loss for months at least. Variables include the still-unknown timetable for reopening the airport, how quickly the public takes to the skies again and, most importantly, whether the real estate market -- the largest source of revenue for local governments -- is dealt a severe blow in the aftermath of the terrorist attacks.

"This is going to be a challenge to Arlington and Alexandria," said Stephen Fuller, a regional economist with George Mason University. "It takes all their flexibility away from them. But they have a balanced tax base, and in the scale of their total revenues, these are not major sources."

Alexandria's operating budget is $325 million and Arlington's $582 million.

Jinks said that even if National opens soon, October's losses are likely to be significant, at least $2 million. Asked to put a $2 million loss in context, Alexandria management and budget director Gene Swearingen said it is roughly the annual budget of the personnel department or the Office of Historic Alexandria.

Jinks said that a meeting of department heads yesterday included contingency plans and that he would have more specifics next week.

Carlee said Arlington County would not cut any approved expenditures but might disappoint some with long-term plans.

"The practical consequence . . . is that many of the capital investments that we would have made in the community, we will likely defer until we have a much clearer picture of when National is opening," Carlee said. Those investments might include improvements to parks, fire stations and roads, he said.

Neither jurisdiction is contemplating laying off any employees, officials said, and both are confident -- as is Fuller -- that they will retain their longstanding triple-A bond rating status.

Staff writer Dana Hedgpeth contributed to this report.
 

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