Fiscal Year 2023 is just over a month old, but the budget process in Virginia never really stops as local governments seek to provide services. In April, Council adopted a $212.9 million general fund budget that was 10.76 percent higher than the one for the year before. That’s built on increased assessments for both real estate and personal property as well as a one-cent increase in the real estate tax rate. That was the first such increase in several decades.
There are about 30 weeks until whoever is City Manager in March 2023 presents a recommended budget and 36 weeks until Council is expected to adopt their amended document. Council got a briefing this past Monday and learned about some of the factors coming up and some suggested the schedule be moved up. (view the presentation)
Will the budget continue to grow at a double-digit level, or will it be more modest? How much will it cost to implement pay and benefit increases that may come through a collective bargaining ordinance? What about the cost of inflation? While the answers aren’t yet known, the foundation is being laid for whatever will end up happening.
At the end of August, city departments will be sent packets to request funds for capital projects and these will be due by the early October. There’s at least one change to that process.
“We’re going to include a Planning Commission member on the review team,” said Krissy Hammill, the city’s director of budget and performance analysis.
Requests from nonprofits and outside agencies are due sometime in mid-October and recommendations from the Vibrant Community team will be completed in mid-January. Also around that time will be another change to the budget process.
“It’s called the city manager budget forum,” Hammill said. “The date for this will be January 10 and it will be held at Carver Recreation Center. This will be an opportunity for the city manager to make a presentation and to engage in public discussion.”
Hammill said the growth in the budget for next year is expected to be more modest than the 10.76 percent increase from FY22 to FY23. She’s also keeping an eye on inflation.
“We already know that there are cost increases that we’re seeing both just in general things as well as capital projects due to supply chain issues and inflation,” Hammill said. “We’re not sure of what exactly what the revenue impact would be for a potential recession if there to be one.”
There will likely be higher compensation costs for city employees due to collective bargaining as well as a need to carry on the ongoing costs of positions funded using one-time money.
Between now and the budget adoption, Council may have an updated strategic plan paid for through the city’s use of American Rescue Plan Act funding.
“The time is right,” said interim City Manager Michael C. Rogers. “In doing the strategic plan right, we’ll get a consultant to engage you individually and collectively over the next few months and by the time we get to April, we ought to have a new direction or at least some themes.”
City Councilor Michael Payne said he wanted to make sure there is funding to address a human resources phenomenon known as compression, funding for climate, and for city investment in nonprofits to build subsidized housing.
“How can we get our adopted Affordable Housing Plan and that $10 million a year into a more stable place in terms of how we’ll fund it at $10 million a year which is what the plan calls for,” Payne said.
Payne also wants to make sure there is funding to invest in public transportation.
Rogers said a compensation study is expected to be completed by the end of the year.
“That will tell us where we are compared to other jurisdictions in the region in terms of our salaries,” Rogers said. “It will define a competitiveness gap.”
The Fluvanna County Board of Supervisors were briefed on their compensation study on Wednesday.
Rogers said the August 15 Council work session will feature a presentation of the collective bargaining ordinance followed by a first reading on September 6 with adoption currently anticipated on September 19.
“And we expect that there will be a push to begin to recognize collective bargaining units after that,” Rogers said.
Another direction to budget staff is to reexamine a policy where 40 percent of new revenues created by additional real estate taxes goes to Charlottesville City Schools.
Some on the current Council have called for that agreement to be revisited, and Rogers said budget staff would look into it and begin preliminary discussions with the school system.
“And at some point the Council probably should have that meeting with schools to discuss an issue like this,” Rogers said.
As for increased spending on public transit, Rogers said current planning by the Thomas Jefferson Planning District is relevant. A governance study for how to implement a proposed Regional Transit Vision is about to get underway.
“The long term play is probably the discussion about a regional transit agency, and what are the dynamics that need to be in place for us to move that forward,” Rogers said. “It’s been talked about a long time.”
The current calendar calls for the second public hearing on the budget to be held on April 3, 2023 and for adoption at a special meeting on April 11.
City Councilor Sena Magill said she wanted to adjust the schedule so that the final public hearing does not happen during the week City Schools are on spring break.
“And it’s just one more way that it makes it harder for some people to serve on Council,” Magill said.
Charlottesville Mayor Lloyd Snook said he would like to see the budget process moved up further so that Council could have more influence. The budget is introduced to the public the first week of every March.
“There are places, particularly in Northern Virginia, where Council is involved in budget discussions by mid-December,” Snook said. “They’re not waiting until February or March and the practical effect of what we do is that our opportunity for actually commenting on things is compressed into about four weeks.”
Snook said he would like to see the budget introduced in early February. Rogers said he would look into seeing if that could be accomplished, but it would leave for no break at all for budget staff.
Hammill suggested holding budget development work sessions when needed. One such work session that comes to mind is the one last September when Council signaled its willingness to transfer a financial commitment for the West Main Streetscape toward school reconfiguration. That gave staff direction as they built the FY23 budget.
Payne pointed out that Albemarle County has adopted their budget in May for the past two years. Rogers and Hammill said they would return with more options.
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