We’re about a month away before interim City Manager Michael C. Rogers will release his recommended budget for the fiscal year that begins on July 1. Last night, Rogers appeared at a forum to discuss the preparation for the document and the decisions that will soon need to be made.
“Our code requires the City Manager to submit the budget to City Council on March 6 and when the city manager submits the budget, it’s based on a number of inputs,” Rogers said.
These include requests from departments, which Rogers said always exceeds the available amount of anticipated funding. The budget must be balanced. That can mean cutting services or expenses, but Charlottesville in recent years has sought to increase revenue by increasing various taxes.
Rogers said for the second year in a row, the city will experience a large revenue increase due to a double-digit percentage rise in real property assessments. Rogers said that’s a sign of a strong housing market.
“Last year if you recall, the Council did increase the tax rate by one cent,” Rogers said. “That was the first time that that had happened, increasing taxes, in a number of years.”
But that’s just the real property tax rate. Council has increased the meals tax twice in the past four years to the current rate of 6.5 percent of a bill’s total.
Last year, Council chose to keep the personal property tax rate the same despite a dramatic increase in the valuation of used cars due to a shortage of new vehicles.
“We’re not back to where we were,” said Todd Divers, the Commissioner of the Revenue. “We’re about halfway back to where we were.”
Divers said the data is still coming in and it’s too early to provide firm numbers, as well as the numbers for transient occupancy taxes.
So that’s a bit on revenue. Krisy Hammill, the Director of Budget and Performance Management, went over expenditures including one factor to consider going forward.
“We are in an era where we have had a lot of federal dollars to supplement a lot of programs during COVID and otherwise and we are coming to end of those dollars as most of them have been allocated and used for other programs,” Hammill said. “And so now we are faced with decisions for what programs are sustained and which programs have to go away because that funding no longer exists.”
One other interesting fact. The city currently has 1,108 approved positions in the budget and about 20 percent of them are vacant. Rogers said localities across the nation are struggling to fill positions. To help retain personnel, the city granted a three percent cost of living increase in FY2023 to all employees at a cost of $1.8 million. Collective bargaining will likely increase the amount spent on personnel.
“Collective bargaining is a major issue, unknown in our budgeting process,” Rogers said. “We should be bargaining this spring and that will have an impact on personnel and working conditions in the city.”
A compensation study is also underway that Rogers said will likely result in more salary hikes for employees.
Another Council priority is investment in public transportation.
“Our expectation is that it’s a reliable, predictable transportation system and in order to achieve that we need both personnel and we need equipment,” Rogers said. “We need rolling stock. Those are going to be issues we’re going to have to grapple with in this next budget.”
Rogers said the city has struggled to fill driver positions. That’s one reason a series of route changes reviewed by Council in 2021 have not been implemented.
There’s also an affordable housing goal in Charlottesville to spend $10 million a year.
“We use a combination of the [Capital Improvement Program] as well as the general fund in terms of staffing, etcetera, in order to meet that number,” Rogers said. “We will keep focused on that.”
Council will have a work session on the budget on Thursday.
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