There are still many months before Albemarle County Supervisors will adopt a budget for the next fiscal year, FY25. Between now and then, a lot of things have to occur, such as release of property assessments for 2024.
Staff have been preparing the budget development process with a series of work sessions with more scheduled in December. On November 15, they took a look at a five-year forecast intended to gauge basic assumptions about the fiscal weather. (view the slide presentation)
Andy Bowman is the interim assistant chief financial officer for policy and partnerships. He said long-range planning is used to help ask questions about the financial health of the county.
“Long-range planning is really about [what] does our long-term trajectory look like in the county for the next five years and really asking ourselves ‘are we making decisions today that we’ll be able to afford in the future,” Bowman said. “If we have challenges and we expect we cannot, what might be done differently with a a strategy or policy level to help change that trajectory?”
During the presentation, Bowman showed a slide depicting the percent change in revenue growth going back to FY2007. That’s when Albemarle began to assess on an annual basis.
“So we have this just as a framework,” Bowman said, “As we look at the future, we need to at least look and contemplate the past and how that might impact us.”
Since that time, the average annual growth in county revenues has been at about four and a half percent, but that doesn’t tell the whole story. Revenue growth in Albemarle was around eight percent in FY2008, but then the Great Recession hit in 2008 and there were several years of much smaller growth.
“And though officially the Great Recession ended much sooner than fiscal year 14, it took a while for county revenues to recover at that time,” Bowman said.
Revenue growth began to increase year over year until the pandemic which ended up not slowing down county finances as badly as had been anticipated.
“This was a period prior to the pandemic where there was another period of relative stability, stable revenue growth year over year and then the last four years where we’ve been in a very unique time where we saw a very deep but very abbreviated recession,” Bowman said. “It happened in fiscal year 20 and the impacts extended into fiscal year 21.”
The past two years have seen higher levels of revenue growth than in the mid-2000’s with a strong real estate market bringing in sharp increases in revenue with a nearly 12 percent increase between FY22 and FY23.
Bowman said it is too early to determine what property assessments will be for 2024.
In October, Supervisors got an economic forecast from a Virginia Tech professor that indicated Albemarle’s economy remains strong.
“Second, we know that our national economy has cooled from this time a year ago,” Bowman said. “There have been a lot of mixed indicators that the cooling has not been as fast or maybe as deep as what thought but we are certainly in a situation where we don’t have as strong revenue growth as we’ve seen in the last two years. This doesn’t mean that we’re in a recession or have declining revenues. It’s just that the rate of growth is not as fast.”
For now, Bowman projects that annual revenue growth will likely continue to be at around four percent over the next several years, but preparing for a slowdown would be prudent. Especially when you begin to think about expenditures.
Bowman then began to show charts comparing revenue projections with anticipated spending, beginning with one that only funds mandates and obligations. There’s no projected gap under this scenario but that would not implement the ambitions embedded in the Board of Supervisors’ strategic plan. (view the plan) See also: (Albemarle County Supervisors adopt new strategic plan goals, October 26, 2022)
“This leads us to know that at least a very starting point that we are fundamentally balanced,” Bowman said. “The challenge ahead is that the Board’s strategic plan does not keep a status quo to only meet mandates and obligations. We then had to go through and consider all of the conversations we’ve had with the Board over the last year with the strategic plan.”
There are six goals in the strategic plan adopted by the Board of Supervisors in October 2022. Goal Six is for Workforce Development and reads: “Recruit & retain engaged public servants who provide quality government services to advance our mission.”
Kristy Shifflett is Albemarle’s Chief Operating Officer and she said the county has been working on this issue but she added they’ve found hurdles in the process in a competitive employment environment that includes the University of Virginia and the City of Charlottesville as well as other Virginia localities.
“When we provided a four percent increase in July, most of our market did something different,” Shifflett said. “The average increase was about six percent for our market so that was one shift.”
Another is a continued desire by many to work at home for at least some of the time. Another is the increasing cost to live in Albemarle. All of these factors add up a looming capacity problem for Albemarle.
“We have been maintaining about 80 vacancies since July and that’s 80 vacancies across the entire organization,” Shifflett said. “That’s high for us we believe and that’s also not where we want to be.”
That rate is about 12 percent of the total staff according to Shifflett.
Shifflett said staff would like to increase calculations that go into the county’s pay scale in order to become more attractive to potential employees. They’re also seeking permission for a mid-year two percent cost of living increase for all county employees and will seek a five percent market increase for FY25.
A decision point on that will be before Supervisors at their December 6 or December 13 meeting.
Other potential investments flow through other strategic plan goals. For instance, Goal 1 is for Safety & Well-Being, so there’s funding anticipated for the new Community Response Team, renovation of the Albemarle Charlottesville Regional Jail and expansion of the county’s court system.
The long-range plan offers a reminder of what funding Albemarle will have to provide when federal grants run out.
“The county has currently been approved for three [Federal Emergency Management Agency] [Staffing For Adequate Fire and Emergency Response] grants that fund approximately 50 fire rescue employees for three years for each of those grants,” said Ryan Davidson, the county’s deputy chief of budget. “Those positions began to be funded locally in FY24 with increases in our local cost and our local shares in FY25, FY26 and other out years as those grants expire.”
Strategic Plan Goal #2 has the title Resilient, Equitable, and Engaged Community and this is where anything related to climate action goes. That includes funding for a Northern Convenience Center, funding more equipment for recycling, and implementing the county’s stream health initiative.
Goal #3 is Infrastructure and Placemaking which is where justification for broadband initiatives comes in, as well as the county’s new street sweeping initiative as well as new efforts to keep the entrance corridors better maintained. There’s also local money programmed in the budget to be used as a match for other grant opportunities.
“The transportation leveraging funding that was included in the FY24 to FY28 [capital improvement program] speaks directly to this goal and objective and we’ll have more conversations on that at a later time,” Davidson said.
There’s nearly $2 million in that fund for the current fiscal year, and the adopted capital improvement program anticipates that climbing to $10.8 million next fiscal year, $6.5 million in FY26, $5 million in FY27, and $4 million in FY28.
Goal #4 is Quality of Life and this is where operational funding for new positions related to housing is justified. This is also where Parks and Recreation funding stems from, such as new operational funding for more maintenance crews.
Goal #5 is Education and Learning and will be discussed in more detail at the December 6 joint meeting with the School Board.
“But I do want to note that the five year plan provides funding to school operations based on the operating formula around the revenue allocations and the revenue splits with the schools,” Davidson said.
In other words, the school gets a percentage of any new revenues for their purposes according to a formula.
Davidson concluded the staff presentation by showing a graph that showed expenditures that are not mandates and obligations. Not surprisingly, there’s a revenue gap of 1.5 percent in FY25 climbing up to six percent in FY29.
“As we look through and we continue to look at the choices and the menu of options that have been provided, those lines can close and widen depending on what choices and discussions are had with the Board,” Davidson said.
Supervisor Bea LaPisto Kirtley thanked staff for the information.
“There’s a lot of information here and frankly a lot of it is frankly worrying to me because we’re going to have the expenditures and revenues and that gap there and I guess we’ll find out later how we’re going to be closing that gap,” LaPisto Kirtley said.
LaPisto Kirtley made special mention of additional support that she said volunteer fire and rescue companies will be seeking.
Outgoing Supervisor Donna Price said she also supported more efforts to increase compensation but had one item she would like to see to encourage more people to seek elected office.
“And I can say this because it has no direct personal impact on me but I believe that Supervisor compensation is inadequate and I would very much like to see a comprehensive compensation review of Supervisors and not just the staff,” Price said.
Supervisor Ned Gallaway said he supported efforts to increase compensation to fill some of those vacancies. He said the presentation illustrated how integral the strategic plan is to county government and what gets funded.
“And I think it’s always important to tell folks and taxpayers what drives these decisions,” Gallaway said. “The strategic plan is informed by what we hear our taxpayers want in the community so we’d best darn well get the folks that are needed to make that strategic plan happen and the compensation strategy is needed for that.”
Supervisor Diantha McKeel said the presentation fueled her conviction that the county must do more to attract or grow new businesses in order to increase the share of county revenue that comes from taxation of commercial uses.
“I remember a ways back before the pandemic talking about and reading about how a healthy community has to have about 30 to 35 percent of their revenues from business tax base to be healthy and not put so much of an emphasis on property tax and residential,” McKeel said. “The last time I looked we were at 18 percent or 19 percent and so all I’m saying is that we have a lot of work to do in my opinion around economic development.”
Bowman said staff would return with a precise number at a later date to answer Supervisor McKeel’s question.
I’ll have more from the future work sessions but still want to go back to a previous one on transit. Albemarle’s investment is increasing, and there’s a key study I want to dig into.
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