Council further discusses FY25 budget during discussion of FY23 surplus 

On March 5, Charlottesville City Manager Sam Sanders will unveil his recommended budget for fiscal year 2025, a budget that will be built on this year’s property assessments as well as a stated need to spend money to retain existing city staff. 

Council provided direction at a work session on February 1 and at that time, Sanders said he was working to close a gap between $3 million and $4 million. (read my story)

A few days later, Council discussed the budget again during second reading of an appropriation of a surplus from the FY 23 budget of over $21.7 million. No had spoken at a January 22 public hearing based on a recommendation from Sanders on how to allocate the funding. (read my story)

The second reading of the resolution to appropriate the surplus had been on the consent agenda for the February 5 meeting, but was pulled by City Councilor Brian Pinkston who had a different idea on how to use some of the funding. 

“So when this first came to us two weeks ago that was before at least I knew the sort of impact of this current budget, the FY25 budget, that we’re working through,” Pinkston said. 

At that work session, a majority of Council supported the possibility of raising tax rates to close the gap in order to pay staff more money by implementing the terms of a compensation study as well as honoring collective bargaining agreements with three distinct units. Sanders has suggested doing all of that in a single year. 

“I realize that trying to do that over multiple years makes no sense but for those same reasons I think that trying to cover this ongoing expense immediately with tax increases only is not fair to the people in Charlottesville,” Pinkston said.

Pinkston suggested using some of the surplus on covering the personnel costs and pointed out that $15.82 million designated for the capital improvement plan contingency fund was more than enough. He also supports tax rate increases but said using surplus funds would help soften the blow. 

City Councilor Lloyd Snook had floated the idea of a four cent increase on the real property tax rate, but began to reconsider.

“I went back and looked and the first thing that came to my mind was how are we going to sell it to the citizens of Charlottesville that we have a $21 million surplus and we want to raise your taxes for $4 million,” Snook said. “That doesn’t make sense.” 

Snook said the city is already using that surplus for ongoing expenses, such as $2.6 million to fund a two percent cost of living increase for retired city employees. Budget director Krisy Hammil confirmed that is a one-time use of funds. COLA is a commonly used acronym to describe “cost of living allowance.” 

“Last year the city granted a six percent COLA employees and retirees got three so there was a two percent COLA for retirees that was unfunded payment to make up for that and then going forward, that’s covered, but it’s a one-time actuarial payment to reduce the liability that was created for the unfunded two percent payment,” Hammill said. 

The discussion of the semantics of “one-time” use was also applied to other line items such as whether a $400,000 line item to cover the cost of an off-budget increase in the city’s trash-hauling contract price was a recurring expense or not. Snook also questioned a $200,000 line item to go to a fund to pay for maintenance of properties the city leases to others. 

“We’re not talking about City Hall or the annex,” Hammill said. “We’re talking about properties that have been acquired like 0 East High Street and other things. There is not a pot of money beyond any normal maintenance to cover a recurring maintenance that may happen with those properties. This $200,000 is intended to be a seed pot of money to help cover the maintenance for those properties and the idea is the rent from those properties will go into an account so we can have the funding to cover that maintenance.” 

City Councilor Michael Payne said he supported staff’s recommendation as is, and said the funding in the capital improvement program could be used for this purpose in the future. 

City Manager Sanders said a good portion of the surplus was created by vacant positions that were funded but not filled. He also said he will need the entire $15.8 million in the CIP contingency fund. 

“So when you received your budget preview last week, we did not spend any time talking about the surplus because it’s one-time money and the intention is to use as much of it for one-time expenses related to those two priorities that this body adopted as its priorities,” Sanders said.

Sanders said the money in the CIP contingency fund would not be tied to any project at this time but would instead be kept in reserve simply to balance the FY23 books. He said Council’s previous allocations from the fund allowed for the $5 million purchase of a half-share of 74 affordable units, the $5.4 million acquisition of the Charlottesville Area Technical Education Center, and other big-ticket items. Similar large capital items are looming. 

“If we tie this now to the implementation of collective bargaining and [compensation and classification], you have fully restricted yourself from even having those options and we all know that you have decisions still coming,” Sanders said. “Alternatives fuels for [CAT] buses. You’re probably going to have an another affordable housing project that is not in the five year [capital improvement program] plan that we’re bringing to you as well as a whole host of other things.” 

Sanders said there are three additional collective bargaining units coming to Council in the future, and that’s going to increase costs even further. 

The resolution to adopt the allocation of the FY23 surplus passed unanimously. 

The conversation took place before a work session with the School Board on February 7, another item I’ve not had a chance to go through yet. 

Here are some resources:

• This is a link to the budget work sessions for the development of the FY2025 budget
• This is a link to Superintendent Royal Gurley’s presentation to the School Board from February 7, 2024. Did anyone write about this event?
• This is a link to the video of the February 7, 2024 work session. Would anyone like to write about it?
• The Weldon Cooper Center released school enrollment projections for the next five years and you can look through it here.

Before you go: The time to write and research of this article is covered by paid subscribers to Charlottesville Community Engagement. In fact, this particular installment comes from the February 20, 2024 edition of the newsletter and podcast. To ensure this research can be sustained, please consider becoming a paid subscriber or contributing monthly through Patreon.