By the time I write this, there have been public hearings in Charlottesville on the tax rate increase. That was held on March 18, 2024, thirteen days after City Manager Sam Sanders introduced a $251.53 million budget for fiscal year 2024 which begins on July 1.
The first of two public hearings on the budget itself will be held at 6 p.m. in CitySpace on Thursday, March 21, as part of a community budget forum. This segment is designed to get caught up with one of two work sessions that have been held.
Council got a reintroduction at a work session held on March 7, 2024 with a look at changes in revenues and changes in expenditures from the current fiscal year to the next one. (presentation)
Charlottesville’s general fund budget has grown from $142,443,480 in FY2010 to $228,433,247 in FY24. The proposed budget anticipates that increasing by just over $24 million in FY25 to $251,526,900.
“You’ll see from the chart that over the last few years, the annual increase has been larger than normal,” said Krisy Hammill, the city’s budget director. “Of course, for FY25, we know we do have some tax increases in here. In 2023 we had a tax increase as well which contributed to some of that.”
Hamill said recent years have also seen large increases in real property assessments as well as good returns on the meals and lodging taxes. She pointed to a decline from FY2010 and FY2011 to demonstrate the risks of municipal budgeting. FY11’s budget was nearly $1.7 million less the previous year.
“This is also to illustrate the idea that while typically the budget does grow every year, there are always chances that it’s not at the same level and that it could also reduce as well,” Hammill said.
Nearly 71 percent of the general fund budget comes from local taxes. The amount expected to be brought in under the real estate tax under Sanders’ recommended budget is $108,438,706, a $9 million increase over the current year. That’s in part because of the two cent increase Sanders is recommending.
However, the mandated advertisement of the tax rate for the March 18, 2024 public hearing was for a three cent-hike.
“We can always go down but you cannot exceed whatever it is that you advertised,” Hammill said.
Revenue from the meals tax would increase $4.1 million to around $19.75 million in FY25, in part because of an anticipated rate increase from 6.5 percent of a meals’ bill to 7.5 percent. The transient occupancy would bring in an additional $1.2 million.
One uncertainty at the moment is the lack of an approved state budget. Stay tuned.
One projected decline is in the amount that comes from fees paid for the city’s recreational programs. The adopted budget anticipates just over $1.5 million and the projection for FY25 shows that dropping by around $320,000.
“Recreation income continues to be something that is redefining itself after COVID as they’re working through their programs and their master plans,” Hammill said.
Turning to expenditures, as of March 7, 2024 the budget reflects a $7 million payment to city schools, $2 million shy of a $9 million request. Some other personnel highlights:
- $851,037 covers two-thirds of the costs to pay 15 firefighters hired in previous years using a federal grant
- $122,935 for a new assistant city attorney
- Three new full-time Charlottesville Area Transit employees have been added to help reopen the Downtown Transit Station for a total of $185,787
- There’s a new transit planner position and budgeted at $124,593 and a new transit procurement buyer budgeted at $121,472
- $211,575 for two new firefighters to be part of the ANCHOR team
- $338,712 for two new police officers to be part of the ANCHOR team
- There’s another $170,500 for someone to be administration for the ANCHOR team with some of that funding going to pay for clinicians for a “local partner” who was not identified at the work session
The ANCHOR team is the city’s public safety response group that will field service calls with parties involved in a mental health crisis. Council had not yet been briefed.
Much of the additional spending in FY25 is related to implementing a compensation and classification study intended to retain city employees. That includes an additional $6,277,500 to be spent in additional salaries and benefits. That does not include the impacts from collective bargaining which adds an additional $3 million to the city’s spending.
Vice Mayor Brian Pinkston offered this support for the additional costs related to personnel.
“This is what I would say is an investment in a much better organization,” Pinkston said.
The March 14, 2024 work session dealt entirely with funding for nonprofits and other agencies that comes through the Vibrant Community process. Hammill had a quick preview on March 7.
“Council had a lot of discussion last year about if there was a way to increase the pot of money for the competitive process,” Hammill said. “There were also some talks about certain agencies that were just considered to provide fundamental services that we didn’t feel like should be competitive and so we put that into play this year.”
More on that next time.
The city will pay an additional $686,215 in FY25 for refuse collection.
“We’ve seen huge increases from our contractor for curbside pick-up and also tipping fees,” Hammill said. “One of those we had to absorb mid-year out of the year-end surplus that you just passed for the current year and this is an anticipated increase that is going to happen in FY25.”
Staff had not yet recommended any changes into the fees paid by city residents.
At the end of the March 7 work session, Councilors returned to the idea of the potential for a three-cent increase on the real estate tax. Pinkston supported the flexibility of being able to have extra revenue.
“We’re advertising three at this point and really only committed to two but we have that option of a million to allocate,” Pinkston said.
Sanders explained why staff opted to advertise three cents.
“It was to allow you all some movement around if you were to make a change to the lodging tax or the meals tax you would have the ability to offset that with the real estate tax,” Sanders said.
Sanders some Councilors have expressed concern that the meals tax may hurt Charlottesville residents.
The first work session took place before the deadline to advertise in the newspaper of record. Councilor Michael Payne said he would support a four cent increase.
“The meals tax is our most regressive tax and I think it also has a larger marginal impact on some of those smaller businesses and real estate tax is not a great tax by any means but it’s the most progressive tax we have the option to use,” Payne said.
A final decision on the tax rate will be made over the course of the next few budget work sessions with further ones on March 28 and April 4 as well as the March 21 public hearing.
Other factors include whether Governor Youngkin will sign legislation allowing localities to hold a referendum on increasing the sales tax for school construction. There’s also the potential for more requests for spending, as well as potentially reconsidering the city’s continued involvement with the Charlottesville Albemarle Convention and Visitors Bureau. Currently a portion of the city’s transient lodging tax goes to the agency to carry out state-mandated for tourism promotion.
Payne requested to be a sent a copy of the memorandum of agreement.
“That’s one of these agreements where an increase can be baked in from an agreement that was agreed on years ago in terms of a certain increase in lodging tax revenue going to them and the question I have is how much of our tourism is driven by the fact that there are wineries and Monticello and all these areas and is that what’s driving tourism?” Payne asked.
Mayor Juandiego Wade, a member of the CACVB’s Board of Directors, defended the role the agency plays and said their work to attract more Black tourists has paid off.
“When they had some extra money from the COVID, they were able to do some really robust advertising, particularly to the community of color, and that’s how they were able to win a lot of those awards,” Wade said. “I found out at one of our recent meetings that one of the reason this region got the wine region of the world is because of our efforts to each out to communities of color.”
Payne said he just wants to investigate future revenue options to support additional city spending in future years.
“Any stone we can unturn and if there’s something we haven’t thought about in ten years, we owe it to the community to think about,” Payne said.
For more information on the city’s budget, visit the city’s website.
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