Today’s edition has a heavy emphasis on Charlottesville’s draft budget for FY25 in advance of the first reading scheduled for tonight. There are several items I still want to cover from the development process and wanted to share what I have learned. For background, I’ll refer you to several stories written so far.
- Increased compensation for Charlottesville employees could mean tax rate increases in 2024, February 8, 2024
- Sanders recommends FY25 built on two cent real property tax rate increase for 2024, March 8, 2023
- Sanders’ FY25 budget recommends big increases for several nonprofits, March 13, 2024
- Council briefed on revenues and expenditure changes at first FY25 budget work session, March 20, 2024
- Charlottesville budget increases monthly parking fees, may consider fee increases for solid waste removal, March 23, 2024
- Sanders responds to Council questions about Vibrant Community Funds process, March 29, 2024
With that as background, let’s jump right into the three public hearings for three tax rate increases that are before Council. City Manager Sam Sanders re-introduced the budget on March 18.
“Per the City Charter, I as the City Manager am responsible for bringing forward a balanced budget,” Sander said. “In order to pull forward that balanced budget this year I met with Council in advance because of course the priorities that we have already identified, the funds were not available to make sure that all of them could be achieved.”
Council held a work session on the budget on February 1 and Council signaled a willingness to increase tax rates above and beyond what a 4.07 percent average increase in property assessments. Sanders delivered.
“It’s a series of tax increases and tonight the public will have its opportunity to speak to Council,” Sanders said.
Sanders budget recommended:
- An increase in the transient lodging tax rate from 8 percent to 9 percent
- An increase in the meals tax rate from 6.5 percent to 7.5 percent
- An increase in the real property tax rate from $0.96 per $100 of assessed value to $0.98. The public advertisement allows Council to approve up to $0.99 per $100.
The three public hearings came after a public comment period in which speaker after speaker gave a passionate plea for Council to adopt a resolution calling for a ceasefire in Israel and Palestine. Many were still in Chambers waiting for Council to take up the matter and some had their children with them.
“So I’m going to briefly touch on each one of the proposed tax increases and then we are required to have an individual public hearing since there are three different tax rates that are being adjusted,” Sanders said.
That prompted a question from Mayor Juandiego Wade.
“So, Sam, you’re going to do an introduction to each?” Wade asked.
“I’ll do all three and then I’ll say something before you open and close each public hearing,” Sanders said. “That way we’ll meet our legal obligation.”
Sanders paused while people in the audience carried on their business.
Then the City Manager explained that there are three Council priorities that are requiring him to increase the tax rates.
“The first being the integration of collective bargaining,” Sanders said. “That is allowing all of our various employees to be able to pursue collective bargaining. With FY25 we will recognize three unions in police, fire, and transit.”
The other priority is modernizing the city’s payment structure for city employees and the third is additional support for Charlottesville City Schools above and beyond the existing formula that governs the local taxes they receive.
“There was a $12 million request made by the schools,” Sanders said. “When I prepared the budget, I included a $6 million allocation for schools. In the conversation with Council and reaching the conclusion that we would advertise an increased tax rate, that number was increased to $7 million.”
When the public hearing was opened up for the real estate tax rate, former Planning Commissioner and former School Board member John Santoski said while Council has the ability to raise taxes to fund their priorities, many in the community are “baffled” by increased tax rates when assessments have led to surpluses each year.
“You know, we’re paying for a Buford renovation, we’re paying for affordable housing, we’re now going to be paying for what could be quite expensive unionization,” Santoski said. “I grew up in the northeast, trust me. Public service unions have bankrupted many a city in the that of Pennsylvania into bankruptcy over the years. Not saying that it’s not a good thing, but you City Councilors won’t be here when that starts to happen ten or fifteen years down the road so be very, very careful.”
Another speaker urged Council to raise the taxes to provide more revenue for services, but also to pay teachers more money.
“Many of them can’t live in the city and so the moral, just, as well as practical way is to pay them enough which obviously is to pay them enough which obviously will cost money and one of the key ways in order to make this a reality is by raising real estate taxes which compared to many places in the country are relatively low,” said Dr. Emily Yen.
Another speaker, Jeffrey Fogel, said he has long advocated for substantial increases in the real property rate tax but also called for more people to become eligible for relief.
“But we live in a very, very rich community and the shame is that property taxes cannot be made progressive the way income taxes are so that people in relative stratas of our society pay their fair share.”
They were the only three speakers for that public hearing for the real estate tax rate.
No one spoke at the public hearing for the lodging tax increase.
There were two speakers who took the opportunity to make a comment on the meals tax rate increase. One of them was Roy Van Doorn. He said the increase would cut into the ability of restaurants to make a profit.
“According to the National Restaurant Association, the average independent table service restaurant has a net profit to the entrepreneuer of between three and five percent,” Van Doorn said. “Yet the city now proposes to tax the revenue of every restaurant customer at a rate of seven and a half percent. That means the city in most cases will derive more revenue from the operations of restaurants than most of the independent table service restaurants.”
Van Doorn said restaurants are already contending with higher rent, higher labor costs, and higher food costs. Three meals tax rate increases in four years was making it harder to keep independent businesses afloat.
“It seems to me that the city has forgotten that restaurants suffered more damage than any other business group from COVID,” Van Doorn said.
The other speaker about the meals tax was Russ Cromberg manages restaurants for the University of Virginia Foundation. He urged Council to do more to promote tourism to increase the volume of sales rather than the percentage the city gains from taxes.
Council will hold the first reading on the budget tonight followed by a work session on Thursday to make any last minute adjustments. Then there will be a second reading and adoption scheduled for a special meeting on April 9.
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 is from the April 1, 2024 edition of the newsletter. This one was also a podcast, but it will not be timely enough to make this week’s radio edition of the program that will air on WTJU at 6 a.m. on Saturday.
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