Localities across the United States face a very different federal government and budget season may be very different as federal funding is reviewed by the Trump administration.
On January 30, City Council held a budget work session for the development of the FY26 budget. That story will be in the next edition of Charlottesville Community Engagement.
On January 21, Council heard from the city’s finance director on money left over from the fiscal year that ended on June 30, 2024. The materials sent to Council are not in included in the agenda packet and are not in the City Manager’s “transparency portal.”
“The fiscal year 24, the General Fund, ended with approximately $22.4 million in excess of the 17 percent of the fund balance policy,” said Chris Cullinan. “This represents approximately 9.8 percent of the adopted FY 2024 budget.”
In municipal budgeting, a fund balance is an amount of money kept in reserve in order to cover unforeseen expenses such as a disaster. Charlottesville’s policy is to keep 14 percent of the general fund and that’s one reason the city has the highest bond ratings possible.
In FY24, Cullinan said the city collected $12.5 million more than expected including $3.5 million more in real property tax revenue.
“Obviously, the real estate tax revenue is the largest city’s largest source,” Cullinan said “The overall revenues for the general fund budget, we continue to see a very robust real estate market.”
Higher-than-expected interest rates brought in an additional $2.9 million.
- Personal property tax revenue was $1.7 million more than expected
- Business Licenses brought in $1.2 million more than expected
- The meals tax brought in $1 million more than expected
- The sales tax brought in $0.8 million more than expected
The city also didn’t spend as much as expected to the tune of $9.2 million, with $5.9 million of that related to vacant positions. Cullinan reminded Council that FY24 began on July 1, 2023, before Sam Sanders had become city manager.
Cullinan said the city has also used a lot of one-time money to fill gaps such as American Rescue Plan Act funds as well as previous surpluses.
“What we’ve discovered is when we add these monies back into departments, these departments already came in under budget already,” Cullinan said.
The surplus from FY22 was due to the rebound after the initial impact of COVID.
Cullinan said one reason why the city ends up with surpluses is that budget staff are conservative with their numbers.
“We take a very pragmatic view of things and we want to see some trends before we start making some significant changes into the kind of projections that we made on the revenue side,” Cullinan said.
City Councilor Lloyd Snook asked several questions about the assumptions budget staff make each year.
“We want to be conservative in the sense of not making ridiculous assumptions,” Snook said. “But I think we also can afford to be somewhat realistic in assuming a certain amount of growth in these numbers year over year.”
Councilor Michael Payne said he is concerned that the city has a surplus each year.
“It’s concerning just in the sense that it’s not conservative, it just doesn’t reflect reality and kind of what’s going on to create that situation which… creates a challenge because then when we’re making decisions about tax rates or investments in the [Capital Improvement Program] or investments in schools, we’re making decisions and just in incorrect information environment,” Payne said.
The surplus will be appropriated at Council’s next regular meeting on February 3. Cullinan said city policy will be to put the funds towards the capital improvement program contingency fund.
Watch this section of the meeting on YouTube:
Before you go: This article was originally sent out as part of the Charlottesville Community Engagement newsletter in the January 28, 2025 edition. Both are functions of Town Crier Productions. You can support the work by purchasing a paid subscription or contributing monthly through Patreon. You can also send in a check or send an email, but drop me a line first.
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