One of the financial advisors to Charlottesville’s government has told the City Council that the development of the Fiscal Year 2027 budget may be more difficult than in previous years.
Vieen Leung with the firm Public Financial Management gave a presentation to Council at their retreat on January 9. That was before many of President Donald Trump’s tariffs went into effect and before threats were made to take over another country’s territory.
“The landscape and the narrative has changed significantly from that to what is currently now, which we all know is that the economic growth is slowing down,” Leung said.
Leung also briefed the Council at their retreat in August when she showed several pieces of information indicating an uncertain economy.
In Virginia, cities and counties are required to adopt a balanced budget by either raising more revenue or cutting spending.
Slow growth is forecast for the whole year and Leung said that will affect local governments, pointing to one statistic that shows more municipalities are growing concerned about not being able to balance their budgets, fund their pensions, and maintain infrastructure.
Leung said Charlottesville’s tax base has experienced extraordinary growth since the pandemic with a 10.3 percent increase in real property tax revenue in 2022 and a 10.3 percent increase in 2023. Increases were 4.4 percent in 2024 and 7.74 percent in 2025. The real property tax makes up 50 percent of the city’s budget.
Revenue from sales, meals, and the lodging tax grew in FY22 but have since flattened or declined.
One piece of information missing from the January 9 meeting and so far still not publicly available are the 2026 assessments. They are to be released tonight at City Council’s budget work session. This year in Albemarle, assessments are up 6.17 percent in 2026.
The audit of FY2025 has also not yet been published.
Federal funding during the COVID-19 pandemic helped cushion local governments but Leung said that money from the American Rescue Plan Act has all run out. In all, the city received $18 million and all but $1.6 million has been spent.
“Projects funded by ARPA include a property purchase from the Charlottesville Redevelopment and Housing Authority, grant programs for special events, and affordable housing initiatives,” reads page 19 of the slide presentation.
Since then, Council has made decisions that will require additional spending. Charlottesville now has four collective bargaining units representing public employees with another two eligible in the future. The contracts come with benefits that are no longer negotiable.
“As more collective bargaining agreements are finalized and finalized, you will essentially see more of that inflexibility on the spending,” Leung said.
City Manager Sam Sanders said that when there is a surplus now, the city first looks to make sure that it is able to cover increased personnel costs that have come as a result of the new unions.
“We go to those things that the healthcare fund, the pension fund, wherever. We know there might be a gap filler that’s needed, something that will kind of soften some of the pressure that we may feel.
City Council’s budget work session begins at 6 p.m. tonight.
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