In a year when real property assessments increased an average of 3.72 percent, Charlottesville City Manager Sam Sanders is recommending a two-cent increase on the real property tax rate to balance a $279.6 million budget that would begin July 1, 2026.
Sanders explained the reasons for the increase in a 45-minute presentation to Council on March 2.
“Tonight we engage in an important discussion about the people’s work as it has been entrusted to us on their behalf,” Sanders said. “We have an awesome responsibility to do what we can to serve them well, meet their needs and reflect their values in the work that we do.”
Resources for this presentation:
- Budget Explorer version of Charlottesville’s draft FY27 budget
- Charlottesville’s draft FY27 budget in .PDF form
- Sanders’ presentation from March 2, 2026
Charlottesville City Council is scheduled to adopt a budget on April 9 after making amendments to the document has Sanders recommended
The development of the city’s budget is informed by many policies, but the strategic plan has the most influence. A framework for a new plan came into being shortly after Sanders was hired as a deputy city manager.
“In 2022, we initiated a new strategic planning process and in August of 2023 Council adopted a new framework anchored with a set of strategic outcome areas and a commitment to JEDI—, justice, equity, diversity and inclusion—that has served as our roadmap since,” Sanders said.
The adoption was actually in September 2023 as I reported at the time. Either way, since then the city has hired a new chief of strategy who will produce a close-out report on the strategic plan later this summer as work to adopt another one continues.
For now, the plan’s vision states Charlottesville is “to be a place where everyone thrives” and Sanders showed a chart with wage distribution from 2024 in Albemarle and Charlottesville that indicates about 30 percent of households made below $25,000 a year and about 20 percent made above $100,000. Just over 20 percent between $25,000 and $50,000.
“ , what you see is in the middle, you see a gap, you see it drop dramatically to the number of people who earn anywhere from $50,000 to $100,000,” Sanders said. “That’s our middle income population.”
Sanders said a challenge Charlottesville faces is that the number is falling and that people in that category have disposable income which supports commerce. Home costs have increased sharply in the Charlottesville Metropolitan Statistical Area and more people live outside the city as a result.
“Individuals are now traveling farther and farther in and it’s getting that much harder for them because they have to go farther in order to maintain affordability,” Sanders said. “I will offer that as people move out, it complicates how we serve because they are not here in the community and able to connect fully. And they also may have to continue to move because they’re trying to stay in a place that they can actually thrive and traffic and it creates trust.”
With that as background, Sanders got to the budget which by Virginia law must be balanced. At a series of work sessions, Sanders telegraphed some of the pressures on the budget including a need for spending on housing, transit, a unionized workforce, and other pressing issues.
“This is my big night because I get to come and bring to you how hard it has been to balance a budget,” Sanders said. “But the budget is balanced. And there are only two ways that we could do that. Increasing revenue and decreasing expenses. Those are only two choices. And I’ve looked under every seat cushion trying to find an alternative, and there isn’t one.”
Sanders’ draft budget for FY2027 is based on total revenues of $531,778,435, an amount that includes rates paid for water, sewer, and natural gas as well as the capital improvement program for the year. He said he was able to get about $500,000 in reductions made after asking departments for cuts.
The general fund budget for FY2027 is proposed at $277,175,674, a 4.5 percent increase over the current fiscal year. The presentation describes the revenue growth as “natural” but what the budget does not tell you is that Virginia law requires localities to advertise what the real property tax rate would be to bring in the same amount of revenue as the current fiscal year.
“The equalized rate is $0.9476 per $100,” said public engagement coordinator Caroline Rice in response to a question asked this afternoon.
The new budget creates five positions for a total of 1,123 city employees. Two of the new positions are licensed clinicians for the ANCHOR team and another will help some in the city cope with an increasing tax burden.
“A tax relief specialist to continue to work on our tax relief program specifically because as we have had challenges and the need has grown, we have had more work that now requires an additional set of hands to manage,” Sanders said.
In December, City Councilors were told that Charlottesville Area Transit needs 42 drivers to have enough people to implement a system optimization plan Council first saw in 2021. There has not been a single Sunday bus since March 2020.
The draft FY27 plan included an additional $2.2 million to hire ten drivers and five support staff with similar step increases in the next three years. Sanders said this amount also helps cover the increased costs that come with collective bargaining and keep rides free for passengers.
“We want to optimize this system and service,” Sanders said. “And in order to do that, we were able to work through the consultants that we’ve been working with to update what it requires to reach optimization.”
However, Sanders expressed skepticism that CAT will actually be able to hire ten drivers each year due to a competitive market.
“The reality is that we are in a community of roughly 160,000 to 175,000 people and we have five transit systems,” Sanders said. “That’s our problem.”
City Councilor Michael Payne and City Councilor Jen Fleischer were present at a February 23 event held by the advocacy group IMPACT which lobbies for funding for housing and transit. Payne said the group is now requesting to know the cost of hiring 15 drivers a year.
“We’re kind of close to what that would look like here,” Payne said. “Essentially, it would be at about a little over $400,000 to this number.”
Sanders said he does not have that number handy and would need to discuss with CAT management but the information will be made available.
The Affordable Housing Plan adopted by Council in March 2021 made a moral commitment that the city would spend at least $10 million on affordable housing initiatives, and the FY2027 budget has $11.5 million for that purpose. That includes the second of three $5 million payments to the Charlottesville Redevelopment and Housing Authority for the first phase of Westhaven.
There are also increases in funding to CRHA as well as the advocacy group that lobbies on behalf of people who live in public housing. CRHA received $137,000 for operations in FY2026 and that will increase to $300,000 in FY27. Funding for the Public Housing Association of Residents will jump from $66,000 to $125,000.
“Neither of those numbers match what they requested,” Sanders said. “But both of those numbers indicate the seriousness in which the city is working to try to support organizations that are working hard for certain populations in our community who struggle.”
Four of the six eligible collective bargaining units are now in place. The FY2027 budget has a two percent step increase for non-union employees as well as a two percent pay scale adjustment. Those in the other units get more due to negotiations.
- Unionized employees of the Charlottesville Fire Department get a 2.9 percent “pay scale adjustment with anniversary date realignment” and a two percent step increase
- Unionized employees of the Charlottesville Police Department get a four percent “pay scale adjustment with anniversary date realignment” and a three percent step increase
- Charlottesville Area Transit employees get a pay scale adjustment between three percent and five percent depending on position as well as a two percent increase for drivers.
- Employees in Public Works, Parks and Recreation, Public Utilities, and miscellaneous personnel get a two percent step increase
Sanders said the city has had to hire staff just to work on the constant negotiations.
“Having four contracts is quite a pickle that you have put us in with having us have this many contracts to manage,” Sanders said. “We’re in a perpetual state of constantly negotiating. That is the reality. We finish one and we move to the next one. And sometimes we have two at the same time.”
There are 389 pages in the draft budget document and some of the highlights:
- There is a $500,000 subsidy to operate a low-barrier homeless shelter.
- An additional $290,000 will be spent on rent and tax relief programs.
- As with Albemarle County, there are contractual obligations that increase payments to the Albemarle Charlottesville Regional Jail as well as and the Charlottesville Albemarle SPCA
- An additional $500,000 has been added to each year of the capital improvement plan to work with Dominion Energy to remove utility poles in the middle of sidewalks.
- An additional $2.5 million added to the capital improvement plan to implement the master plan for the Charlottesville Parks and Recreation department.
- An additional $4.3 million is slated to support the Downtown Mall Tree Plan
The city’s budget also includes $21.88 million from Albemarle County that comes from a revenue-sharing agreement agreed to in 1982 at a time when annexation was still possible. This agreement remains in place until one of three things happens, according to page 206 of Albemarle’s draft budget.
- The County and City are consolidated into a single political subdivision
- The concept for independent cities presently existing in Virginia is altered by the State law in such a manner that real property in the City becomes part of the County’s tax base
- The County and City mutually agree to cancel or change the agreement.
More details in the next newsletter from a thorough reading of the budget as well as the rest of Sanders’ presentation and Council’s reaction. A budget work session is scheduled for Thursday.
Before you go: The goal of Town Crier Productions is to increase awareness about what is happening at the local, regional, state, and federal government levels. Please share the work with others if you want people to know things! Paid subscribers cover the cost of conducting research for this article which was originally published in the March 4, 2026 edition of Charlottesville Community Engagement. You can either subscribe through Substack or make a charitable contribution.
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