No major comments at Charlottesville City Council’s first public hearing on two-cent tax rate increase

There are many steps a locality has to take in order to adopt a budget each year and Charlottesville City Council has many to go until adoption. On March 16, the elected officials held the first of two public hearings on proposed tax rates on which the budget for fiscal year 2027 has been built.

“We will be having our official noticed public hearing on April 6, but tonight serves as an additional opportunity for the public to speak to you since there is an increased tax rate proposed in the proposed budget,” said Krisy Hammill, the city’s budget director.

That increase is an additional two cents on the real property tax rate for a total of $1.00 per $100 of assessed value. The increase fills a $2.5 million gap and results in a balanced budget.

Only one person rose to take advantage of the opportunity but did not give a name. Instead of making a comment, the person asked questions.

“What’s the relationship of fundraising from any number of kinds of sources to our, you know, our tax revenue that we use for things,” said the unidentified person. “So we use taxes for things that we want to accomplish. How might. And how does fundraising of different kinds relate and fit in with our budget?”

Charlottesville Mayor Juandiego Wade responded that there had been a work session on March 5 where the revenues that make up the budget were discussed and there will be other opportunities to learn.

Councilor Natalie Oschrin had this explanation.

“Our total budget is composed of state funding, federal funding, and local funding that’s then broken out and spent various ways,” Oschrin said. “And some of those funding sources have specific strings attached, like money we get from the feds for our bus system has to get spent on the bus system. And there’s certain local matches for various projects and grants we apply for throughout the year as well.”

Before we go back to the March 5, 2026 work session, some resources:

• Charlottesville City Manager Sam Sanders’ recommended budget for FY2027
• Presentation from March 2, 2026 introduction of the budget
• Presentation from March 5, 2026 budget work session

Council went through all of the revenues and expenditures at their work session, beginning with a recap at the March 5 event.

“For the 2027 budget, we have a proposed total general fund budget of just over $279 million,” said Krisy Hammil, the city’s budget director.

Some of that revenue comes from Sanders’ inclusion of a two cent increase on the real property tax rate. One of the reasons cited for a need to bring in more money is to meet the demand of the advocacy group IMPACT to hire more drivers for Charlottesville Area Transit.

In December, Sanders briefed Council on a plan to phase in the hiring of dozens of new CAT employees in order to implement a “system optimization plan” that turns five years old this spring.

“We need 40 additional drivers, 106 drivers total,” Sanders said. “So we need 40 additional drivers. But whenever we try to have that conversation, [CAT Director Garland] Williams is always pointing out to us that it’s not just drivers, it’s also the various staff members who support the drivers.”

That means supervisors and mechanics. The cost for the first phase of the four-year plan will be $2.2 million and a portion of the full cost will be covered by Albemarle County.

Council has already said they want to continue to keep CAT fare-free and there are costs associated with collective bargaining.

One Councilor asked what would happen if the city could no longer afford to cover the cost of increasing benefits called for in the four contracts. Sanders said if Council was not willing to raise real property taxes to cover the difference, there would be negotiations.

“Basically, we would indicate to them that we are not able to fund the budget, we are not able to fund the contract and then they would more than likely want to move forward with fact finding,” Sanders said. “If we were to say that we can’t afford it, then we would have to prove that.”

Ultimately the decision is with the City Council.

The official public hearing will be held on April 6. The rates can still change between now and March 25 which is when a public notice can be readied in time.

On March 5, Councilors offered their positions on whether they wanted to make an adjustment to the real property tax rate.

“I’m thinking that at least for me, I don’t want to see it higher than two, so I’m, I’m comfortable with advertising it at two cents,” said Mayor Juandiego Wade.

All others were in agreement to advertise two cents, ratifying Sanders’ recommended budget. However, Sanders pointed out if Council decides not to proceed with the rate increase, there won’t be much time to make adjustments to anticipated spending that would then need to be removed.

“If we’re going to possibly not increase, we don’t have a lot of time to come up with alternatives,” Sanders said.

One of those alternatives would be to put a portion of the $8.5 million surplus from FY25 to cover the difference. That might jeopardize the city’s AAA bond rating.

“To use one-time money to balance the budget is not seen as a good financial planning tool,” Hammil said. “They would much rather know that management and council have the strength to either raise taxes or cut expenses to make sure that you’re structurally balanced.”

For more information on the budget, consult the city’s website. For my stories, visit the topic page on Information Charlottesville.

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