In November, the Albemarle Board of Supervisors will be presented with foundational information about the details of the county’s next budget beginning with a review of the five-year financial plan.
To prepare, county staff provided a macroeconomic outlook with a detailed report produced by Virginia Tech. But a key thing driving Albemarle’s fiscal policy these days is a desire to diversify the county’s revenues to increase the amount that that comes from commercial sources.
“What matters is how much of that tax base is made up of residential versus agricultural versus commercial and industrial,” said Assistant Chief Financial Officer Andy Bowman. “And what we’ve seen over the timeline since the emergence from the great financial crisis to present is that commercial and industrial has declined from about 15 percent to 10.9 percent percent.”
The amount that comes from residential property taxes is 69 percent, up from about 54 percent in 2004. To reverse the trend, Albemarle County staff are betting heavily on economic development as embodied in a strategic plan that seeks to grow the agribusiness, bioscience, and national intelligence sectors.
For an understanding of current trends, staff commissioned Dr. Sheryl Bailey, Visiting Professor of Practice from Virginia Tech’s School of Public and International Affairs, to once again provide an overview.
“We have a resilient economy, it is incredible,” Dr. Bailey said. “We are the largest economy in the world, which means we’ve got a lot of room to absorb many, many disruptions. We’ve had nothing but disruptions since the pandemic, and it’s coming faster. The opportunity and likelihood of disruptions has increased and it’s playing itself out.”
Dr. Bailey said disruptions created by tariffs have slowed the pathway to economic growth and there is still a lot of uncertainty. Virginia has been hit by reductions in the federal workforce as well as a related drop-off in the number of contractors. But recent projections from the United States Bureau of Economic Analysis showed signs of health.
“AI investments in healthcare have bolstered Virginia,” Bailey said. “We continue to expect it to grow, but we expect to trail the nation for the next couple of years until we absorb the significant change in one of the major sectors of our economy.”
Dr. Bailey said investment in AI technology by companies is seen by some as risky if the hundreds of billions of dollars being spent do not come with a significant return.
Dr. Bailey said Albemarle County is ahead of most economic trends in Virginia, outperforming on jobs growth and meals and lodging taxes.
In September, the Federal Reserve raised interest rates to try to keep inflation in check and another decision point will be made later this year. High rates have slowed the real estate market.
But one statistic explains how consumer spending is holding the economy afloat.
“The top 20 percent is responsible for nearly 60 percent of all consumer spending in America,” Dr. Bailey said. “So they’re driving the economy and it’s very much depending on stock market wealth. And the rest of us are using savings and debt.”
One of Albemarle’s top advantages is a string of AAA bond ratings from multiple agencies. Dr. Bailey said another is the county’s ability to plan ahead which led to the purchase of 462 acres around the Rivanna Station in 2023.
“You said, okay, there’s 400-plus acres here, and we can accommodate that and achieve that and keep our AAA,” Bailey said. “That comes from that long-term financial planning. That strategic step would not have happened if you had not had that long-term strategic planning and saw that you could accommodate it and maintain services and your rating.”
The first of two work sessions on the financial five-year plan will take place on November 18 according to the county’s budget calendar for FY2028.
Resources:
- Staff report for Economic Outlook
- Presentation for the October 21, 2026 on the Economic Outlook
- Annual Economic Outlook from Virginia Tech
- Calendar for development of Albemarle’s FY2028 budget
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