That way you'd still be able to see you if you're sitting down. >> On the very end >> over here. >> Where you at? >> Right here. >> Okay. >> Great. There you go. That's that's reserve
top. Don't start that. >> This you want to go in an oven up here too. Yeah. >> Why not? >> Okay. >> Got a wardrobe change. >> Yeah. I got allowed to do a costume change. Get a hot suit. >> I'm trying to
>> I think your phone was >> s >> trying to only wear color. >> Good choice. >> All right, we are live right now. I'm break. >> You're ordering dinner for >> We should just order dinner and eat
here. >> Why am I doing this >> instead of >> you have the big budget? No, we're talking about the order for March 5th, 2026. Um, madame clerk, will you please call the role? >> Councelor Flesher
>> here. >> Here, councelor Payne >> here. Councelor Snooker >> here. >> Mayor Wade >> here. Um we're here to starting our um bud budget work sessions meetings and we
are this meeting will be discussing the revenues and expenditures. Um so Sam I turn it over to you or do go right to Christ. >> Okay dive right in my comments for later. >> So good evening council. This is the
first in our series of budget work sessions for the 2027 budget development. Um so tonight, as the mayor mentioned, we'll be going over uh uh revenues and expenditures
uh for the general fund primarily and uh talking about several other things which on the agenda. We're going to talk about revenues, expenditures, the budget drivers. We're going to look at the five-year general fund forecast and then we're going to have a discussion um
around the tax rates. So, jumping right in, some of these slides you will recognize from um Sam's presentation Monday night. Um but for the 2027 budget, we have a propo total general fund proposed budget of just
over $279 million. of that. You can see how those revenues are broken out. Local taxes are about 70% of that. License and permits are just over 4%. Uh county revenue sharing
is um 4.7%. Miscellaneous revenue makes up just a little over 1%. Charges for services five. And then intergovernmental revenue is about five and 63% um is how those total revenues break
down. Just real quick, do you want questions as we go or do you want to save for the end? >> Fire away as you have them. >> No, thanks. >> Well, let's talk a little bit about what changed from 26 to 27. Um we'll walk
through a couple of screens on the revenues. So the first section here is the real estate tax. As uh we discussed um this budget does include a two cent real estate uh tax rate increase. And with that the re real estate tax revenue
would be just uh under $6.4 million increase over 26. Lodging tax uh we're looking for about half a million increase. Sales is about 1.2. personal property. Um we're still
working on those assessments, but right now we're building in about $200,000 increase there. Meals tax, uh also about 1.2. And then moving down through the list, um minor increases on some of the other
local uh taxes. Uh there is a decrease on the plastic bag tax and as we've talked about before, that's basically a behavioral thing. And so we anticipate that that was going to continue to go down. >> And the goal is that it goes down, >> right?
>> Yes. >> Correct. >> Um, you know, in the past we have been talking to you um when we first started the budget development process sort of the tourism uh related revenues that I'll call them sales, meals, lodging um
they were lagging behind the first quarter of the year. We have seen some rebound on those and have projected accordingly, but there all of those tax rates remain the same for this budget. Moving on to license and permits. Um not
a lot, no real increase here. They're basically flat. Um the temporary parking permits that decrease there, that's really dependent on where projects are. Those are for contractors who have to get permits to park on the street. So,
um that's not really a big deal. Intergovernmental revenue, again, we're not sure where the um state budget completely will land. That's not finished. So, some of the numbers here are basically just an estimate. I think uh we've projected about a 2% increase
on those categories. um state uh police protection is not really we're not really projecting much because our 26 budget was a little high. So that's why that increase does not really account for 2%.
Um slight increase on the fire contract with UVA and then the DMB commissions. um a slight decrease uh but basically flat and then a few miscellaneous revenues um there with a slight
increase. >> Is there a quick breakdown of what the miscellaneous items are? >> Um it is a long exhaustive list actually. Um I'll be happy to share with council. It's of a lot of um
um >> like four or $5,000 here, 10,000 that >> Yes. And of course, nothing is coming specifically coming to mind, but we'll get you that list. >> Thanks. >> Um charges for services. Uh slight increase on the EMS billing. That's uh
billing that services that happen through the Charlottesville Fire Department. There's an increase on the uh payment in le of taxes from the utility funds for just over $400,000. Um indirect cost recovery uh that is uh
fees that we actually get from um our cost allocation report. Those are fees that come through social services and others as um our cost match uh for some of those grants. um parks and recck revenue basically
flat but a slight decrease. Court revenue similarly. Um and then there's sort of another category of um other charges for services um that are making up about 144,000 and again that's a
bunch of little small um changes. Uh we can certainly give you the in the in the budget book on the summary page for revenues you'll see all those listed. Um, and we've just summarized them here, but we can provide you a list if you'd like to see that.
>> Well, so in the budget on the charges for services revenue line, it's like5 million and some dollars and then the difference is negative $122,09. Is that the same charges for services as this
or is that is it referring to different set of charges for services? >> It should correlate here. Yes. Thank you. >> Uh miscellaneous revenue interest rates have continued to stay higher than we um
had anticipated in 26. Um and we did take a look at that and project that into what uh we're seeing or expect to see for 27. So we are projecting a change there. Rent has decreased slightly. Um, and then miscellaneous
revenue. Again, um, that's another, as I'm saying this out loud, I realize we have a bunch of big group things grouped here. Um, but they really are a bunch of little small item things to make up about $100,000 in that category. The transfer from other funds. Um, we have a
landfill reserve that has been in existence for quite some time. It it was actually um part of a reserve that was built uh many years ago um when we before uh there was an opening of that agreement. Um we have continue to use
that reserve to buy down the cost for the postclosure um cost that we have related to the landfill in Ivy and also that is where um our bill is paid for the recycling center on McIntyre.
We have been funding that about $450,000 from the reserve. Those to those two things total about total 948,000. And so um we are using up that reserve and we're putting in more um from the
reserve this year to cover those costs. So the Amar County revenue sharing as you know there was an increase of a total increase of about 1.7 in 27 about 1.5 of that we're using for the
operating portion of the budget. So all total for what we call the operating the net operating revenue changes that's about $13.6 million. And the next part of that is what um we have
sort of coined the term is designated revenues. This is the county revenue sharing portion that goes to the capital projects fund. Um and then also for the school contracts and then the um one the
equivalent of 1% on the meals tax that goes to the CIP is also what we call a designated revenue source. So that's another 719,000. So that gets us to the revenue change or increase from 26 to 27
of um 14.4 million. Any question on any of those before we move forward? Moving on to the expenditures. Again, um as we know, the budget has to be balanced. So, the total expenditures are the same as the total revenues at uh
just over $279.6 million. Um we are breaking this out into sort of functional categories here. Um and from this you can see that some of the larger groups the local contribution to schools makes up about
uh 28% of the budget public safety is about 22%. Debt service is um just uh over 4% and then uh you can see how the other categories break out as well.
So if we look at the changes there uh as we've discussed the change in the contribution to city schools is 2 point just over 2.5 million. That does match their ask um based on their budget that
was presented to you Monday night. We have increased rent and tax relief by over um 290,000. that does uh take into account um the impacts of the increased real estate um tax rate. We are absor
fully absorbing um a position that had uh previously been funded by a state safe routes to school uh grant that is now going to be fully absorbed within the NDS budget and we are funding a security contract for social services
which is an all um this I believe the total was like $70,000 um and 50,000 would be the local portion of that contract for compens compensation and benefits. Um, all unaffiliated employees, that
means employees who are not uh under a contract, they will receive a step which is uh approximately 2% sometimes it's a point something more or less uh excuse me more not less 2% or a little more
plus 2% pay scale um adjustment that amounts for about $2.3 million. the police contract. Uh in this budget account, this was just a renegotiation of that contract. The cost increase uh
in 27 is just over 460,000. The fire contract, we just finished negotiating a wage reopener, a one-year wage reopener for that contract, and we'll be renegotiating a contract beginning in the summer. Um that is just
over 388,000 >> what did you say? A wage reopener. >> So there their original contract was a 2year or three-year contract. Um and there was a provision in there that allowed them to come back to the table
and reopen their uh pay scale to renegotiate their pay scale in the third year. So we just completed that with them. Excuse me. Um and then their contract ends after 27
and their new contract will begin in 28 and there'll be a whole new set of uh negotiations for that. Uh labor and trades um that is a four-year contract. This is year two of that contract and that um accounts for
about $260,000 increase in this budget. Uh back la I believe it was last year, council passed a resolution to increase counselor salaries. Um and so the total cost increase with that and the benefits
is just over 88,000. We've been talking through many budget cycles um now about vacancy savings and the contributions that they were making to the year large year in surpluses. You may recall that last year we took a
swipe at that by uh estimating we went from estimating a million dollars in surplus uh I'm excuse me in vacancy savings uh we went to 5 million for 26 um we are closely watching that um and
closely managing that and so we back that off a little bit this year um to move that down to 4.7 to or what we I think might be a little bit more comfortable. Um, in addition, we've talked about the rising cost of health
care and our health rising cost of health care claims. Um, and so that represented about a 15% increase per employee in the budget this year at about 1.5. Fortunately, we were able to um help
offset some of that reduction. um our pension plan had a good year of returns um which we were able to use and so we were able to reduce the city's annual required contribution by just under $1.3 million which helped to offset the
increase in healthcare for this year. So, I have I mean I'm not sure if this is for for John, but I am on the healthcare. Do I have to like do it just um not a disclaimer, just a statement or
>> um not tonight because we're just we're not voting on anything, but we'll uh we'll look into it. >> And question for Chrissy for the um council pay increase with benefits. Did our benefits get more expensive as our pay increased or how is that factored
in? >> So some of the benefit health care for example is a flat fee. Yeah. >> Um some of the other benefits are a percentage of pay. So as the pay goes up the benefit cost goes up slightly. This is largely just pay though. What up, women?
>> Uh, I'm not aware. >> I can tell. I I mean, I don't want to say I just picked up the number from total personnel. I'll look and see. But generally, when we talk about paying benefits, it's life insurance. Um, if there's any retirement, the health
insurance, but that's a flat fee. Um, I can like maybe this is all personnel uh costs. If it I I will confirm that. Yeah, it might just be the word that's in there. You don't have to. >> Fair enough. Fair enough. Just in case there are >> Yep.
>> Um, thanks. >> Yep. And then in the budget, we approved three new positions. Uh, a tax specialist for our commissioner revenue. We approved a part-time police officer for the drug court. That was a
compliance issue. Um and then there was a Commonwealth attorney position um an attorney position in the Commonwealth attorney's office um that was basically largely offset by um expenditure savings, but it it did count for a new
position. Um contribution to outside agencies and nonprofits. These are sort of the um larger these are the contractual agencies. So these are um agencies that we have u regional
agreements with by and large. Um or there's a formula um that dictates what their funding is. Uh the jail has an increase this year of about $430,000 over 26. Most of that is related to um
the debt service um increase for the renovation. Um there is actually a decrease in the Blue Ridge Regional Detention Center. Um I believe that is basically just uh a reflection of our bed count is reduced from the prior
year. Uh ECC had an increase. Most of that is uh based on their salary and benefit changes for the year. Blue Ridge Health District. Um, very
similar. Um, and then the library had some changes to, um, they've been over the last few years trying to adjust their pay scale. Um, to get their pay scales in alignment. Um, so most of that
is the uh, pay and benefits. um conventions bureau that's based on the lodge first 5% of our lodging tax collections. SPCA uh as you might remember we renegotiated that contract with them last year. Um
that is based on a per capita rate which is increasing from $13 to $16 in this uh in 27 public defenders office. uh we uh have been providing a uh subsidy to them to help supplement the their salaries.
Um that is a small increase and it's basically the equivalent of what we're giving to um we're increasing their base by the amount that we're increasing our employees. So four the 4%. Um and then the other ones are just uh
basically the they're small programmatic changes. Um for the others on that list, fundamental agencies, these are agencies that were previously part of vibrant community funds. Um
most of these uh we'll talk about this a little bit more next week. we can give you some more detail, but most of these increases are based on um a 3% increase over last year. Pathways, you'll notice
that there's a negative there. Um so that is funded at a million dollars in the budget and part of that 700,000 of that has been direct aid. the additional amount um last year was $337 and uh
$337,43 um was to fund um the administrative part of that. We were able to actually get rid of a position, a vacant position that was assigned to that. So, um, we were able to move the total back to a million and then also were able to
reprogram a a few more dollars to direct aid. Um, even though it's showing a reduction there, Brack uh the reduction there, you may recall at the last uh meeting um in the wrap-up work session that you all had
last year, they had um there was a grant that they were not going to receive funding. And so part of what you um you all did at that last meeting was to provide them the gap funding for that grant. Um and so that's why this is showing as a reduction, but in terms of
their fundamental services, they're being funded flat at 250 that we have done previously. Inter agency transfers. Um these are transfers of dollars from the general fund to these other funds. Um, debt service is one that we'll talk about in
detail when we get to the CIP work session. That transfer is going up about a half a million dollars. Uh, our transfer to CAT is going up 883,000. Human services um is going up about
600,000. Some of that is uh about 250 of that is related to the two new positions or the anchor um program enhancements that we have funded this year with the two clinicians that were previously contractual and that will now be city
employees. Um and then 150 of that is to fund Kip expansion to uh help serve um I believe between 80 or 100 more uh spots for interns. Um and then social services is basically
related to an operational increase and CSA um that is related to increased costs that we've been incurring as it relates to foster care. So other changes um parks and wreck took
a look at their budget and um they have reduced their uh salary for temps that they were using based on some other programmatic changes. um information technology. Um we were able to reduce the computer
and infrastructure replacement. That's an annual funding mechanism uh for recurring replacements of uh city uh computers. Um generally contractual increases, this is city or city
departmentwide for in the general fund was about a million5. Most of that is contracts that have CPI increases. Um, a lot of it is for professional services, um, um, legal fees, those things where
we have established contracts, but the contracts have annual increases. That's what makes up that 1.5. Um, slight increase on utilities. And then um kind of moving down the list, the council strategic initiatives fund uh as we've
discussed that is um increasing about 130,000 um over what we did last year, but that is to um move your fund back up to give you a half a million dollars. Uh
so the citywide reserve um has reduced slightly. Uh solid waste disposal contract fees that's uh slight increase. Overtime we're seeing an increase there. A lot of that has to do with the collective
bargaining contracts. As the pay rates go up, uh the cost of the overtime goes up. Um there's been an increase in the workers compensation insurance pla claims and then uh we increased ever so
slightly um although not ever enough um our vehicle replacement funds. >> What what is the it's a $15,000 increase. What is the um I'm just curious. What's the budget for vehicles annually?
>> Uh so in the general fund it's $2.6 million. uh is what is currently in the base budget. That varies uh depending on the replacement cycle of what vehicles need to be replaced. >> That's not including fire.
>> It does not include fire trucks, >> right? >> But it does include like the light duty vehicles for fire >> and not buses. >> And not buses. Correct. Um it includes school buses, but the school buses even though it's 2.6 six total. The cost of the school
buses are in the um school maintenance um excuse me, the school pupil transportation contract that the schools reimburse us as part of the the cost that they reimburse the city. So the budget for pupil transportation includes the cost of replacement buses.
So it basically equates to about two to three buses a year depending on >> um so it's in the line item twice. >> It's in there once but I gave you the total for the general fund but I wanted
to make the distinction that schools actually replace actually pay that cost. >> Got it. Okay. >> And it's about I think it's like 534,000. So um you can if you want to subtract that out
then all other department general fund departments other than pupil transportation is about 2.1 million. So that gets us to the operating portion of the budget is 13.6 which matches on the other side.
And then looking at the um designated expenditures um they the capital improvement went up um about 104,000. The the school contracts went up the
whatever you add those together 360 something. Um and then the meals tax portion um went up 230,000. So that gets us to the total expenditure changes of 14.4 million.
Any changes? Any questions there? The school building maintenance the 232. I was trying to remember um earlier today it like it's 1.4 now
total budget. >> Yeah. Right. >> Is this a different line item? Oh, this is different. This is for the actual the uh operational part of the budget. This budget's actually 5.5 million.
Um and it went up 232 from last year. The 1.4 you're speaking of is in the CIP and that is for like uh u capital repairs, >> right? And so what's the 5.5? >> That's the operational part of the maintenance contract. So that's the
people, the the labor um for the school maintenance. >> Would you say >> like supplies? >> Yeah, supplies. >> So moving on, um we've been talking about drivers of the budget. These are slides that Sam presented uh Monday night. Do you want
to talk about these? if you need a break. >> Go ahead. >> All right. So, just kind of refreshing uh for the conversation from Monday uh referencing the fact that the priority that council has identified is to
transform transit and that has been um presented to you as a four-year uh plan. Uh and the goal is for us to of course uh activate these two items to increase frequency, improve reliability, raise
our writership levels, secure more funding and achieve optimization. And ultimately the the goal here is to operate a high performing regional transit service. So what we had identified was that with the update to the optimization study, uh we had previously been operating with an idea
that we were trying to achieve a little over 90 drivers and now we know that number is over a hundred. Um, so that's right. 100. So we need 40 additional drivers. 106 drivers total. So we need 40 additional drivers. Um, but whenever
we try to have that conversation, Mr. Williams is always pointing out to us that it's not just drivers. It's also the various staff members who support the drivers. For every certain number of drivers, there has to be a supervisor available to them to support them in the operations across the the network. And
for every number, every set of buses that are on the road, we need to have mechanics available to keep those buses operational so that they can get back on the road as quickly as possible. And therefore, we have other ideas of supports that are needed. So, we never want to just allow the conversation to
focus on just the idea of drivers, drivers, drivers because it's bigger than that. And for that when you add in the additional supports that are needed plus the fact that we have received from council indication that you want to continue to prioritize zero fair for riding the bus and there is a cost
increase u associated with collective bargaining. All that's identified here to suggest that the increase for funding needed to support our bus system is $2.2 million. that is shared with the county and we're showing you as well that the city share of the cap budget is 6.1
million and the county share of the cap budget is a little over $3 million. So this is meant to reflect the idea that this is year one of a four-year plan. next year. I would say to you that you've already made a commitment that we are going to be spending additional dollars in transit, which is why we want
to point out to you that when you make a decision about the budget and the structure of the budget, you've already made decisions. Collective bargaining is one of those decisions. And now transit is one of those decisions. Affordable housing is one of those decisions. So, you've pre-spent. So any increases that
we get are automatically going to have to go here first based on your commitment or you change your commitment. That's always the trade-off. So that's what we're pointing out to you at this point is 6.1 million for city share, $3 million for the county share and we'll come back to you next year
with additional increases uh to support that work. >> Supporting our schools. Um again just to um review when we first met with them their original ask was 6.4 million that
was reduced uh to 2.9 and then their final ask uh through their presentation Monday night is the 2.5 and that is fully funded in this version of the budget. Um additionally the 1.4 4 million we just talked about. That's in
the priority. It's for priority capital improvements. That's in the CIP. And then um another 1.3 million which is for ongoing maintenance and improvements. That is also in the CIP. Um and then in addition um we have the Walker PreK
Center um loaded in the budget and we have money for design and preconstruction in there as well. Pardon me. >> Questions. >> Affordable housing. Um redevelopment investments.
We have uh an additional 5 million which would be grant three of three for the redevelopment of West Haven. There's 1.7 million for Friendship Port Phase three. 700,000 for 501 Cherry was added to the
five-year plan in FY28. Um, we also anticipate roughly a half a million dollars for HUD entitlements and then the interest uh payment for the Carlton Mobile Home Park acquisition um
is $227,000. Um in addition we this budget funds a million5 uh for the affordable housing fund which also includes the funds for hops and $900,000 for cap and both of
those are in the CIP. So that's 11.5 million in investments in this budget for 27. So, moving on, I wanted to spend just a few minutes to talk about the the sort of long-term projection for the general
fund. Um, as you look at this and as you look at any projection, um, the obvious is that expenditures over this term are projected to outpace revenues. Um,
that's not unusual. Um, we're looking at growth for revenue at about 2.4%. 4% and expenditures at about 3.2%. So part of our job with each of these budgets is to make sure that by the time we adopt a budget, those two lines come
together and there's not um a difference uh or a gap between them. But some of the things that relate to that gap is this is a um a look at what our tax assessed value year-over-year
growth has looked like um since 2022. Um 2022 was 10 and a half% and then as you may recall this year our reassessment is about uh overall average 3.7%.
So you know the line is going down. Um, if you looked at this over a long term, you will see that this is all over the place. Um, but I think you would find that our average is somewhere closer to the four to 5% range. Um, and not always
at the 10. So again, uh, for the last few budgets that we've been working on, we've had a lot of extra cash to spend and now we're moving back to something quote air quotes more normal in terms of growth there. If you look at what's sort of tied to
this projected annual growth, the tan bars um on the left relate to the real est excuse me relate to the revenue. Um some of the things that are sort of baked into this long-term projection is
um you know uh slowing national economy and as well as some of what we've seen locally. There's also modest assessment growth. So if you were to look at this um you know three and a half% on the real real estate the other nonpropy
you know just below two um and but our total revenue is again at 2.4%. On the expenditure side, um a lot of what is baked in here right now in terms of the increase is what we are projecting out for employee compensation
um for the collective bargaining contracts, but also uh what is will be necessary to keep up for our unaffiliated folks and that pay scale as well as the cost of benefits. And then in addition um some inflationary factor
on the cost of services and infrastructure. So all of those things are kind of the um the the fuel if you will um and are the things that we use when we're working to build out the budget to make
sure that it's balanced. Um we also are thinking with an eye to the future as well. So that's before we get to the tax rate. That kind of concludes sort of the overall summary of the budget. I'll stop
there to see if there's any questions or >> Yep. Any questions or um you like with collective bargaining. So, some of those costs are probably, you
know, they be inevitable no matter what. Um, but there's definitely creating additional costes beyond just like adjustments we would need to make to the market. What again is the process for um how it would unfold if council
determined um that amount is too high to work within our budget. it is associated with your your ability to fund the budget. Now, if you were to indicate that we think the number is too high, that we're out of out of whack
when you're not interested in raising taxes and we cannot pull any additional levers to bring it back into balance. One of the conclusions that we would draw is that the the collective bargaining agreement cannot be funded. We would have to go back to the table.
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 uh move forward with factf finding. So, we would have to go to a third party and they confirmed the outcome in that case
because we're at the table negotiating two party. It's us and them trying to reach agreement. Uh if we were to say that we can't afford it, then we would have to prove that. >> But there's not binding arbitration. So whatever the factfinder said, >> it still comes back to you.
>> It would eventually come to city council to make a final decision on whether to fund it at that amount. >> That's correct. >> Because the factfinder would identify what the solution is that they see and it is it's kind of immaterial to how we feel about the choices that are available to council at that point.
That's the reason why you do what you can to avoid it. Uh but if you were to end up in that moment, whatever the factf finder says is the end of the conversation from a negotiating standpoint comes back to council and it would be up to you to make that determination.
>> But should city council say the either this budget cycle or at some point in the future the amount is too much, there would be a process for council to be able to >> Yeah, you'd have to >> reduce the amount given as part of the contract. Yeah, it actually it creates more of a tension. I would say that
we're we would still be rapidly approaching a budget deadline, but we're not going to be able to manage that process and it won't be in our control. It'll be working with them on a schedule to see how quickly we can get the results to then be able to bring some action back to you. We will probably end
up need to needing to change the adoption date. And so when you go into those negotiations, you have and you know you have the information from Chrissy and others about the budget and what you think the budget can bear type of thing.
>> Yeah. So technically, so I don't go in negotiation. I'm not in the room because I'm the ultimate decision maker. So I'm not there. U can tell you what it feels like to be in the room. But um we have a budget team. We have a a negotiating team that is in the room representing
the interests of the management side. And the work that we do in advance is to reach conclusions as to what we think affordability looks like. They are working with me in that moment of trying to identify what's the line that we can get to. Uh, and the goal would be to
negotiate to whatever degree you can. And that's assuming a lot because I'm in making that decision, we're using the information that we have about transit investments, climate investments, and other parts of the budget for being able
to determine that >> and also pretty ear the way our schedule falls pretty early in our process in terms of what our revenues might look like. So it is negotiating a little bit and >> um
sequential the employee healthcare costs have gone up a lot. You highlighted is there anything we're not doing or that are best practices or innovative programs that can of bring that down. >> Jason, do you want to speak to that?
>> Government. Yeah. Yeah. >> So, um, so as far as healthcare best practices, uh, the city has hired a new, um, third party consultant who specializes in that area. Um, so for the last however many years we've had a
consultant that we've worked with and it's always good to get new ideas and just make sure that there's nothing that you know we as far as plan structure, um, the premiums that we're charging, rebidding all of those contracts for health care, pharmacy benefit managers,
all those sorts of things. Um, and so we're in the process of doing that now. Um, and human resources do is doing that with the the new consultant where they're sort of doing, you know, an a toz review of the plan, how it's funded, how it's structured, the cost sharing between the city and employees and
retirees. Um, and so there's probably not much that would affect, you know, three months from now, but over the next six months, all of those things are going to be revisited to see, you know, what efficiencies could be found. >> Thank you. Um,
and then for the new positions, it sounds like the KLS attorney one was essentially offset or mostly offset. Mostly mostly offset. Um, for the other two, given that we kind of freezed hiring significantly or pretty new
position significantly, how were those determined to be? >> So the the court recovery officer is a mandate that we had not fulfilled. it's been uh basically we've been out of compliance for some period of time. So for me that
was one priority that we needed to go ahead and get resolved. So that was the basis for that. The other position was um commissioner of revenue works very hard I must say. Uh and with adding the tax relief programs it just gets more it becomes more work with more people
applying and more people processing. Um but I can he's here so if he wanted to add any further to it but in our conversation it was just a capacity for additional help. >> I mean yeah I'd be I'm not against it
but just curious to know like what is it helping with? >> So um we're getting creamed um I don't have enough people to do everything we need to do. Um, this person is going to work with business license and business
taxes primarily to be sort of a frontline uh customer service type position. Um, that would hopefully free up my business tax auditors um to actually go out and find money. That's the idea.
>> That was one of the deals that he made with me is that we should actually get a little more money in, but he couldn't offset the position. >> But he would try. >> Yeah. question. Is is this position going to find revenue that we're not collecting? >> This position is not, but hopefully it
will free up some other folks to go out and do some more audit work and discovery. That's the idea right now. Those people are chained to a desk um kind of managing customer service tasks, walk-ins, phone numbers. Um and I need
them auditing and doing other higher level stuff. >> But then this person's also going to work on the um >> Sorry, you just said it. Not compensation. The >> I said tax relief, but
>> tax relief. Yeah, this person's probably not going to be doing that. Not to >> I I need that too. U >> I got that confused because he asked for two. >> Oh, I see. Sorry. Okay. Got it. Got it. Thank you. >> And then um
just couple more. Um with the schools, when will we have clarity on if we fund what's in front of us right now with that collective bargaining agreement? what that cost is going to be for the city
one, two, three, four, five years from now. Um because as I said, I'm just worried that we're basically have placed like a bomb in our budget for the two, three years from now that we're just not factoring in. >> It's an there is a there's an increase.
The question is is what portion of it are they going to ask for? uh because they still have the ability to rework their budget. As you saw in the slide that we showed, the original ask was 6.4 and we are now looking at 2.5. Um they
did share with us um I don't remember the numbers, but they did share with us a projection over a three-year period because that is how you do your contract. Um and it is a steady increase for each of those years. It's part of what my comments to you are is that in
making the decisions that we're making now, we're making them for future years because these are not one-year decisions. These are multi-year decisions. It's a both contracts are three-year contracts. This is the second year of their um teachers contract and
would be the first year actually this would be yes second year of the teachers contract and first year of their support personnel contract would be FY27. So we have three years of one contract of increases another year plus they'll be
renegotiating after that as well. But that three-year projection does not include any analysis from them about addressing wage compression after their bottom pay scale went up over 30%. >> And that is always a result of this action and not identified as a part of
what we received today. Again, I would really just like to try to get an answer even though I know it's going to be um uncertain because we're talking about making a commitment to potentially 5 to10 million that we're just not
>> thinking about. Um >> I will say that um just because we're in the process so we now understand what it's like. I know what it feels like. Um there is the the element of the the uh employee base that is outside of the
contract. There's also not the top leadership, meaning the superintendent. Um that that has to be worked on. It's meeting and confer is the reference. That's the term that you use. Those are the individuals that you get to have a conversation with because they are interested in having a conversation
with. What you did to the bottom of the pay scale now presses them closer to us. So what are you going to do to create the distance that should exist? Um so they will be asking and there that will be an additional increase. We face the same situation. These three contracts
these four contracts that we have today at the end of each one I have another group of employees to sit down and have a conversation with individual the individual groups >> and it always comes out that we owe more when it's done.
>> Great. it will be a very big number that is unknown to us. >> Um I think well I'll I'll take the note of what you're asking and we can we can make that a question >> and they can give us a projection and at least we can have that available for you. It is a fair consideration for this
decision. >> So Michael just a quick tag on to your question about that. How is how is the information about our finances related to and I guess Dr. the girl that can't be in the conversations like you can't,
right? >> He's not. I don't I would imagine he's not in the conversation, >> right? Who you know when they go to the table, I guess their finance team from the schools. So, they have to kind of check with,
you know, out the overall city finances. >> I think there's a reason that they should. I think there's a reason that we should be able to give some indication of where heartburn might lie and where they could go because we have to help pay for it. But that is not the process.
It's not required. That is part of the legislation that is under consideration that it would correct that and it would make it necessary make it required that uh the school system would have to check with us before so that they would that's one of the corrections that just doesn't
exist at this time. Sorry. >> Oh, no. You're good. And I guess to kind of second that concern slashquest. So, the city was not uh involved in negotiating the contract. >> No.
>> Um but we set our budget and do the finances. So, the >> help pay for it. >> Right. So, the the information and decision makers who would fund it were just not involved in negotiations. So they go house shopping and don't ask
the bank for what mortgage they can get is basically what we're saying. Okay. Just checking. >> That's the analogy you want to >> just checking. >> Um and one final question, not that important, but curious with the
five-year general fund projections, how is 2.4% growth what's landed on for the projections? Um we have a table behind that where we're making some assumptions
on uh a bunch of things uh salaries and benefits um debt payments um our capital cash cost um and so that 2.4 is basically the average of all those
categories. Um I can share it actually in the budget book um in there is a section on long-term forecast and these tables are the summary tables but there is a more detailed table of the revenue categories and the expenditure categories and the projections of those
that'll show you the 2.4 and the um 3.2. >> Thank you. Anybody else here before we move on to talk about your favorite topic? >> Yeah, I got a couple questions. Um, so I know we're waiting for the state
budget. Um, just for, you know, we talk about state contributions along the way. um and in various boards and committee meetings we're were we're were in. But just to kind of summarize it nicely for the discussion here and for anyone who's tuned in, what are kind of the biggest
areas of state contributions where we're what where do we wait on making the most impact? Kind of like the top, you know, the top section. Um in terms of total dollars, social services, CAT, um
human services, they all have a big portion of uh state funding. Um for the general fund specifically, uh state aid for police, um uh reimbursement for constitutional officers,
um I'm missing one. Uh, let me go back. There's three that are big. >> Highway assistance. Um, those are the big ones in the general fund. They're several million dollars.
>> Um, thanks Um and then uh something that we've talked about in the finance committee but not really brought to a larger conversation. um what would it look like to implement zerobased budgeting and how would that process differ for well for
you all and for the staff >> worse >> I don't want to >> um so we have tried um a version of zerobased budgeting um and I will say that um we don't just there's a
perception that we take um you know if my budget is $100 $100 that we start with $100 and um we just add on from there. That's actually not what we do really. Um when departments are submitting their budget, they actually
have to enter a budget for every line item. They have prior years to review. Um and certainly they use that as a guide. Um and sometimes you know for office supplies do we say yeah well we think it might be 2% more or whatever or
the trend is this. Um but for all the big line items like contractual services, travel and training um we ask that they itemize that um each year. So there is we I would say we do some
hybrid portion of that. Um many of the large budgets like um for for the that's departmental budgeting for the many of the larger items um we do look at trends um and also you know a lot of the
departmental budgets many of them are contractual like for our core services trash for example um is based on a contract um that has an annual escalator in it. So we know that that's a given increase. um same for like our auditor
fees or um that we pay. So some of it is a given. Um you know we like I said we have tried zerobased budgeting. Um I'm not sure that I'm not a fan personally I
because I think that um they're just core cost. Um and we're already asking for the details. We we do a pretty deep dive um with the submission and also when the budget the departments come to
advocate in front of the city manager for their budget, we ask a lot of questions. Um so I'll stop there. I'll stop rambling. Sam likes >> and then I'll add not that I like it. Um I learned to do it so I have an
appreciation for what it feels like. It is a lot of work. Um, and not that that's a reason to not do it. Um, it is a lot of work. We are doing, as Chrissy said, we're doing a hybrid version of that. Um, we haven't, I would say, we haven't always necessarily done a full
hybrid version, but what has what is actually has uncovered is that through the way that we are approaching budgeting today, we actually are able to get directors to go back into their budgets and figure out where they can be creative and where they can come with suggestions on things that they can do
differently. and they've actually been responding well to that. And now what we've also gotten to do is be conditioned to the idea that if you want to do something and you don't think you're going to get a yes, come with that plan. So they are now showing up with I would like to take these three
vacancies that I've not been able to fill for an extended period of time and take them and do this with it and here's why and here's what we get in return for it. That's what zerobased budgeting really is going to produce is the moments for more of that to happen. Um
but I have and this team is is expected to take um a closer look at variances. So we have really been able to use our finance director in the past to take a look at variances and give reactions to where are they showing up on a regular basis and then we dive in and start
forming questions around if the variance is big in this number in this this line item and we've seen it for three consecutive years. We're putting more money there than we should. So we are pulling it back. So that's all part of the same process. So while we haven't just totally turned the table upside
down and implemented zerobased budgeting, one concern behind it is that we need to teach the team to do it before we it's a shock to the system if the system if you've not done it before because it really requires you to break everything down. And I think that's part of what we've been trying to avoid the
disruption to it because we would need to be teaching them now to start our process for when we start our process. and we haven't even finished it yet. It was time to start talking about the new system, >> but I'm a very systemsoriented person. So, I'm intrigued by the idea and we
have been introducing and she's better about it. She doesn't hate it. She's getting better at it because we are finding benefits to doing to to doing it in different ways. One concept that we had was that actually taking a look at certain departments and putting them on a rotation and therefore verifying the
quality of the budget. And that way we don't have to do it every single year because it does get monotonous and it feels like you're wasting time doing the same thing over and over. But you can do a deep dive and spread that around. And technically we have done that. We did that with some of the larger departments this year. That's how we
found $500,000 in savings. >> Thank you. Um, I know we did kind of a overview in revenues today, but I was looking at the budget summary earlier and highlighting some line items that I
had questions about. Um, like the wills tax line item is a 31% change. Is there what um >> we see fluctuations in that based on interest rates when there's a lot of
refinancing. We see a lot of um those it's really de recordations um more than wills. Um but it's really that's the biggest contributor and then obviously you know as people have large
estates and pass away and then we get large >> um will tax if you will. >> Um okay thanks. I've got more but I'll list >> okay >> to give you a chance to look at them. >> Okay. >> Um
but I do have one question for intergovernmental revenue. There's a line items. It's just called transfers. Were those part of what we looked at in here? Sorry. >> Um, can I add that to a list space? Yeah. Of
>> Yeah. Absolutely. Because it's kind of big and just >> cool. Okay. Thank you. What's the number? How much is it? >> Um, well, last year it was 10 10 million
10.3 and this year was 6.2. >> Okay. I I don't know. That's not right. Oh, >> okay. Thanks, >> Jen Lloyd. Do you have any questions? Mine are more like Natalie's like why is the UVA service charge 13% less revenue
making >> that is dependent on their their only um that is dependent on property that is actually taxable to the city um and it has to be for educational use I'm getting this jump in if I'm getting this
wrong you can speak better >> I think most of those there's some weird code provision related to property they own that's used for like faculty housing is taxable and one of the larger pieces they either sold or transferred between the university and the foundation or
something like that and it came off of that taxual so that's primarily why it went down I think you know which property it was I can look it up there they give us a list so >> it's only like three or four >> yeah there aren't very many of them >> yeah and similarly how did the city
schools make a re what's the revenue from city schools. >> That's their payment for the contractual services. Is that a couple million dollars? >> Uh, no. It's $4.7 million. >> That's um the trans pupil transportation
that they pay us for the pupil trans. Okay. >> Thank you. >> That may be what you're seeing in transfers as well. It might be transfer from schools. So, I know there is a school's line item and then separately there's a transfer line item.
>> Okay. >> I can look at it. I don't >> Yeah. Otherwise, everything I have >> I think that's does it. Lloyd, you didn't have anything right. >> Okay. So,
um, as you know, this budget includes a two cent tax rate, uh, increase for real estate tax. And um we are going to have um a an informal,
if you will, um we had originally planned to have the public the noticed public hearing for the tax rates um on March 16th, but we wanted to give you all an opportunity tonight to weigh in on that. So, we're going to have an informal, if you will, um or an
additional opportunity for the public to speak to you about the tax rates on March 16th, but we will actually hold the official noticed uh public hearing on April 6th, which means it has to be advertised uh no later than March 29th.
And in order for me to meet the printer deadline, um it needs to uh be at the paper before the 25th. So, um, part of what we need to know tonight from you is, um, if you can advertise what, um, a
rate that you want and you can, um, put at least that much in the budget and go down, but you cannot go more than what you advertise. Um, and so part of the discussion tonight was what you want to actually advertise uh for the tax rate
uh for that public hearing. And so before we talk about that, I'll just give you we'll just walk through a few of these extra slides. So um this uh budget uh proposes to move the tax rate up from 98 cents to a dollar per hundred
every $100 of value. The first box here will show you some groups of assessed value. Um, and if you recall the um the if this were the 25, so last year's h if your house in 25 was
valued at $950,000, um the assessment uh for this year for 26 on average for residential was 4.74. So, your house value would go from $950 to $9.99
uh and $30 $995,30. So, a change in your value of $45,000. If you were to apply, moving to the next box, um if you were to apply um the 98
cents to the 25 value, the taxes that you paid was $9,310 using the new value or just the reassessment. So, without any change in taxes at all, your tax bill um for 26
will be $9,751. So, a change of $441 is an increase that you will pay in taxes um in um on your tax bill just because of the reassessment.
If we move to the third box, uh this is to show you what the difference is with the tax increase. So, as we noted, um, with just the reassessment at a house value that started at 950 and 25, you
will pay $9,751 in taxes. Uh, at the 98 at the dollar rate, uh, you will pay $9,950. So, a change of $1.99 would be the
difference added on with the two cents. Um so this just gives you a way to look at that to look at the impact of what the tax rate um increase has. Um and then I'm going to pause here and let Todd speak about the um tax relief
programs and what we've done with those. >> Yeah. Thank you, Chrissy. um whenever um whenever tax rates get discussed, um it's not long before people start wondering about the relief programs and what we're trying to do to to mitigate
things. And so we put some slides together that kind of let you guys know sort of what the plans are, how we handle uh the three tax relief programs in my office. Um so the first uh slide just kind of gives you an idea of what we've budgeted for each program. um how
many folks we expect to take advantage of it. Um this is just kind of using trends from past years. Um you know a lot of people take advantage of these. All right. Go ahead. Um I think there has been some concern that we have not
uh altered these programs yeartoear. Um, you know, we used to come in, some of you guys may even remember when the budgets process would happen, there was this kind of haggling over what we're going to do with the relief programs, where are we going to set the benefit
amounts, you know, what are the thresholds for the home value and the income value. Um, and I hated that as much as anybody. Um so in uh we have very intentionally built these programs. Now some of you probably voted on these
um to where the income thresholds move. Um so they they are pegged to MFI which is a number we get from HUD. And so as our uh local incomes increase these thresholds increase. Uh and so the idea
is we're hoping to try to keep people from falling out of the programs as you know as their in as their income increases we don't want them to drop out. So you know these have a built-in mechanism to to move every year and you can you can see there how since 2023
um the income thresholds have gone up. uh we started it with the elderly disabled uh uh real estate program and the CHAP program and then in 2024 we we use the same mechanism uh for the rent relief program. Uh so so they adjust um
Chrissy if you want to go to the next one and um the only program that where where there's a home value threshold is the chat program and that does the same thing. Um, essentially the the the
maximum u home assessed value is the average assessed value that the assessor puts out every single year. So that moves as well. So as as our home values increase in the city that tries to keep pace so hopefully people
aren't getting you know dropped out of the program. Um >> that assessed value limit is that like a >> the average assessed value of residential real estate. It's in the it's it's a number I get out of the the
assessor's report in January I think. >> Is that a limit set by state legislation or is that I can't remember. >> That's something we did. If you I don't know if you remember a few years ago we were really treating uh CHAP as a as a
tax relief program and we kind of got our hands slapped over that because there's no provision in state code to give tax relief to you know there are certain groups that can get it elderly folks disabled folks veterans but we were just kind of giving it because we
always had uh so we sort of restructured it at that point um and then that seemed like the number to go with um you know the the the folks who get that program you either get one of four uh grants. You get
$1,000, 1,500, 2,000 or 2500 depending on where you land in relation uh on the income piece. And as long as the home value your home value is not above that number, you're good. It's just a sort of a way to kind of make sure that we're
targeting the right right >> folks, you know, not folks in mansions and McMansions. >> Are we spending all of the money we allocate for it or >> we get pretty darn close? Um,
you know, we >> last year was the first year I think I undersshot the mark on one of the programs, but we had overshot on some of the others, so we're able to move some things around, so we haven't over spent. Um, usually we come in, right? I couldn't give you a
number how much, but pretty close. >> Chrissy probably tell you better. I could >> pretty close. then it's structured. >> Is it is the program you were just describing the thing that we worked out with Andy Block's assistance?
>> Yep. Yep. Just for those who don't know, uh, three years ago, I guess it was, maybe four years ago, with the assistance of, uh, law professor Andy Block and his clinic on local government legal assistance, we asked him basically
to take a look at this programs and say, "What can we be doing? What are we doing we shouldn't be doing? How can we do it better?" And we came up made some recommendations that we had turned into. Yeah, that's right. Uh, and so, you
know, they they are a lot of work, but they're a lot less work than they used to because I would come into these meetings and we would spend 20 to 30 minutes haggling over, you know, where the income thresholds need to be or where the home value thresholds need to
be. And then this way, it's just it's all baked in. So um to your knowledge are the the various programs and things that we have are we pretty much doing with more than most cities >> more than anybody in the state.
>> Yes sir. >> And do we know what proportion of people who would be eligible are were able to support? Do we have stats on that? >> Um we've got projections on the number of folks that we you know that take
advantage of it. We I've got stats on the number of folks that get various grant amounts. I can share all that, but that's stuff that we collect every year. Um, you know, we know, you know, for instance, how many people
are getting 100% tax relief, 80%, 60%, 40%. Um, I can get that all for you, too. >> Thank you. So yeah, I mean we're doing a lot, >> but like I said, I said this a long time
ago, you can't relief your way out of a tax increase. So it's, you know, we we we help folks. We we do what we can to mitigate it, but it's still it's still tax increase. So just think about that.
Y'all good? Thank you. Um so just to review um about a penny on the real estate uh tax rate is about a million2 in uh revenue increase. 1% on
the meals tax is about 3.2. Lodging is about a million. And then for every 10 cents on the uh personal property uh is about $339,000. And again, there are three different classes uh of personal property. It's
not just cars. Um but it is also machinery and tools and business tangibles. And >> remind me, they all have to be the same rate. >> Not anymore. Not anymore. I mean, we used to um but we decoupled them now
in SAP. Um primarily they were all bunched for accounting reasons. Um but you you could have decoupled them now. They're they're separate GL's and SAP. So it's a lot easier to it's not easy, but it's
>> a lot of fun acronyms through with us. >> Yeah. All right. SAP's accounting system. >> Okay. >> Um, have people started adjusting? Um, I mean, what do other localities do? Do eBay have different rates?
>> Um, most localities might have a who who do it, they they tend to have a different machining machinery and tools rate. They might have a really low machinery and tools rate because they're trying to attract manufacturing or something. we just don't really have the infrastructure for large-scale
manufacturing. So, it hasn't really made sense to do that. We've got, I think, 30 to 40 businesses classified as manufacturers in the city. Um, so it wouldn't really reel many businesses in,
right? >> And that's concludes sort of our presentation again. Um we have our work session tonight. Next week we will be talking about uh nonprofits and agency contributions. March 26 is the CIP. April 2nd we'll use
for a wrapup. Um we have several public hearings on the horizon. Um again we'll have the informal public hearing on March 16th for the tax rates. The official notice public hearing on April 6th. Our community budget forum is March
19th and we that serves also as our public hearing on the budget itself and then we're slated to formally adopt the budget on April 9th. Um, and just a reminder, uh, if you go to the budget web page, um, we will have
this presentation and any of the, um, materials that we talk about in the budget work sessions, um, will be, uh, there on the website for the public. Um, including, uh, a tax calculator that we have built out if you want to go in and,
uh, you know, key in your own assessment value to see what it, uh, means for you specifically. Um, you can use that tool to do that as well. >> Other questions, comments, >> what do you need from us now?
>> Um, what do you want to uh advertise on the tax rate? Did you want anything else specifically? >> Good question. So, um I'm
thinking that at least for me that we definitely I don't definitely want to see it higher than than two. So, I'm I'm comfortable with advertising it at two cents. So, Natalie, >> yeah, no more than that.
>> So, you comfortable with it two? >> I'm comfortable with advertising for two. I try to express to folks I have my alternative plan but let's advertise too. >> Yeah, Michael. >> Yeah, I mean I'm comfortable with
advertising too. Uh I always think there's no harm in giving ourselves flexibility. So I'm not necessarily opposed to advertising other things or higher but if it's two then that's fine. >> Jen, >> two for me please.
So you have what you need to to to advertise >> kind of sort of but >> support for advertising two cents is not the same as whether or not we're going to live with a decision to increase. So
if we're going to possibly not increase um we don't have a lot of time to come up with alternatives. So, we should use some of this time to discuss what said alternatives can be because if we need to get to work, which I would I would
suggest that if we're not increasing, we have work to do. >> We we need to have some kind of indication of that and I think it's we can clearly acknowledge that. We've heard using surplus to fill is one idea. We'll put
that on the list. We're needing to hear is that what you want us to do is to do the work to identify alternatives to avoid a tax increase altogether. >> So that you can see what that is. >> There's a couple questions about that strategy. >> Sure. >> The first is
it does doing that automatically raise red flags for our bond rating folks? >> Yes. Um because it basically indicates that structurally your budget is not balanced. Um and uh so that's one part
of it. The other part of it is um when we rate oursel with our other AAA peers um our current fund balance policy um is mediocre um in comparison. It's not
counted against us. Um but typically it's not one of our we don't get high marks for our fund balance specifically. Um and so it definitely there are um there are often not often there can be
times when it is necessary to draw down um on a reserve or one-time funds but it typically has to be something big and there has to be a plan to replenish that. So if there was an economic downturn for example or if a
catastrophic event happened here, you know, the downtown something happened on the downtown mall and um you know many of our tax revenues were impacted. Um that might be something that we could could do and discuss um and we would
have to convince them that we have a plan um to get our budget back in balance. But to um use one-time money to balance the budget is is not um seen as
a as a um financial a good financial planning tool. 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
materially I mean structurally balanced. So, um, >> so like it if there was something catastrophic, it's useful as a band-aid but not as a >> and I'd give you the flip. There's that's that's looking at it from a deficit perspective. There's also more
of the ability to look at it from the positive perspective. If we were anticipating significant change to our revenue projections and think about development, if we were landing Astroenica in the city, then we might be
able to make a case for why we would use funds out of our reserves to do certain things, higher expenditures to help bring that home and in return down the road we see bigger dividends. >> That's not our case. So that's why it
feels hard for us to process the idea that how do we defend this because it would be them looking at us and saying well you're just not as disciplined about this as you need to be. >> Supposing the answer is that we are hopeful that we will have the ability to
impose a higher sales tax. We're bringing in roughly 12 to 14 million more a year. therefore more than offsetting the $2.5 million that we're talking about for the real estate. >> That revenue source is limited to
capital only. So it can't be used to offset it. The way my understanding is the way the legislation is written is it cannot be used to reduce what you plan to fund for what is currently in your budget. So you can't supplant your budget and it has to be used for
capital. So it wouldn't make up your $2.5 million operating deficit. >> Well, how much money do we contribute every year to the capital program? >> Um about in total or just for schools,
>> either number >> in total it's um well for this year's budget it's 8.4 million in cash. So, if we say, "Well, we've got $10 million that we're allocating for the prek program this year and $20 million for
the prek next fiscal year." Uh, where would where are we expecting that money to come from if we don't get a tax increase, the sales tax? >> Um, we're funding that with bonds. So, it's in our debt service projections.
>> Okay. And the debt service of course does get paid by general funds. >> Correct. >> Debt service is also a permissible thing for which tax revenues can be spent >> on anything going forward is my understanding like because we already
have the middle school in the CIP. My understanding is you can't use it to fund what you already were going to fund. It has to be >> okay. But we've got $30 million that we're looking at right now on uh the prek.
We have been told to look at I don't know what 10 or 15 million per elementary school. How are we proposing to pay for those things if not with money from the general fund? Whether the money from the general fund goes directly to the project or goes to
the debt service for the project. I think what's in our plan is what um what is currently in the CIP we've planned for those things that you're talking about are part of the bigger um picture that the work group that's been assembled is working on and those would
be things that we would definitely look to that 1% to fund. >> Okay, >> either in terms of debt service or cash. But if we're doing that, we are seeing a path forward to making these improvements that doesn't require more
money from the from the city's general fund. >> Correct. >> Why would that not be seen as a plan that's a good plan? >> I think it is a good plan. I mean, >> it's a good plan for addressing debt expenditure.
>> Sure. So, you know, my my thought to put it out there, my thought on the reason for the uh the $2.5 million to come out of the the surplus is number one uh because purely in political
terms, an awful lot of voters out there aren't going to understand why we've been we will have banked $50 million over the last three fiscal years and not cut any taxes. In fact, we've increased taxes during that time. Number two, that
uh if we're going to be asking those same voters to trust us with another 12-4 million a year uh through the 1% sales tax add-on, it would be nice to be able to show them that we have some
degree of of restraint on our own. Uh, and just as a matter of making the whole system work better, I think number one, I think it's a good idea to have that 1% add-on. Number two, I think it's a good idea to do what we need to do to make
that politically more believable. And as I said in my memo to folks, you know, we pay Sam to not worry about the politics. We get paid to worry about the politics
and we need to worry about the politics. >> I think what I would just say to you is in your scenario, you've you you've argued the point for the sales tax working, but you haven't fixed the structural imbalance that is caused by using the surplus funds at 2.5 million.
That's the issue. It's not that the that the scenario won't work to use the funds that are generated from the sales tax to address our schools facilities issue and we will have to exercise restraint. I will offer you that too because the bill that we got from Mike Gddard was a
projection and it was a hund00 million for everything to get done and we know that's not real. That's just a projection. So depending on what actually comes out of the general assembly, that's our scenario for doing whatever we choose to do regarding facilities. We're still in the concern
mode of if we take 2.5 million in one-time funds to address a recurring matter. We haven't resolved that by the prior year and we're going to have to eat that at the start of the prior year is the pressure that it creates. But before we even get to that, we'll have a
date with the bond rating agencies that we'll have to try to explain. And why did you do that? And how are you getting out of that? And that's the concerns. >> Well, one of the ways we're getting out of it is by not digging the hole deeper over the next five or 10 years. If we
were going to go ahead and do the school improvements that we're talking about, we will be build we will be digging that hole significantly deeper unless we get a number of things to happen. One of them being the the tax increase. And
again, that that to me says let's do what we can do to make that to to sell that if we can. And one of the things I think we need to be able to do to sell that uh is, you know, to to not be I mean I just think it's a really bad look
that that we're at the same time that we in the same within months of each other we raise the real estate tax and we come back and we ask for an additional 1% on the sales tax at a time when we've already been talking about the fact that
our our financial analysts tell us that we're getting pretty close to the limit of how much we want to be taxing folks. Uh I just think we we need to be sensitive uh to to that entire picture. And if particularly if we if we think
that Charlottesville I I do believe this Charlottesville voters are going to want to support the school system and they're going to want to to support good construction of good schools. But I also know that if we don't get money from
some other place like a tax increase that's it's earmarked to that, we're going to have a heck of a hard time figuring out how we're going to fund $100 million or probably $150 million. I mean, if we if we want to look at it that way, uh typically these uh I think
the the grant of authority lasts for 10 years. If we had 1% times 10 years, that's $150 million. That's basically we've already got that lined up. We already know what that's going for and we don't have another plan for it if we don't get that sales tax increase. And
so if we're looking to get the sales tax increase, I just I think we need to make that as as attractive as possible to as many voters as possible. And that's the plan forward. That's how we get out of what is at least a we're not going to be
deepening the structural hole, right? The problem still remains. We haven't addressed the hole we create. That's the problem. Everything else about what you said, perfect. It tracks by using one time we hole that we haven't addressed.
Okay. Even if so, okay, we'll talk about it more later. I just So, yeah, >> I got a couple questions based on this discussion. Um, so Chrissy, you said that anything in
the CIP already wouldn't >> you can't pull out. >> Can we zero out our line items now before it passes so that we could add them back in after the sales tax is passed? >> I don't know how that's viewed in the
spirit of working with our friends. >> They get mad at us for that >> general assembly. I mean they may have a provision that might come for that reason. We don't. John, do you know specifically do you that? >> No, because the legislation isn't final yet. Anything
>> but just from the draft. Was there any reference that you can remember? >> I don't remember. >> Off top of my head. It's been a week or two since I looked at it. I I didn't when I looked at this a year or so ago, my understanding was that well, for example, you don't want to be tucking
current projects in there, but you could tuck in new bonds being sold. >> There was a direct reference to supplanting. So, it's how they define that term. that would be supplanting depending on the parameters they put around when
>> the fact that that we have something that we're planning to spend something in an outlying year and it's already in the CIP just means we're planning well it doesn't mean we can't use money from the taxes provided they don't define it that way. Yes, I would argue that with you
but >> it all depends on what they write. >> Yeah, that seems like it would be a big problem. >> It would be a problem if you take it out and then get punished for it. Well, or if we're not allowed to use new money on projects that haven't been realized yet, they've just been planned. >> I suspect that they won't miss
addressing this, but we know everything doesn't come out exactly right. And implementation is everything. So, when it makes it into the hands of the departments that we will be working with is when we'll learn how hard it is. >> About six or eight nine jurisdictions right now already have the authority.
Surely we know something from or can learn something quickly from their experience. There's a lot of eyes on this right now. I imagine every single bad behavior the uh general assembly might want to curb will be considered and will be in the final bill. But we can we can look and see what it says now. See what what's
proposed. I can take the temperature down in Richmond. See what's going >> because it would make sense if they're like if the bond has already been issued. That's different than if you've already got a school planning process underway. >> Because our our CI our fiveyear CIP is the plan, right?
>> It's only the one year that is real. But we don't know how they're looking at it from that >> the bill as drafted only. The only thing that it does is to change one section that says what's applied to these eight
or nine jurisdictions now applies either to we're adding Charles Alarl or it applies to everybody. I don't I don't I didn't see anything in the bill that suggests they're changing the the standards from implementation. any.
>> Um, and then my second question is, are there any one-time expenses that are currently be paid from the general fund that could be paid with surplus money instead? Since I know things have to come from specific buckets, is there any
shuffling there that can be done? >> I don't know what one time expenses. I don't know if there's any one time expenses >> time expenses that are already in the >> already in the budget that would be getting paid from general. >> I don't to say no would be a big no that
would be a big stretch. Um I will say I I'm not aware of anything that is material. Um however there are things that um are recurring in nature that
maybe we could shift i.e. >> Does my question make sense? >> Yeah. I.e. replacement of vehicles. You know there's a certain amount of dollars that are put into um the general fund budget every year for replacement of cars >> to maintain the schedule. uh you know,
we could shift that and use that um as a one-time money. The problem is that's now if we do that, you still got $2 million hole that when we get to next year and we need to replace another round of vehicles. Now, that's either an
ad back to the budget or we've got to try to find another source. >> Are we really spending $5 million a year on the >> uh close to two millionish? >> Okay. Okay. I thought you had said five earlier. >> If I miss if I did, I'm sorry. I misspoke. >> That two I was shocking.
>> 26 as you said. >> Yeah. >> I mean, there are some levers like that that we can pull. None of those things are like perfect because even though buying a car is a one-time purchase, it is a recurring business operational
need. the demand for that particular car is one time but the overall need the same way that like student demand is constant even if the specific >> and it's on a schedule so then making any adjustment to that we're now disrupting operations there's a trade-off for that we have to >> I guess it was less like scheduled one
times like that more like a just don't want to >> nothing like nothing she knows a budget better than I do because she lives in that all year long but if I doubt there's anything I can't think of anything either but what would be a material one time something.
We'd have to go searching for a number of things to build it up. >> But that I guess that's that's really what I'm getting at. And we're going to we know we have to go and do the work to have the backup plan. We're just making sure what are we backing up to?
>> Yeah. So I think I think that counselors staff this morning want to get a kind of a good temperature. Um, some of us already had the 221 to kind of dive a little bit deep into it. I think some of y'all may have it tomorrow. Staff just kind of want to get a good temperature
where we are with with the tax so they can go back and do the work if like there's is not appetite with us for the two two cents. Then they have work to work to do. So we just kind of need to get them as best we can. And I know this
is the first, you know, work session that we've had, but we've been talking about this um you know, for minute. So, um so, but so if we could just kind of as best we can at this point give staff
some some direction. Michael, did you want >> And I just want to add I double checked that 1 cent sales tax legislation has died in the state senate. So, it was left in appropriations after being folded into another bill. Point being,
there's no guarantee it even passes this year. If we use surplus, we're going to be in that position of having done that, not knowing what the outcome of the state budget process will be. Um, but again, bottom line, there's really no
guarantee it passes this year. >> Pass last year. Well, now that they know where to go sign, >> do you want to switch seats since you got the bad news? >> A lot of things on that list.
>> Hope it's some political posturing. Jen, you want to chime in? Yeah, I think after hearing the pressures of the bond rating and the and how much we need that to work kind
of to get the work done. um and the risk associated with like not knowing about the November vote um that I'm comfortable with the two cent um
increase for the real estate tax and I think knowing that um Todd's office is ready to support that um fully and that maybe you know the new staff can help open up some space for
other people to support that as well as honestly looking using the calculator um and kind of seeing what that impact is in dollars and cents um made it less uncomfortable for me to just get a better sense of like what would be
expected on a twocent increase personally and then you know for other homes I looked at and that renters would most likely not bear the brunt of that blow maybe a little bit but um it doesn't look like certainly the assessment is what has a really big
impact but the two cent increase on real estate seem to not be as um intense so I'm comfortable with it yeah as the assessment yeah >> which and the assessment we can't like we can't help that like that's >> why why would the renters not be affected by their landlord's actual
payment instead why would it matter whether it's an assessment or a rate increase >> the I the rate increase does is not such a proportionally high increase. The assessment is. So when you roll in the smaller amount of the tax increase, it's
not causing a proportional jump. The assessment's causing that jump potentially, and I don't know, I don't run to anyone. Um, but that the small add-on of the two cents was would likely not make a
another huge step in that. It would be yes rolled in but the proportion wouldn't be significantly different than what the assessment is creating than the change the assessment assessment is creating. >> Okay, the assessment change is roughly average of 4%.
If we assume that landlords are simply passing on their costs, they would pass on a 4% cost. If the tax also goes up by 2% on top of that, they would presumably pass on a 6% cost increase.
I would think, right? >> Yeah. I I I mean, I didn't math the math that way yet, but potentially. >> I think I But I think your point is kind of like someone's
small time landlord, which is the situation is probably going to apply most in, and their house that they're renting out is worth $750,000. The two cent increase is $157 a year. So you're talking about passing down $12 a
month in cost if they made the decision even to put a 100% of that into the web. >> Um which I don't think they would even do that. >> The assessments will drive the increase, but I agree with your point. >> That's what I'm Yeah. >> Well, it's a Yeah, it's a 348 plus $157
increase in total. So you from the assessment it would go up roughly $29 a month and then you would add on top of that another 12 month. >> Yeah. Assuming that foster giving
passively rational >> but I understand what you you're you're saying Jen. So, I'm in the same campus as Jyn's and I'm support the the two the two cents. Um I I um
I was you know wanted to hear more about the the using surplus just for this but I understand that um of the kind of overall impact of that and and if that
has an impact on our rating that it may even cost us more with us you know the cost to borrow money and things like that as we do these other projects. So, um, Natie, did you um >> I'm trying to weigh the
cost benefit analysis of if we if we said no and the work what would the work look like for you all to find those savings and what would get cut. And then if you did that work and we decided
to go with a two cent adjustment anyway, then like >> sure >> that's >> that's fair. >> We're going to do that work anyway. I mean it's we're just trying we need to know how deep do we have to go? How creative must we come up with finding levers the way I talk about this is a
series of levers that you pull up and down. Well, now that I've presented the budget, they're locked. >> Yeah. I have to figure out which ones to go unlock and how do we move them to produce dollars that are materially missing the replacement of those funds.
>> And I think we just need to feel comfortable knowing that, and this is not me doubting you. This is me having a mental imaginary conversation with constituents that we can tell them our staff did everything they could to make sure that this is
what was needed and it's not that staff is asking for everything they want and we were saying sure giving it you know it's we've done the work to make sure that we've gotten it as small as we possibly can while still being able to
provide the benefits and services to our Right. >> Um, >> I would offer to you that I've done that because I brought $500,000 in cuts to this conversation to begin. So, that's that's one >> and that's not that's not me doubting the effort of our staff because I do see how hard you work, but just being able
to assure the community that should we do decide to to go for the the two cents that we have done everything. And I would I would point out that it wouldn't just be um the answer to the the conversation that you would be able to have wouldn't be solely focused on staff
compromise. It would also be us identifying things for you to consider compromise because that's really where the bigger numbers are going to be. And that would be making adjustments to decisions that you may have already made. That's what we will be trying to find because that's what it's going to
take to find $2.5 million. And then just it's also making me think about we like like you like you mentioned Lloyd our financial advisor has told us we are hitting our fiscal stress level. So we can't just keep reaching our hands into the wallets of
the same people every year. We have to expand our people so that we can spread out that burden. So we we have to see what those levers are to that's kind of a a longer more root
longer term more root adjustment not a just >> more positive >> right >> more option >> grow the base instead of deepen the base >> grow the pie higher as George W Bush once said >> I don't know grow
the fire higher Yeah, we've heard about vinegar pods. >> Still not interested. >> Um Okay. >> So I um Lord, I think that we you are
you in the same camp with um Natalie? You just kind of want to see the the numbers with and without >> Sure. I mean I Yeah, that's fine. So, do you
>> I'm good. We're good. If it's helpful, the you know, as I said, this is not final anything. The current uh legislation that's kicking around around the 1% sales tax increase. It currently says has a provision. It's a new provision. The revenues from this tax
shall not be used to reduce, supplant, or offset any amounts of local appropriations or local funding for capital projects described in subdivision one, which is just construction renovation schools on the date such taxes first imposed in the county or city. >> Is that the house bill?
>> House wipe it away. >> Is that a Senate bill or >> that's Senate bill? You could wipe it away to make the runway >> because it says that the the day of touch first and post being posted. >> So we could wipe it in post. You could
strip your CIP and then recommit it during that action. >> It's I think for down >> it's inelegant, but it gets the job done. >> It it it may um I I will say that >> I think it would I think it would challenge your conversation. John's
gonna let that fly. All right. >> No, no, not my senior partner when I was in big law, he would always I would come with some brilliant scheme and he would say it's too puke. Too cute. >> And when you get too cute, people smack back. And so I I worry that if we were
to take this act that that um it would get attention. >> It would get some very unpleasant attention on the city as population. >> It's not the right spirit. And we let our game plan >> negative attention is different than negative bas.
>> It just means we freeze adding anything else. >> We don't put anything else in to see what comes of this resolution. If it doesn't pass this year, we don't worry about it until we get it passed and then we move forward. We can do the planning work internal from a staff perspective.
Just don't commit it to the CF. >> Right. I mean, one of the things we're actually already working with our financial advisor, too, is um let's just say that tax passes and we get $15 million. Um $15 million for debt service payment
could potentially put us over our debt limit, which would mean it's great because you can get the school projects done, but it may mean you don't have any room to issue any other debt. So there's some planning that we need to do with that and what that impact would be. Um
and it may be that if we get to 15 million then we have to you know allocate some for debt, some for cash. Um but I think you have to you know you have to be cautious >> reconciling. Yeah. To figure out I think
we don't know when any of that looks like. There are, as um councelor Snoke mentioned, there are other localities that are already doing this. They already have some policies in place. We're already trying to get that information um to see what their splits
and what that stuff looks like. So, we'll have more to talk about, but um there's some work to be done there. >> And we can use our surplus money for debt service as long as it's it's like additional payment. It is not replacing
payment, >> right? Um well yes and no. So if if if you look at our um you know we'll look at that debt table when we look at the CIP
we are already our debt payment our actual debt payment is already a lot higher than what we're transferring from the general fund because we've been buying down our debt service fund balance. So yes we can use the surplus. Um and you'll you know what you'll see
is in fact when we got some gain sharing back from the school this year um our debt service transfer should have gone up over a million dollars because we've been talking about that. We actually held it at a half a million because we got the 1.4 from the schools. But the impact of that is because it's just a
one-time payment. It's not increasing our base. In future years you're talking about $2 million a year increases on your debt service payment. So, yes, you can use it. Um, but if you're not increasing your base to get you closer to what your actual debt service payment
is, it's a little bit kicking the can and it's going to keep compounding. Okay. I was think I was imagining it more like, you know, over the course of a year, you've added one more you've paid off one more mortgage payment than you needed to and so it cuts your term. >> So, the only way you do that with bonds
is you have to refinance them. And we actually do have well as of a week ago there are some refunding opportunities um that could potentially save us a couple hundred,000 a year and we look at that every year when we get ready to
sell bonds. Um but it's not like we can say oh we're going to pay this principal off fast because you have people who are holding the bonds and unless they're structured to be callable and other things it's not the same. You can't electively just fade it off. >> Okay. Thank you.
>> Good try. >> I followed you. That was good. >> Thanks. Any other questions? >> That's right. That's good. That's right. >> Well, Michael, did we hear from you? Did
you already say what you were thinking on this? But no, I mean, I'm happy to discuss creative ideas, but I would say at this point I'm very skeptical that using one time surplus would be wise or feasible.
And I'm okay moving forward, assuming a two cent real estate tax scenario. I would like to wait for him to return. Sure. >> I'm trying to think of what can I say. Um, >> somebody I'll I will say that. Um, and I
do um I appreciate Council Snook reminding that I say I don't play politics because that's not my job. Um, and I don't and I try really hard not to. Um but I I do think just for the public's benefit just to appreciate the
notion that we did not arrive at any recommendation of a tax increase lightly. Um we have worked very hard trying to figure out alternatives to this point. We started this budget cycle with a double-digit gap. We start with a gap every year because we're realizing
that there are things that come forward that we then have to see if the assessment and other increases were enough to cover. It wasn't. It was dramatically out of balance at the start of the year. Miss Hamill did a masterful job of finding all the different ways
that we could potentially move things around. So, councelor Ashen, to your your idea of the conversation with the public, I would offer that we have done what we think we can do without causing damage to what we're trying to do, which
is serve this this public well. make sure that we're doing the things that you've identified for us our priorities and giving the team what they need to do that. So when we arrive at a notion that I'm standing in front of you talking about taxes that's hard for me. It's not
a desire. It's definitely not a priority of mine. And she can tell you that I kept saying I want to do what I can to avoid this. I want to do what I can to avoid it. Um, and in checking with you all as a part of my process, um, I come to council and ask your perspectives on
where we are, taking your temperature on taxes because that's a part of the choices. And when I laid out the budget presentation on Monday night, I reminded you that I only have two choices. Increase in revenue or decrease expend expenses. That's it. Um, so when we
arrive at that, we cut what we feel like we can get away with cutting, unless you tell us differently. If you tell us, go back at it. And I have described for all of you, I use a scalpel and I will hatch it. I can I love working with a scalpel, but I will cut. And everybody in this
room that works for the city of Charlottesville knows, oh, he will cut. Uh, it's the damage that you do when you're using a hatchet versus when you can use the skill of a scalpel. So the goal is to try to avoid that to the best of our ability. So we have um done
number of things. We each have recognized that we needed to have options as um drastic cuts and changes. Um there are things that we have to put meat on that bone and we can bring that back to you. Give you a shot at looking at that and if you choose to go that
route then it's available to you. That's our job. So we recognize that we'll do that. They won't be pleasant. I'll tell you that. >> Great. Do you have those ready. >> We're working on them. >> We have to make sure that we determine what the true value of the adjustments
are because I could tell you an idea, but I don't know that it generates enough money to take away. And I'm looking at this in half a penny increments. That's the only conversation I want to have with you. I'm not looking for $200,000. It's got to be half of a
penny in those increments to make it make sense. >> I had a question about the thinking of that kind of thinking. So, we saw four new FTEES. Um, how many were requested? >> Uh, but I know it was well over four.
>> I want to say 31, but I might be making that up. I >> It felt like at least 31. >> I I know it was significant. I don't know if it was. >> I don't remember, but that Well, it's usually a lot, but um and I mostly say
no to that anyway. um >> especially if salaries are already going to be the big driver in that. >> It's why it is why I have in my message back to the team has been that we have chosen to invest in the staff that we already have. So therefore we don't need to continue to expand. We take care of
who we have and we have to work smarter with who we have. So that comes at a cost too. So I I guess question one question I have if we're saying that we now have a $2.5 million structural deficit that I
assume we did not have last year. What specifically makes up that $2.5 million? What what different things this year are causing that? the 569,000 extra to schools because the budget was based on two million. That's the number I gave
them. So that's the number that I gave Miss Hamill. Uh the investment in transit, I think it was 8 >> 83. I think >> it's 883. >> Yeah. The number for transit 8.83 for transit. That's the increase that we
have to absorb that was not baked into the budget. And then uh 1.1 is the collective collective bargaining impact. So those three together is why we have a need for additional revenue or an offset of G of expenses.
>> That's what I went Tuesday morning. Is that this week? >> Yeah, this week, you know, went that, you know, told the public with >> that's the reasons for it. >> Yeah. Yeah. student and it won't matter for this budget
cycle, but I'll just flag for us to think about the land value tax legislation has passed the general assembly again. It won't matter for this budget cycle, but if we're trying to think ahead three, five years from now, whatever decisions we make around real
estate may just like play out in very different ways within like two or three years. So, >> okay. Um, other questions or comments? We our goal will be that we will try to figure out what we can. Uh, next week is
focused on outside agencies and nonprofits. We don't believe you'll have any time left to talk about this part two. So, we we think that's going to get consumed because it usually does. Uh, but we will do the work in the meantime and I guess we'll try to see if we'll be
ready for the CIP or the community budget form work session because your deadline for advertising will be shortly thereafter. >> Yeah, depending on what kind of turnout we get for that, we might have time to fill you in on the 19th for the community. Sometimes we have a
lot, sometimes we don't. So, >> I'm always ask when when again is our last financial update where we're going to have the 100% certain picture of where our revenues are at before we >> What do you guys think? >> What is our date for?
>> What date the budget get adopted? Day before that. >> Give me all you can. Well, on the 19th, will we have another month of revenues? Like if we wanted to, >> we'll have another month of sales tax. >> Okay, >> that might be the last chance. So maybe
for the CIP work session, we could talk about that as an indication of additional revenues, but for sure the work session on the second. Okay. Any other questions or comments? Is that it for
tonight? >> Yes. >> Thank you. Do we have to do a motion for this or Okay. Um, can I get a motion to adjurnn, please? >> Motion to adjurnn. >> Can I get a second? All in favor, please say yes. >> Yes. Please say no.
So isn't Thank you.