City Council Budget Development Work Session   2/3/2022

Ah, yes.

One point that I wanted to go into research at one point.

How about you, Juan?

Oh, man.

Wanted to get into medicine.

Wanted to be a preacher.

And

I never thought I'd be an urban planner, you know, kind of growing up, but it's kind of evolved into that.

So I'm kind of doing some of that stuff now.

I wanted to be an astronaut up until I was in middle school.

Nice.

Yeah, I'm not sure.

Yeah, I wanted to be all sorts of things.

At one point in time, after this was, of course, after watching Top Gun, I'm just telling my age right now, wanted to, you know, fly, fly planes, fly fast planes.

Yeah.

It's funny, that was the highest, you know, at least in my high school, it wasn't.

Yeah, that was a tenth grade summer course for me, because I didn't do it regularly, yeah, so, yeah, so.

Yeah.

but I mean, but I also know that my nephew who's down in Southwest Virginia, he's in geometry as a junior in high school.

Mr. Rogers, welcome, sir.

Yeah.

Well, I had no hair to pull out, so I decided to stay around.

But no, I'm really...

enjoying engaging with the staff and getting to know them and understanding the issues that we're all facing and as we try to do our best service for the residents of Charlottesville.

So it's five o'clock.

Are we all assembled and ready to go?

Unfortunately, I just a moment ago started printing out the PowerPoint that Mr. Rogers forwarded to us.

So I'm going to have the computer, the printer running in the background.

I'll try to speak loudly enough so that I overwhelm it.

I guess we'll call this meeting of city council and the budget work session to order.

It's five o'clock and it looks like all the right people are here.

Ms.

Sure.

Councilor McGill.

Okay.

Councilor Pinkston?

Here.

Vice Mayor Wade?

Okay, so I guess turn this over to Mr. Rogers and welcome Mr. Rogers.

I guess this is your first official meeting and go ahead and take it away and

Well, thank you, Mr. Mayor, members of council, very pleased to be here tonight.

Our discussion is the first discussion about the FY23 budget.

As you know, the budget process begins in the fall and

our various officers assess the property, forecast the revenue that will come in.

And at some point we come up with the number and the budget staff works with the agencies to receive requests from them in terms of their needs for the year.

And we come and present you with a package

as a preview.

So that's what we're doing tonight.

I'm very pleased to say that it's somewhat of a good news story.

There has been a tremendous boost in terms of the assessed value of property.

And we will have Jeffrey Davis kind of give us an overview of that.

Then we will have

presentation by Christy Hamel, who will walk us through the drivers for both revenue and expenditures and engage you in a discussion about where we come out and what's available and some of the choices that council will have.

as long as I get unmuted here.

Okay.

Yeah, thank you.

And good afternoon, everyone.

I'll provide a brief overview, as Mr. Rogers said.

Reassessment notices were mailed last Friday, and maybe many of you have already received calls.

I don't know.

But we're starting to have some calls come in.

The reassessment saw a larger than normal increase this year, and that was due mainly to the overall strength of the residential market.

The commercial market is slowly returning after a negative last year.

So I sent out a more detailed report last week, but I'll just run through some of these numbers

Hopefully don't bore you too much with these, but it's just kind of a recap of the reassessment.

In 2022, the residential market in Charlottesville increased 11.7 percent.

And in 2021, that number was 4.2 percent.

And in 2020, that was 3.8 percent.

So

Based on the on the previous two markets, this is a pretty substantial increase for residential appraisals.

The commercial market this year was increased 2.8%.

As I said, it's slowly coming back from a negative last year of negative two tenths of 1%.

And the commercial market went up 10.5% in 2020.

The 2020 market was based on 19 where we always

look at what has taken place in the marketplace rather than what is taking place or what might take place.

So we always work with data that's, at this point, it's older.

So for 2022, we're working with 2021 sales information.

New construction this year was up quite a lot due to the construction of three new office buildings.

And so it was at 2.9%.

as opposed to 2021, it was new construction was 1% and in 2020, three quarters of 1%.

The overall increase when you combine all the changes and add in commercial, residential, and new construction, the reassessment increase was 10.8% this year.

That compares to Albemarle County was at 9.53%.

and actually the amount that was added to the base is $860.8 million.

In 2021, that increase was 3.3% and $250.3 million was added to the base.

And in 2020, the overall increase was 7.2% and $537.1 million was added to the base.

So all in all, it was a very strong market, especially, again, from the residential standpoint.

We are right now in the process of handling appeals, and we will be doing that until the appeal period ends at the end of February.

And at that time, we will look to prepare for

the Board of Equalization, which we'll hear appeals in May.

So with that, that concludes my report.

I just have one question.

No, it just was one clarification.

Jeff, right at the beginning, you were talking about the business assessments, and I think you said that in 2020, there were

You know, 10%, can you just go, it was, I just want to make sure I get the numbers, because I know that they were down for one year because of COVID.

Thanks.

For 2020, the commercial properties increased at 10.5%.

The question that I had was, do you have a sense of sort of historically how much of a change there is after you go through the equalization process after people make their appeals?

Yeah.

Last year, we reduced assessments based on administrative appeals and Board of Equalization changes.

I don't have the percentage.

It was $44.5 million was the overall change.

But that was high.

In previous years, it's averaged around $15 million of assessment change.

for the appeal period.

And last year was more due to the fact that the effect of COVID had on the commercial properties that maybe we didn't take into account strongly enough when we did the appraisal.

And those were changed by the Board of Equalization, and they were rather large properties.

So that increased that number a great deal.

But typically, it's been around $15 million, which is a

The only reason I'm curious is to my next question was going to be perhaps for Ms.

Hamill.

Ms.

Hamill will answer that question when she comes on with a presentation.

That's fine.

I got nothing else for Mr. Davis.

Okay.

Thank you.

Are you ready for your presentation?

Yes, sir.

I'm ready.

So good evening, council.

Tonight, we're going to kick off officially our budget session.

It feels like we've already been talking about this for a while.

Okay, great.

So we're going to do a brief overview of the budget.

We're going to talk about revenue drivers, the things on the expenditure side that are driving some increases, departmental new requests, touch on the capital budget.

Then finally, we'll wrap up with the short conversation about council's budget priorities and then wrap up with sort of some categories of decision areas.

So jumping right in, couple of housekeeping items.

Again, I want to reiterate that February 14th is sort of the magic date by which we will effectively have the budget balanced.

By that, I mean we will know what our max is in terms of what we will be spending for 2023.

So again, as we talk through the issues tonight, we do have to put an ad in the paper 30 days prior to the first public hearing.

on any tax rates and that would be March 21st.

So to give us a little extra time, February 14th is the magic date to get all that done to the paper and make sure we meet that 30 day window.

March 7 will be when we will deliver to you the city manager's proposed budget.

Again, the first tax hearing will be on March 21.

Second hearing will be on April 4.

And then finally, we will officially approve an adopted budget on April 12.

During this process, we'll also have, we have multiple work sessions scheduled to work through.

Each work session will take on a different topic or subsection of the budget.

The community will also have opportunities to weigh in on the budget in these work sessions, and they will be out throughout the month of March, and they're noted here.

You can also find this calendar on the budget webpage.

As of now, because we are still under an emergency order, these right now are suited to be Zoom webinars.

Should that change or our posture change in terms of our meetings, the calendar will be updated accordingly.

So just make sure to keep checking back.

and jumping right in as Mr. Rogers indicated from a numbers perspective, there's a really good story to tell here.

Our FY22 adopted budget was just over 192 million.

And as we look at our revenues for this year, the most large change that Mr. Davis indicated to you was with real estate.

However, we are looking at a revenue increase of

$14.8 million for the 23 budget.

So what's driving the 14 million?

Again, we talked about real estate.

Mr. Davis gave you his report.

Many of our major revenues that we have talked to you about throughout COVID that were greatly impacted by COVID, many of these are coming back to pre-COVID levels.

So

I'm thinking of this in some terms as a return to normal, whatever that means for all of us these days.

Sales tax, so real estate alone is about $8.3 million of the $14 million increase.

Sales tax is projected to make up, again, about a million dollar increase.

So again, just to be clear, the numbers I'm quoting here are actually the change from 22 to 23, not the total.

So we're just talking about change here.

And then meals tax is projected to increase about $2.1 million.

In total, we're looking at about a $2.5 million increase, but according to our policy, just under $425,000 of that will go to debt service, and that'll show up in the next slide.

Moving on, lodging tax.

As we know from our conversations during COVID and as we figured out how to maneuver through the impacts of COVID, lodging tax was pretty dramatically hit by that.

It continues to trend upward towards pre-COVID levels.

Still not quite there, but we're getting there.

Business and Professional License.

This was one that we had forecasted and assumed that there would be somewhat of a decline.

That decline actually did not materialize.

And in fact, we are still seeing some growth there.

So about 1.4 million there.

Charges for services is a category.

There are a lot of things in this category.

These are things like recreation income, waste disposal fees, interest, the payment in lieu of taxes.

And so that we're seeing a slight decrease of about $214,000.

I believe that the majority of that is based on a new assumption of the recreation income.

One-time revenue and transfers from other funds.

Again, we're looking at a $750,000 increase here.

These, over the last few years, and we've had some larger fund balances and in an attempt to buy those down, we've returned some money to the general fund.

This was sort of a one-time thing.

Last year in the 22 budget, we budgeted for a $250,000 transfer from risk management.

a $250,000 transfer from the health care fund which have both been removed as of now as we work through the 23 budget and then the landfill account is an account that was has been in place for many years based on some agreements with the landfill agreement.

We have a sizable reserve that we continue to draw down

until that will eventually be zero as those needs will continue to decrease.

And then finally, the parking fund, the one that we talk about a lot, as we are looking to, you know, withdraw the parking revenues out of the general fund, we slowly continue to wean the general fund off those revenues and maintain those in the parking fund.

And so we're looking to reduce that transfer by another 250

in 23.

I just wanted to make sure you were aware that I was just in a Virginia first cities meeting the other night and Jim Regimbald, I've actually got a screenshot and I'll send it to you that it's they're estimating the grocery tax loss is 2 million for our locality.

Okay, no.

Yeah, thank you.

I don't believe that is counting for the potential education loss as well.

Okay.

Yeah, I know Mr. Divers, who's on this call, did a lot of work.

That's not an easy number, actually, from what I understand to tie down, because generally the sales tax is reported as a total and not necessarily based by the breakdown of the type of business unless you go looking for that.

And so I know Mr. Divers looked at that.

No, you're right.

It's a tough, it's a deep, deep dive and you've got to parse a lot of sales tax data.

I'm not sure how he came up with that.

Yeah, I just wanted to make sure.

Yeah, thank you.

Moving down to the city county revenue sharing, that is an agreement through with the city and the county, a contractual agreement.

There is a slight increase there of $133,000 based on numbers we've received from the county.

Miscellaneous revenue, interest, rent, and several other small items account for about a $23,000 increase.

And then finally, the designated revenues, which again, the revenue sharing shows up there as most of the big portion of those dollars actually go to the CIP for one-time expenses.

Our one cent or equivalent of one cent of the meals tax is dedicated to debt services in that designated revenue section and also the payments from the schools that we receive for the contractual services we provide to them for building maintenance and pupil transportation.

there's roughly a $1.3 million increase in that area.

So all of these changes total up to the 14,850 that we are projecting as the revenue change from 22 to 23.

So I'm assuming, I guess this should be obvious, but I just want to double check.

That is correct.

Okay.

And sorry if I miss anybody.

I can only see a few of you when I'm sharing my screen.

So just let me know if you have any other questions or otherwise I'll move on.

So what are we going to do with all this money?

Well, let me back up one second.

I know that in various meetings as of late, I know some of you have asked, you know, what is the equivalent of some of our larger taxes?

These would be the taxes that would be

within council's purview to look at increases.

And this table here is an attempt to kind of frame that up for you.

So last year at this time, when we were talking about, and as we've been talking about the school reconfiguration project, we had put a value on a penny on the real estate tax at about 845 and some change.

That's now up to 927 and some change.

The meals tax, roughly 1% of that is equivalent to about $2.5 million.

Property tax for every, you know, roughly 10 cent increase is a little bit hard to talk about a penny, but a 10 cent increase would roughly be equivalent to $233,000.

And then on the lodging tax, roughly 1% would be equivalent to about $800,000.

I need to update those tables.

The ones that I have are a little bit outdated.

On real estate tax, I think as of late, we've seen some comparisons.

You

depending on where you think.

I mean, the tax rates are in any range anywhere from 50-some cent in some counties up to $1.13, $1.14 in some cities.

And so we can get you more specific information.

In terms of meals and lodging, Todd and Jason may have some more information on this as well, but I think we're sort of in the top third throughout the state on those.

And by being in the third, I think that at least for meals, if I recall correctly, like that's the top rate.

And then lodging, I'm not sure.

I think we're about middle of the road.

This is Todd.

I think we're about middle of the road on lodging, but that would put us, I mean, above most counties.

But I'd have to look at it.

Well, the property tax, what does that even go under?

Mainly.

Yeah, mainly.

Okay.

Okay.

The sheet that we were given has another line on there for cigarette tax.

We don't.

And that's actually why I took it off.

So last week at the retreat, we did have the cigarette tax on the table on this chart.

That's fine.

Thanks.

Yep.

Yes, sir.

Any other questions on this piece before we move finally on to the expenditure side?

Okay, so moving on, as we start the budget process internally, we've talked to you about this as sort of a continuing process.

It's also sort of a multi-layer process internally.

We go through lots of

reviews, everybody gets a chance.

And so that starts with departments and departments put in their budget proposals, both on the department level and at the budget team level.

We start with sort of the status quo.

So with knowing what our budget is today, the services we offer today, what what has changed?

And kind of what we're talking about here for the drivers, that's sort of where we start.

And then also based on some other programs, what are changes or increases that will be necessary over and above what we currently do.

So this is kind of a combination list.

First and foremost, we are a service business, which means we're a people business, so employee compensation and benefits make up a large part of our budget.

Council approved a mid-year 6% market adjustment for city employees, which adds to our base for the budget going into 2023, and that has a cost of about $3.2 million.

Additionally, we know from various listservs and groups that we all belong to, there's a lot of conversation among localities about potential July 1 merits.

We know from our regional partners that they are all considering something, perhaps.

The governor's budget indicates a 5% increase.

Schools are looking at a 5% increase, and we are

We have priced out here a potential 3% merit increase.

That would be at a cost of $1.7 million.

Continues to be an employee market.

We have heard in every single departmental budget meeting that compensation continues to be an issue.

And as you know, through the work of Ms.

Marshall, we are endeavoring into a comp

Study as well.

Moving on, we also have retirees in our plan, and it has been our practice that whatever merit city employees receive, that they receive half of that.

And so in this instance, again, you know, we would, we

put in an estimate of a 3% merit.

And for retirees, we put in a 2% merit, which given the inflationary increases and things would be a little bit more than our normal practice.

But still within the ballpark, that would come at a cost of about a million additional dollars to do that.

And then again, we're not recommending any changes or cost increases for health insurance that would be passed on to the employee.

So they would be maintain hold there.

So all of those employee compensation and benefits, if we move in those directions, again, the mid-year is done.

The others are at discretion and decision points.

But if we did all of those, that would be roughly about $5.9 million.

They are not.

There's no change, actually.

There's no change.

Correct.

I see.

While we're still on this page, you've got changes to employment compensation benefits of 5.9 million.

In the budget?

Yeah.

That's a great question.

Within the nearest five million or so?

I don't know.

I don't have that.

I'm sorry, but we will get that for you.

Yep, I can get that.

We'll get that when I'm not talking.

I'll get it for you.

Sure.

So the school meeting with the schools last night, per the formula, if we looked at 40% of the new revenue, again, of the real estate and on personal property, based on those projections, their formula would be $3.3 million.

Their current request is at 4.2.

tax relief programs.

We have spoken, I know part of last year's budget process and in several prior years budget processes, we always look at these programs.

Tide Divers graciously runs lots of numbers and comes back with different options for you.

And we are still working through those numbers to enhance the program

There is some increase that will be inherent in that dollar amount just because of the growth in the assessment value.

And so that that's kind of baked in and we haven't quantified that exactly yet.

But he's also looking for other program enhancements and changes.

and as we work through that, we're thinking that based on whatever recommendation we land on, that's probably somewhere in the neighborhood of about a million dollar ask.

what is the new assessment cap for the relief programs do we know because I know that's set by the state not by us do we know if that's changed or if that's still the same amount the the I think you're referring to the number that's um that's referenced in the charter the last I looked it's not it has not changed um well I don't believe it has changed I I need to look um

I think there's I think there's room to go up on that.

Honestly, I haven't looked at it in about six months.

We've got room to expand the income thresholds.

I mean, there's plenty of room on there.

But that's a good question.

I need to do that.

Thank you.

I mean, you've got so much going on.

The other question I have on the school's local contribution, I just want to verify, and this is coming off the meeting last night, the $4.2 million request, does that include kind of fixing that one-time

So it, I think from Kim's presentation last night or Ms.

Powell's presentation last night with the thermometer where it was red and it was really high and then with this request it comes down to you know just below half.

So this does address that problem.

And this number, along with other cuts that they have made, we're getting closer and closer to where our bases match.

And that one time money reliance is coming down, I think, in her

presentation, she quoted some amount or talked about some amount that there may be that they're using for 23 and maybe a little bit more than 24 to kind of so we're not sort of taking the whole bite at one time.

No, and I know, and they're working so hard on that.

And this is not I just, I'm just kind of trying to keep track because we have a number of these one time things that are going to be coming due all at the same time.

Yeah, the transit grant, the fire safer grant, and the school and the school's contribution piece.

And all of them are around the same amount of money.

And so that's, I just want to, I'm trying to keep

Yeah, I can't see his face, but I'm sure Chris Cullinan is smiling because you're speaking his language about this, using this one-time money for ongoing stuff.

And you will hear us talk about that a lot.

So thank you for keeping track of that.

The last thing, and I brought this up one other time, and I swear we voted on utilizing a one-time expenditure fund to merge the CHAP program and the rent relief program and the mortgage relief program so that they could be on the same schedule because it was going to

And so that is part of what we're considering in this million dollars is just those things.

And so as Todd finishes up that work and as the budget team works through that, we will come to you with a proposal.

So as a

You know, I was going to go back and do a little bit more research, and I still plan to, but can you give me, and I'm sure there may be others in the public that may be listening as well, what is just a Reader's Digest version of the tax relief program?

So there are two programs, real estate tax relief for the elderly and disabled.

That is authorized under state code.

Most localities have some version of that.

And it's just what it says.

It's a relief program for elderly folks, disabled folks.

The top income threshold right now is $55,000.

There's no home value

limit on that program.

There is currently a net worth component, so we have to kind of pour through a bunch of paperwork to see people's net worth.

The other program is the Charlottesville Housing Affordability Program.

Anyone can apply for that.

There's no net worth component for that, and it has the same income limitation of $55,000 per household.

Okay, Todd.

So is this the program that if there's a resident, they've been living in a house for 40 years and they have limited or fixed income, but the house value may have gone up because of the neighborhood that they're in and they can't afford to pay the bill that they just received.

Yes, sir.

Right.

Mr. Mayor, I just want to ask one additional question along this, and it may not be the proper time, but for a program like this, how

Do residents find out about it?

We try very hard to get the word out.

We advertise in the newspaper.

We get press releases out.

Of course, it's on the website.

Okay, I thought that is, you know, I wasn't sure.

Sure.

It used to be, but a number of years ago, they removed the net worth component entirely.

On the net worth, correct.

Yes, that's correct.

There was a net worth limit years and years ago on real estate tax relief for elderly and disabled, but that was removed from

There is a limitation in our charter that

forms the basis for the CHAP program, that the CHAP program parameters have to conform with the VHDA home loan program.

And the upper limit on that, we're not close to touching that.

I think that's like 90,000 or something.

Right.

Right.

We can't we can't.

Yeah, I mean, we can't raise that as far as I know, you know, unless the VHDA changes their their parameter.

And I, you know, check it every year and I just checked it again and it's still at 375.

So if your assessment's over 375, you don't qualify?

Todd, I certainly am not as expert in this as are you, but in the last 48 hours or so, I had occasion to research, and I don't remember where I saw it, but I would have sworn that it is still a valid principle that you don't get, you're not eligible for certain kinds of relief

if your net worth, not including the value of the house involved, exceeds $125,000.

That's for real estate tax relief for elderly and disabled.

Yes, sir.

That's what Mike, Counselor Payne, was asking about.

That is still in place in our code.

It does not need to be.

The state code does not require that of localities.

You guys could remove it.

Okay, I didn't remember the source of it, but that's good to know.

Okay, thank you.

And I should say, there's one other issue relating to this, and I think I had asked you about this a couple months ago when we were talking about the city's legislative agenda.

There is a proposal floating around, I think it's in the General Assembly at the moment, for what they've called a loop program, loop standing for long-term

owner-occupied, that's the loo part, I guess they didn't want to just call it a loo program, putting the P for program in there, that basically would allow, it would have the state authorizing localities to have a form of tax relief

for people who had been long-term occupants of the property, they owned it, they were still there.

And that's one of the kinds of emails I've been getting from people saying, I've lived in this house for 40 years and now you're driving me out of it and you've got to do something about it.

That's correct.

I'm not aware of any criteria and code that relates to that.

I mean, it's income.

Yeah.

And I think I told you I would look into the loop thing and obviously I didn't.

So I apologize.

Well, I think it's before the General Assembly.

Some other locality has put it out there, but I have no idea how it's faring.

Yeah, I don't either.

Okay, thank you.

So great questions.

You gave me enough time to get an answer to your previous question.

So salaries in the general fund account for about $65 million of total budget.

And then this 5.9 would be, you know, 9% of that, basically.

65 million.

Okay, thank you.

Sure.

Moving on, there were things that we cut from the budget or reduced or deferred, however you want to talk about that, as part of our COVID strategy.

And this budget looks to return those somewhat to normal or to try to catch up.

I think if you talk to staff that manage both of these, they will tell you that, you know, we've never funded it optimally.

And by reducing funding only put us a little further behind.

And so the dollars here look to return those to our sort of pre-level funding levels.

I'm sorry, pre-COVID funding levels.

And

a little bit more on the equipment replacement side.

Again, this is a request.

We're still weighing our options here, but that is one thing that we would consider as a driver.

Next, moving on, Ms.

Yeah, so contractual agencies are sort of by definition, those types of agencies by where we are a regional participant.

And there's usually some type of MOU or agreement, or we have staff that sit as part of those boards.

And so it's things like the jails, SPCA, ECC,

and those we actually do still can work with the county very closely on those the two budget teams meet we review the application separately come up with our own questions then we work with each other on those questions many times we're reaching back out to the agencies as a collective voice and we try to work together in our responses and what we decide to put in the budgets so

Some we don't have a lot of choice.

And I'm just, I guess, coming at this of trying to figure out why

Yeah, and I, you know, if you want to, we can look at those individually, I would say by and large that what's in the vibrant community pool are not ones where we necessarily have partnerships, certainly they're our partner, but they're not sort of contractual type of partnerships.

Well I just also wanted to make sure our contractual agencies that there is a metric that we are once they're a contractual agency that there is something in place that is making sure that just like we ask for metrics with the vibrant community grant that we're also asking for metrics

Great question.

And to answer part of that, the contractual agencies, almost all of them, there are a few exceptions, but almost all of them fill out the exact same application as do the vibrant community agencies.

And so there are questions about their budget, there are questions about their metrics and their performance of those metrics.

So human services city match.

Human services has been one area where has been particularly involved in a lot of our COVID responses.

Most of those programs are funded either through federal, state dollars, fee for services.

And then there's some portion that is a city match.

Over the last few years, we have been, there was a, because they always have fared well with their fees for service and other things, they've had a fund balance, and so in some prior budgets under the sort of one-time fund transfer plan,

you would have seen some transfers back from human services which was basically a way to lower the budget as the the city match portion and sort of draw down some of their fund balance.

COVID has somewhat exposed that methodology in that their fee for services just because of COVID those services

didn't materialize at their normal levels.

And then because of COVID, they also were forced

to have to provide other services that maybe were not as well funded.

And so there is sort of a big number here that we need to move back to sort of equalize all of this and get back on to what a normal or a more steady trend would be in terms of funding human services.

Contractual agencies, we touched on that already.

The largest driver of this number here is basically the ECC, the juvenile jail, and there's a small increase or a smaller increase for the regional jail.

For both jails, that's basically reflective of our

Bed Days.

And so that's basically what's driving the increase there.

Most all of the other contractual agencies are fairly flat.

And then finally, per our policy, we will have an additional $430,000 transfer to the debt service fund.

That is reflective of the return to normal status, if you will, of our meals tax collections.

So all of this, these things are again, the sort of first step look that we take in the general fund budget.

And again, as I talked about, this is sort of the things that would maintain the status quo in terms of the services that we currently provide and things that are already in the budget.

There are some enhancements to some of those, some of these line items we've talked about in terms of the tax relief

and, you know, increases to the school ask and meals tax.

But basically, these are not new things.

It's just drivers of things that are causing those costs to increase.

All of those things are before we get to the departmental new request.

and that is the second part of the submissions that departments submit as part of their budget proposal every year.

We received just over $10.5 million in new requests from departments.

We've tried to categorize those as best we can.

About $4.7 million were requests that were based around new positions.

about $388,000 was based on reclassifications for different positions.

The compensation, these were requests that departments submitted based on what they felt was

were issues with the current compensation levels in their departments.

And I will say that these submissions were submitted prior to the 6% mid-year increase.

Doesn't mean that made the problem go away.

It could mean that that number may be higher and lower than what's shown here.

But I just want to clarify that there still are, you know, compensation issues, which, as we've talked about, we're addressing in other ways.

And then roughly about two and a half million dollars were operational type increases.

So all that brings us to 10.6.

As the budget team is going through those, we'll be making some recommendations.

You know, this number varies every year.

It's typically a very high number.

And

It just depends, again, typically, you know, what are the priorities?

What are we accomplishing?

So, Chrissy, right now, you know, if you go to the city's job opening page, there's several pages of them.

I know we talked about some of them.

Timson, but I assume right now there's there are funds allocated for those positions just in case everyone would fill those positions tomorrow.

But in this current economy, like you said, that is employee employees market right now.

So I'm just trying to figure out, like, is that money just in the

isn't a fund until just in case.

Yeah, great question.

So the way this works is departments are allocated a number of positions as part of their budget proposal.

Most of those positions are full.

There are a lot of positions that are vacant.

As part of the budget, if that is a position that is readily available to hire, then there is a budget associated with that position.

However, to your point, we do have to make some assumptions, and we do make some assumptions about what that vacancy or attrition rate may be during the year, and we do capitalize on that for balancing the budget.

If you were to look at a history, that number that we have used for what we estimate as a reasonable attrition number has ranged anywhere from $250,000 to a million dollars.

And right now, what we're looking at is an allowance of about a million dollars for attrition for that thing, for that specific amount.

issue that you raise.

In this case, there is no allowance in the budget at this point for anything that's in this chart.

So if you were to approve any of the new positions, they would be an add and they would start coming off that $14 million number that we talked about on the first slide.

Does that answer your question?

Chair, Ms.

Hamill, Hamill, a question for you, please.

So these requests, and this is me just wanting to understand more of the process behind the scene, are these vetted through the deputy city managers or how does this budget

Rob McClendon, J.D.

: I mean, I'm assuming that if I were to dive into this sort of click into it, as it were, I would see specific positions for specific departments that are going for some new initiative or

Michael Koch, Mike Signer, Ph.D.

: Perhaps a job that's been a person who's who's working 50% more than they're really supposed to, because they're just trying to get something done for the city and we're trying to actually backfill with the appropriate number of people, but

I'm sure I'm missing something here, but if I look at 4.8 plus .4 plus three, that's close to $8 million in just compensation, it sounds like, or paying for people, which is greater than 10% of our current

current staff budget, according to what I heard a minute ago, $65 million.

So this process starts at the department level.

They submit their budget proposal.

Again, it's sort of the status quo.

And that does not mean they just take the amount that they had budgeted in the prior year, and that's what they asked for.

They do have to document what they're using that money for.

So if you have a line in your budget for contractual services and it was $50,000 last year, and if you ask for $60,000 this year, you still need to itemize the contracts that are making up the $60,000.

But by status quo, what I mean is, you know, what is your budget that is based on what you do now, the services you provide now, the level at which you're funding right now, are there any additional or changes that you need to make for 23?

So that's the first thing they do.

That's all in that first set of slides that we talked about in the expenditure driver.

That is representative of that process.

The second thing that departments do when they submit their budget is if they have new requests.

So they have a new initiative.

They would like another staff member to carry out that initiative.

they have one person that's doing the job of three and it would be better if we could split that out and so we'd like another position to do you know that part of that job that is a new request that gets submitted with a summary and it goes in to our budget system and that is reflective of the numbers you're seeing here

That information is then summarized.

It's brought to the budget team where we can review those.

We also go through a series of departmental meetings where the department heads and the staff

that they bring with them actually present their budget and they present their case for their new request to the budget team, which includes the deputy city manager.

Typically the city manager is really, this is the opportunity when the departments are able to sell their budget and their request.

and then all of that information gets taken in and we use that to figure out what gets moved forward at the discretion of management as part of the proposed budget.

and then that's how that we form the budget.

So these are new requests that and are not part of the numbers or the drivers that we were speaking of earlier.

So if we had 14 million new dollars and we did nothing but the new requests,

Yeah, I guess for me, I'm having to rely on the professionalism, which I know I can, of your team and the deputy city managers and Mr. Rogers as well.

At some point, this is his first week to somehow give a sense of

I'm just wondering what this is for.

Because just looking at it sort of on the macro, we're talking about a 10%, 15%, say 10 to 12% increase.

Basically saying that if you look at it in terms of staff compensation,

That's a pretty big increase, I would say, for what we're wanting our organization to do.

So maybe that is what we need.

Maybe that's exactly what we do want our organization to be able to.

I guess what I'm trying to get at is I'm trying to get a sense of the organization's capacity to get work done as that's indicated through these numbers.

What I'm seeing here is some serious appetite for

It is, and, you know, I think there's a little bit of all of what you just said in here.

There's also a little bit of, hey, if you don't ask, you never get it either, and so that's part of what gets parsed through, and we will provide you with a list of all these requests.

so that we can provide you any detail that you need, but at least initially we will be providing you a list of an itemization with hopefully enough of a description so you get an idea of what it's for.

So it won't be left.

Got it.

Just my internet just went out.

So I missed like the past two or three minutes.

So this may have already just been covered.

Um,

We could probably parse through some of that.

It's not like the CIP where we're maintaining those as sort of a deferral of a project and we're looking at multiple years.

It's kind of left to their new requests for each year.

Are there some that are repeat?

Yes.

And we can probably take a look at that and have a good indication of how many have been submitted before.

Yeah, and just the bottom, I'm just interested if there are sort of chronic ongoing needs that we've deferred for long that we really need to just stop kicking the can down the road on.

Yep.

Yeah, we can look at that when we give you the list.

We can try to give you some indication of which ones are repeats.

Any other questions on this one?

So that that's kind of the general fund discussions, you know, again, to kind of summarize the story.

Number wise, it's a good story to tell.

We have $14 million of new revenue.

The challenging part is that we always have more needs than we have resources.

And so how do we best prioritize and parse through and figure out the trade-offs of one over the other and make a decision for a proposed budget?

And so that's the part where we are now.

And we'll continue to work on that until we actually present you with the proposed budget on March 7th.

And, you know, along with that, the other moving on, we've talked a lot about the capital budget.

And it's hard to not talk about the general fund budget without talking about the capital budget.

They both have, they're both very dependent upon one another.

And as we've talked about moving along to

stretching our capacity and our affordability.

We would be remiss to not talk about them together.

So as you know, we'll have a series of work sessions where we'll talk about, you know, specific things to the general fund and we'll have a specific work session on the capital projects fund.

But as we talk about those, I think we need to constantly keep this in our

you know in our mind about how they interact with each other and so just briefly again this five-year plan we feel is representative of council's priorities education being number one affordable housing number two and transportation and access number three whether they're in that order or not those are the top three funding priorities based on where we're putting the dollars

You know, there's still discussion to be made as we move on.

We know that this plan is not affordable as currently laid out without significant revenue enhancements.

We have to figure out a way to pay for it.

We know that the debt service, we will be exceeding our 10%, current projections show that, and that our debt service will be doubling if we were to issue all of that debt as we have currently planned.

And that does not address roughly just under $127 million of other projects that are unfunded and

to the previous discussion.

Many of those have been deferred for, you know, multiple years.

And so we need to, this is when, if ever there is a time when priorities take a very high look, this is the opportunity to do that.

So

So I'm going to move on and I'm going to turn this over to Mr. Rogers and our deputy city managers and

They'll walk you through the rest.

Christy, when are we going to talk about a possible tax increase?

All right.

Thank you, Christy.

So we've walked council through the state of the budget at this point.

And as she clearly pointed out,

There's a good news story here in terms of the availability of more revenue due to assessments that we've had before.

And that's good news.

The other side of that is that there are some decisions that have already been made.

that impact how that new revenue can be used.

And some of the decisions have already been made.

Some of it is that we are recommending based on prior discussion that certain investments continue to be made in employees and in retirees.

Also, we have, with respect to the school requests, their request is beyond the normal formula that they receive, and we put that in the budget.

So that's a decision point for the council.

So at the end of the day, when we

look at all of the availability of revenue and all of the things that we have listed that are up for funding.

There's not a lot of money that's left if it goes that way.

And so in order to increase the availability of funds for council to further allocate, there would have to be some decisions with respect to what has been proposed.

and some decisions with respect to revenue options.

And that's something for council to consider.

But as I've said with the budget staff, what about council's budget priorities?

Where do they get to give input into what they want?

and then that's what we want to hear now because as we go forward with the rest of the budget process to bring you back the city manager's proposed budget, we think that we should have your input in terms of those items that you think should be funded.

And so that's why we have this slide here now is what say you, council?

Can we discuss your priorities and discuss the options that you have?

Go for it.

Yeah.

Hey, if you don't speak up, you don't get heard.

You know, we have got too many priorities.

There are some things coming up that we have to make sure we know we have to do something about our schools.

I mean, I will tell you as a parent of a child at Buford and talking to my child today about, you know, how he feels going to Buford.

It's, you know, it's serious.

Now, I know we're also still trying to figure out reconfiguration from renovation from all of these parts and pieces.

But I know we do need to sink a lot of money into our schools to bring them up to a place that the buildings are environments that are conducive to learning and good mental health.

Um, second competing priority is I know currently the jail board is looking at putting in its proposal and about taking on $50 million worth of debt to renovate the jail.

The jail is as old as our schools are and regret and people did not put as much into them.

So that's going to affect our bottom line in a couple of years.

Um, and we need to make sure that if we are putting people in jail, that it's a humane jail.

Um, so, and that's not coming, please, anybody listening to this, this is not criticizing anybody in this field anywhere.

It's just the state of some of our buildings throughout the city.

I also know that we are in desperate need of some automation.

Um,

updated systems within a number of city departments and getting our own house in order is a really big, if we're looking at collective bargaining, we're going to have to also look at the amount of temporary employees that we have throughout our system and

I personally have a very hard time with that.

That if we have a temporary employee who's been in our system for more than six months, it's hard to say that someone's temporary at that point.

And these are mounting.

We have to figure out how we're gonna take on that $4 million from the safer grant from the fire department.

How are we gonna take on the four plus million dollars

that ends to the transit department in another year.

And it's thinking of all of these needs that have been deferred and deferred and deferred.

It's why I think we desperately need to raise our taxes.

I know our assessments have gone up recently, but if you look at that list that Mr. Divers provided from the Weldon Cooper Center,

We are one of the lowest tax rates in cities across the state.

And so I will let somebody else talk now.

Who would like to go next?

Anybody?

Would staff find it helpful to, for the purpose of this discussion, try to narrow it down into a certain number of priorities?

That would be helpful.

That would be helpful.

And also considering the realities that we've pointed out in terms of the current, not only the current revenue, but the challenges in the CIP budget and the fact that you've got $146 million that has projects that haven't been funded.

and we also have to look at the impact of dedicated

so much of available debt service to the Reconfiguration Project and the implications of that and the limitations that that would put on capital funding for perhaps another 10 years, 20 years.

So these are tough problems that

We have to discuss and figure out how we work together.

Sure.

Can you hear us?

He's been having some internet difficulty.

I'll go ahead and chime in.

Yes, and I mean, I've expressed this, you know, when we have met too on twos and publicly and individually that I believe that we need to support the schools.

And that's because, you know, just fresh out of a month out of being on the school board is because being on the other side, we've heard this conversation.

The school has heard this conversation that there's been so many other priorities that have taken precedence.

And as I said before, the cost of the schools, they're not going to get any cheaper if we had made some of these tough decisions.

in the past, instead of 75 million, maybe we were talking about, I don't know, 60, 65 million would have been cheaper.

It's not going to get any cheaper if we keep putting it off.

I think it's just going to get more and we're going to say, well, you know, went from this amount to now this.

And I just think that it's going to be difficult.

We're just going to have to make some tough decisions.

And I think that for me, the number one priority should be

addressing schools and we need to just get really aggressive, creative in finding different funding ways.

We need to work with the architects and the school board to say, okay, well, maybe we can get a grant to do

You know, some of the windows, a grant maybe to do, you know, that will help knock off some of the money.

I know it's not going to find a grant for $75 million, but we just need to find every means possible, you know, to address it.

But I think that, you know, because schools don't have the ability to

to tax, then it falls on our shoulder as a city council.

And I can tell you that, you know, that this last year, year and a half that we have been out really actively talking with people, this is something that, you know, a large portion of the citizens are very passionate about.

So that's where, you know, and I know we can come up with number five or 10, but

of priorities, but I believe that, you know, the schools is what I understand is big enough that it's going to consume a lot of the debt service.

And I know there may be some things that we absolutely have to do because it's life and limb type of things, then we need to take care of that.

But otherwise, my support will be to the schools.

Michael, you want to try again?

Yes, we can hear you now.

Okay, my internet keeps going out, so I'm just calling in from my phone.

Okay.

But yeah, I would, you know, I'll try to

limited to five.

And as I was saying for me, I think that, you know, the number one line in the sand is maintaining our investments in affordable housing to be able to fund our formally adopted affordable housing strategy at $10 million a year.

um even if we're not able to immediately get there this budget cycle to have a clear plan for how we will very shortly and maintain that commitment over 10 years as is in our formally adopted plan maintain our commitment to redevelopment of friendship court in public housing um

Second one that comes to mind is investment in our public transportation, particularly because I know we have a significant amount of federal money on the table if we can have a local match.

And I would see that as part of funding and implementing our climate action plan as well.

A third would be investments in reducing our achievement gap within our schools.

The fourth would be ensuring we have adequate money to invest in our operations, because I do see we have a lot of deferred operations that politically are maybe the easiest to cut, which has gotten into a position where

We're often perhaps not going to be able to implement our policy goals until we focus on getting our staffing and staffing needs right.

And in particular, this budget cycle, I think putting aside money for the positions necessary to make collective bargaining happen as part of those operational needs.

And then the last one is

would be ensuring we have enough money to make the investments in the reforms for policing that were called for in the two task force that did work on the Marcus Alert system and other reforms.

We're going to legally be required unless it's repealed to have a Marcus Alert system.

And I think we need to set aside enough money to make those happen.

Mr. Mayor?

Yeah, so part of what I'm struggling with is the fact that I'm new to all this and there's a lot of...

you know, without knowing some of the trade-offs that would be involved with existing operations and with existing plans that you all are executing against every day, it's difficult to say sort of in a vacuum, but I'm going to try to do that in a vacuum.

I'm with Juan, with Vice Mayor Wade in terms of the schools.

I know that we're not all on the same page of that on Council in terms of seeing the

the merit in it, but I do.

I think that, you know, local governments build schools.

That's like a core competency of what we should be doing to advance.

It's more than just, you know, building shiny new buildings.

There's an investment in physical capital that reflects human capital as well impacts that.

So perhaps that's a little

I'm not too idealistic or romantic of you about building schools, but I think that we need to do it.

We've been waiting a long time.

That said, I don't think $75 million is the number we're going to end up with.

I think we're going to be able to find creative ways.

I was encouraged by Mr. Knox's presentation with the way they're structuring the bids.

I would ask the public and the school board and everyone else

to let's work together if we can get a program in a facility that meets 85 or 90 percent of what's being asked and yet costs 10 million dollars less let's not just spend 75 just because that's a number I'm not saying what the number is let's just be thoughtful that's definitely the max and if we can do

If we can reduce it and still get a good program, that's what I'd like to see happen.

I'm with Juan.

I think that there are other creative ways to help with the schools.

I was encouraged that the school board

brought up the notion of basically infusing some of their ARC money, I guess, to help with this investment.

So I think there are ways we can get there.

So that's for me number one.

A close second is the affordable housing plan that was formally adopted March last year.

which calls for $10 million a year.

I realize that's a significant lift, but I think that that's the other piece of equity.

And then the third thing would be the operational pieces that Counselor Payne just mentioned in terms of, and I guess that's what's embedded in the $10 million slide that we just saw in terms of new people, new staff to get things done.

I will have to take y'all's word for it that that all correlates without me, you know, hopefully at some point I'll see where the the dots are connected.

But if we don't have the people we need to do the work, then we can't do the work.

That said, I would love, you know, very interested in what Mr. Rogers and what the deputy city managers can do in terms of making the organization as efficient as possible.

and I look forward to hearing those sorts of suggestions.

So I guess I'm left, I've come in last.

Let me just ask a couple of questions that I'm not quite sure I know the answer on.

We have a capital contingency fund that I assume has some money in it.

How do we decide when, A, how much money we want to have in it, B, when we're going to take money out of it to put it into something?

Yeah, so there is a capital contingency account, and in fact, Mr. Cullinan came to you a month or so ago with the year-end results of FY21, and you'll remember we deferred all our cash contributions to the CIP.

to create a COVID reserve that we ended up not needing.

And so part of that action was that we returned $6.7 million in that one action to the CIP contingency, which remains unallocated.

So part of that is completely at council's discretion and has to be approved by council before any of those dollars can be spent.

It can be done at any time.

It could also be something that we do.

We've included that as part of a CIP budget in the past as sort of a revenue line at the top.

That would be another way to buy down some debt because that is cash.

So what is in that account right now?

I think I'll get you that exact number.

But if I recall correctly, this is off the top of my head.

I think there was just over two million before the 6.7.

So could that be used then at a later if we didn't touch it?

Could that be used

So a couple of things you could do.

Typically the way you would best monopolize those dollars is you would use those dollars either instead of debt or you would move them out of the contingency to the debt service fund to save up money to buy down the debt payments.

You could do one or either of those.

It really wouldn't have anything to do with the timing or staggering the debt because we're going to do that for you based on when the expenses are going to happen and their tax law and their reasons why we have to time the debt the way we do.

but it certainly it certainly helps your cause and if that was something you wanted to dedicate to the school reconfiguration project that is one of many options that we can get to as we talk about ways to finance that project.

I think you know from a staff perspective getting to the answer of

One, are you doing the project?

And two, how much are you allocating to the project?

Then we have the pieces we need and we can go to work and bring to you a lot of alternatives to how best to get there.

So one of the questions that occurs to me when folks have been talking about having a tax increase and the impression I get from what you're describing from tonight's presentation

is that if we did not have a tax increase, we would have enough revenues to do sort of the maintain where we are and to deal with the other expenditure drivers.

That is correct.

That's also to say that if you dealt with what we listed on the expenditure drivers and that's it,

We could balance the budget.

And we talked about about a half a million dollars for your sort of priorities.

The other thing is, you know, have the new request list.

You could look at that.

And again, you decide your trade offs.

And so you still could add something from the new request list without doing a tax increase, but you got to figure out what on the driver list you're not funding or what are you currently funding that you're willing to reduce.

So that's kind of the tradeoff decision.

But yes.

So just so people understand, I'm thinking now just in very stark and simplistic terms, and this does not mean this is where I want us to be going, but I want to understand that

Supposing we said, okay, we're going to fund all the drivers, that's all we're going to fund.

So we're basically in a balancing situation.

We've got maybe $500,000 extra that we can allocate, but we're basically balanced.

On top of that, we decide we want to have five more cents on the property tax rate, roughly $4.6 million dollars.

Would it be an option or would it be, it may be an option, but it's stupid to say we're going to put that money into the capital contingency fund and begin to save up for the next fiscal year when we know we're going to have to put $75 million into a school that would give us a jumpstart of 4.6 million more combined with what's already there.

Now we've got 13 million or something like that.

Does that make any sense at all?

I don't know if Mr. Rogers wanted to weigh in.

I was saying I understand what the mayor is saying is that if you have a big capital project out here,

are a couple of years out that you plan for it by accumulating cash through deliberate action.

The tax increase is one way to do it.

And you put it toward that project at some point in the future.

That's one way to go at it.

But it takes you longer, right?

You know, I think it certainly helps.

This is a question we've been sort of tossing around with our financial advisor.

We when we first came out with the school reconfiguration at the 50 million and we presented that to council, we presented an option where, you know, we said, look, it looks like you would need a minimum of a two cent tax increase over five years to pay for this.

to get you to a total of 10.

You know, there's some pragmatic issues with that that I think have to be considered.

Number one, if you really need a 10 cent tax increase to pay for something and you're going to sign a contract for 75 million, you got to have a way to pay for it.

And if you only pass

you know half of the tax rate in the first year, then by the next budget cycle you've got a whole nother list of drivers and a whole nother list of new requests that then compete with something you've already committed to in terms of your tax, your capacity to raise taxes.

So

It's kind of a chicken and an egg thing, and I think it's a decision that council would have to make.

There's also some issue about, you know, raising taxes for the sake of generating a savings plan.

Again, I think it gets back to the decision like where are we with the decision and where are we with the amount and then sort of these other these other questions and answers fall into place.

So I think I don't think there's necessarily a right or wrong answer.

Well, I guess the question is, assuming for the moment that we say, yes, we're going to put $75 million into a school, it's going to be funded with bonds issued in fiscal year 2024,

That's all a given.

We now know that as a result of, we know right now that if we did that, it is going to drastically constrain our ability to do all kinds of other things that we're going to want to do in the next couple of years.

Do we say

Even though we're going to balance the budget right now in terms of without raising taxes, we could do it that way.

We're going to raise taxes more than we need for current expenditures.

And with that money, we're going to save it towards some capital project coming down the road.

That to me would seem to be, if you want to talk about a tax rate this year,

that is going to begin to start to address the educational demands next year, we have to say we're going to raise that tax rate and we're not going to spend it.

You laid out as what you do.

You can raise the tax rate.

That additional revenue you say is reserved.

It doesn't go into the pot for expenditures on other things.

It may go as...

a budget for the debt service fund and it just sits there until you're ready to pay the debt.

It could go as cash to the CIP and sit there.

And so instead of issuing $75 million worth of debt, you're now looking at $70 million worth of debt.

Well, and I'm not really concerned about sort of getting a commitment from you right now, but the point is that there are pots of money into which such a tax increase set of a batch of revenues could go that would be held for

the next year to where we either through debt service or paying more in cash than in bonds, that we can make that expenditure of the funds necessary to build the school a little easier to handle.

I agree, and I think, you know, in making that decision, the math gets a little bit more complicated, and just to think about as you weigh out your decision processes, the way the current school formula works, you know, a penny is only 60% in, in, in

to the city.

The other 40% goes to schools.

And so that would be another part of your decision process is that if you are going to raise taxes, be it 5 cents or whatever you decide, and you're gonna dedicate that to the school project,

then I think there has to be a conversation about what that means on the operating side of the school budget.

Does that mean they still get their 40% of that?

Does that mean everybody's agreement that the full one penny value goes to the project?

Okay.

And so certainly if we say to the schools, listen, we're giving you your $75 million, give us some control.

We're going to take control.

It's not a matter of giving it.

We're going to take control over how we're going to get there.

And one of the ways we're going to get there is we're going to raise taxes by 10 cents

and we're not going to give you part of that because we're putting all of it into the fund for you.

You just don't get it in operating terms right now.

That is a decision council can make.

And we've talked a number of times about whether that ought to be revisited.

I've got a quick question on this that's pertinent to this.

So the real estate assessment is part of the calculation

of the LCI calculation that we often speak about.

I was going to turn to you, Juan, and say he's got the answer.

He's got 16 years on this thing.

Okay, I mean, that certainly is a number that we need to know.

It's probably one that we could find out by getting the school people in to talk about, and we don't have to know the answer tonight.

I'm curious, given the tax relief programs that we've got, we've said that one cent on the tax rate is equivalent to $927,000 in revenue.

It is not.

No, I'd have to do some math.

My recollection from other years is that it works out to roughly $100,000 per penny.

Does that sound about right?

Does anybody know?

Sounds reasonable.

Yeah.

Okay.

Yeah.

I'm not going to make decisions on the basis of it tonight.

Anyway, just curious.

There are a lot of items on the capital budget overview that you've provided page 13 of the PowerPoint that I suspect are in the category of

$100,000 a year being set aside for this, $200,000 a year being set aside for that on an ongoing program basis.

We also know my favorite thing that I really just flat out don't understand is the AB&I list.

and we've got sidewalk repair funds and things like that from years past dedicated there.

And we're getting people writing us letters saying, we want more money to be spent on sidewalks.

We want more money to be spent on bike paths and things like that at a time when we've got things on the AB&I list where we've already approved them at some level, but we haven't spent them.

Do we have any ability to say to these folks,

Yes, we can spend more money on sidewalks and bike paths and things like that.

So a couple things.

Remember the A, B and I list is a list of projects that have already been approved.

So those amounts have already appeared in a five-year plan.

They have already appeared in year one at some point that were formally adopted by council.

They're on the A, B and I list because either the work is in progress

or the work has not yet begun and so we just haven't sold the bonds yet.

So when you see sidewalks is a good example and Sam may be able to speak to this better than me but when you see sidewalks on that list and there's a number on the A, B, and I list, sidewalks in particular we have a lot of

Projects that are tied up in VDOT with also VDOT matching funds and they're in sort of a five, three to six year plan in which that funding is kind of spread out.

So even though it's on the AB&I list, those are funds that are dedicated for that.

The rest of the picture just hasn't evolved to actual dollars.

And so in some cases we're building up

balances, and that's why a portion of it's on the AB&I.

Sometimes it's just that it was just approved in last year's CIP and we haven't gotten there yet, but that's not sort of extra money laying around.

If we were to, for example, as one

batch of emails we've been getting, I think it's calling for $200,000 more per year for sidewalks.

If that $200,000 a year were to go into, we were to say, yes, let's put $200,000 more into it.

What would happen with that money?

Would it go into this pot from which we would be spending down for VDOT projects?

If we were to add $200,000 to sidewalks as part of the CIP process, that would be in addition to what's already on the A, B, and I list.

And it also, in the spirit of keeping the balance between the revenues and the expenses,

and how we've been talking about this.

I understand.

And I've made that point in response.

But the other question that keeps coming up is, and people ask, why is there this money sitting there?

Why isn't it being spent?

And at least one

Response to that is, well, if we add $200,000 more to that, that'll just be $200,000 more than getting spent.

So if I could, I would just add that Chrissy's explanation of the balance that exists is accurate.

That is why it does appear that the money is there sitting.

It is actually already pretty much tied to virtual projects that are coming forward.

They could be in various stages of being delayed, balances being built up, or still pending.

Simply adding additional dollars to the sidewalk fund or if you wanted to take any other fund and just say we want to add a little bit more to it does not necessarily mean that that money will be on the streets very quickly thereafter.

Part of the challenge also relates to capacity issues on the staffing side.

We do not have the ability to manage many more projects than we are currently managing today.

So adding more money isn't necessarily going to mean that more projects will actually be let.

That just means that we have more money available to get to future projects.

And the likelihood of getting to them soon is probably a little more remote than we would all hope.

So when you look at the new request list, there probably are some moments where adding staff in different places might actually expand our capacity so that if there were more money, we could spend it faster, or some of the money that's currently sitting could actually be spent faster.

Okay, so the specific sort of priority items that I've got, obviously, we continue to have to struggle with this issue of the school construction.

And I said last night, or maybe a couple nights, whenever it was, I don't see a lot of point in saying we're going to spend $65 million and get a project we're not happy with.

if we're gonna spend $65 million to get a project we're not happy with, let's go ahead and spend 70 or whatever it takes to get something more that we are happy with.

I have some fundamental questions as I posed to people today about that whole thing.

But anyway, I completely agree with the suggestion Councillor Pinkston had, the argument he made, that one of the things that cities need to do is to build schools.

There are very few things that are uniquely city things to do, and that is one of them.

One of the things that we have decided in recent years is going to be a thing that the city is committed to doing is to spend money on affordable housing.

which if you think about it is perhaps, it requires a rethinking to the, certainly to the mentality that would have applied 30 years ago to say that that is of the same importance in terms of priorities of what cities are all about as building schools.

That notwithstanding, Charlottesville has decided

This council and prior councils have decided that it is something that is a priority of ours.

And it gets hard after a while to figure out what it means to be one of those core things that cities just have to do if we keep adding more things to that list.

So I have to be a little cautious with that.

A few things that I think we need to be putting money aside for.

One is that we understand from the experience of other localities that going to a collective bargaining system for our employees will involve more expense, more positions, whatever, from the HR office in City Hall.

that if we're looking for full-time equivalents that have to get added.

I mean, in Loudoun County, I think they wound up adding six people in order to be able to implement their collective bargaining ordinance.

We're not going to have that level of a situation, but I think it's likely that in addition to filling the HR directorship that is currently vacant, we're likely to have to add another employee or two there.

So that's number one.

is to get a good sense of what that's going to mean for us and what additional revenues and what additional expenses there will be and what revenues we will need.

That's even before we start paying the first dollar in raises to the employees as a result of some collective bargaining agreement.

That's just for us to be able to handle things internally.

I also think

that we, I agree with the notion that one of the things we need to figure out is and begin to plan for is what happens in the fire department when the funding that we've got for the 12 medics, I guess it is, runs out.

and what is the overall plan and are there funds that are going to have to be spent now to begin to make that transition?

I don't know whether there are, and I'm not trying to say that there ought to be, but we really need to figure that out.

Part of the issue there, of course, is the ongoing concern that has not really been addressed, has not been addressed at all between the rescue squad and the fire department.

And that's a

an issue that we need to be working on.

Whether it has an actual budget impact on the next fiscal year, I don't know.

It seems to me that it may well.

My guess is that there may well be some additional fiscal year, next fiscal year impacts to implementing a new zoning ordinance.

It may not happen, the new zoning ordinance may not be adopted until next

in January or February or something like that.

But then they're going to have to be probably some costs associated, probably with more employees, probably with a zoning inspector or two or something like that.

That's a plan that needs to be made as well.

And I don't have a particular dollar figure to put on it, but I'm just thinking about things that are coming down the pike in the next fiscal year, and that's one of them.

I also think it would be an appropriate plan

to consider the possibility that when we hire a new city manager who hopefully will take office roughly around the beginning of the fiscal year, that we have some money available for what that person might have as an initiative or initiatives.

So that when we hire that person, we will be able to say, you're coming into a situation where you will actually have the ability to do something.

right away, where we're not saying, gee, I hope we can find some money to scrounge around to pull out something so you can do what you want.

I think it would be a very attractive opportunity, would add to the package of attractions, let me put it that way, if we had the ability to say that to an incoming city manager.

There are just generally a lot of organizational kinds of things we've all commented on at various points over the last year or two,

Some of it are people, seats that aren't filled, some of it being initiatives that haven't been undertaken.

One continuing issue is how we're going to start dealing with climate change issues.

what that's going to mean in terms of personnel.

I'm not sure what all it might mean, but that's one of those things that we keep talking about and don't actually do anything about.

And if we're going to start doing something about it, my guess is it's going to take some money.

If I could add, you know, a thought that comes to mind for me is priority in a different way.

It seems like a more short-term priority for us as councils, at least for me.

I feel like before we make any decision, we should have some very specific scenarios over the next

the implications over the next decade so that both as a council and as a community, we're all operating on the same set of facts and we're very clear about if we choose decision A, this means precisely

Don't fund this for a decade, fund this, cut X, Y, Z. And I think within those scenarios has to be not just what we choose to fund in the CIP, but also the other variable of is a majority of council in support of a 10 cent real estate tax increase.

15, 20, 5.

Do we want to include any contingency about proceed with a sales tax if and when it happens?

Which again, you know, I suppose you should never be too optimistic about

politics anywhere, including state politics.

But it did pass the Senate with bipartisan support 28 to 12.

And the state's commission on school funding was very explicit in saying that the only solution was state level.

And so I'm cautiously optimistic at some point there will have to be action.

I think

The number is over 50% of state schools are over 50 public schools over 50 years old.

And there's $52 billion total in deferred public school building maintenance needs across the state.

Point being, you know, it seems like there's still not enough specificity

that we're all on the same page on in terms of whatever decisions we make, both in terms of what's in the CIP, the level and timing of tax increases, and then specifically what we will choose not to fund.

Because again, my understanding is even with a Tencent real estate tax increase to afford everything in our CIP would still mean no CIP expenditures for

Smith, Jr.

: significant ones until about 2031.

So again, I mean, to me, that seems like a priority is to just get it for all of us on council in the community to be on the same page, whatever decision we come to, because it seems to me that's the only way to be to be fair and honest with the public, as well as to just ensure we're all on the same page.

The second thing I would add is a priority in terms of thinking about how we're going to afford whatever decisions we make is to the mayor's point, looking at across all departments, the buildup of unspent contingency funds,

Looking at our enterprise funds, probably not a whole lot of money to wring out there, but something to look at.

And then finally, engaging the University of Virginia on a payment in lieu of taxes or pilot program, I think

is longer term, but it seems like a discussion that we should engage the university on.

I know that's something that the University of Michigan, Yale, Harvard, many other institutions have done.

My understanding is if the university paid property taxes on the rate we have, they would pay about $9 million a year to the city.

Currently that number is 33,000.

Again, there are universities which have made agreements with localities to pay 100% of what they would owe if they weren't exempt from property taxes.

So that's a lot to think about.

And we appreciate that.

And this part of the program was precisely what we hoped for, to give you an opportunity to put out some issues for us to consider as we bring back the proposed budget, too.

And we will do that.

And we'll think about ways, too,

Hopefully we can get all on the same page for using some survey mechanisms that give you an opportunity to express just where you stand on some of the options.

Mr. Rogers, an updated computer.

It was a lot of static there.

I guess this is as good a time as any to pose it.

I hinted at it earlier.

You know, I realized walking into a new organization for me coming on board and we have Mr. Rogers coming on board as well.

I

I just am very interested and I don't want anyone to feel threatened in any way, but I'm just very interested in trying to get a sense of efficiency of the organization.

Are we spending our money on what we say our priorities are?

The process by which the budgets are created every year.

I mean, I'm in that same kind of world.

It's very easy to sort of have accretions over time.

and again, none of this is meant to be accusatory or anything, but I really feel like we're going to have to do the schools and to do the affordable housing and the things that I think really are priorities for this community.

We're going to have to

get creative on the expense side as well, the operating side and looking at different ways of doing things and really asking ourselves, you know, is this value added towards what the, you know, the needs of the city are?

And I'm sure that most of them are.

And again, I

I don't go into this with any prejudice, but just wanting to say that as I look at things with the budget as it comes forward, I'm really going to ask hard questions.

Is this the best way we could do this, for example?

So anyway, that's all I'll say.

Thank you.

I wasn't sure if that required a response, so if not, I have a quick comment.

and that is it just occurred to me that last summer we're looking to go to get away and we use Airbnb it was in a different state and everything but we had to pay you know as part of that fee pay taxes and is that part of I mean I imagine you know it's a pretty big business here in Charlottesville is that kind of rolled into that information that we

that you shared, Chrissy, you know, and I just haven't really kept up with the, you know, that is a tax generating or, I'm sorry, a revenue generating issue for, you know, for Charlottesville or, you know, any locality in Virginia.

I did not unmute, Todd, for the record.

Yeah, Airbnbs and homestays and things of that nature, they do collect and remit lodging tax.

It's funny that you bring this up because there are some bills winding their way through Richmond that we've been watching intently.

and the Commissioner Revenue Association.

Last year, a bill came through that put some of these platforms, they called them or they defined them as accommodations intermediaries.

And it put them in the position of now finally, which is probably a good thing, of collecting and remitting on behalf of their hosts.

So we do expect to see some more money from those entities because, you know, we can't, I'm sure we're not getting everything we're supposed to from the hosts for a number of reasons.

A lot of them don't even know, you know, what the rules are, things like that.

The problem is that the intermediaries do not want to give any information about their collections or their remissions.

And so they're fighting this really, really hard.

Uh,

You know, and of course, we're fighting back.

But to answer your question, yes, they do pay lodging tax.

They don't pay, you know, there's no business licenses for the for the platforms.

Now, the hosts and the folks operating the Airbnbs and things like that, they they are subject to business license, you know, if they if they operate to a certain level.

Thank you.

Todd, can you just give me a roundabout figure of what we get in from that?

I'm not talking about traditional hotels.

I think the last time we looked at this, it was about $200,000 a year from that type of entity.

We don't get everything because I don't have enough staff to go after every single

entity that's out there that's operating on these platforms.

But I think that gets you in the ballpark.

Thank you.

Sorry.

Yes, please.

And I'm happy to talk to you about any time, Vice Mayor.

Are there other discussions that staff feels they need us to have before?

Of course, we have a public comment period allocated.

I feel satisfied with the information.

This really was just a buildup, actually a drill down from the retreat conversation, which was helpful.

I concur.

This was very helpful for our thinking to be able to look towards presenting a budget for you all that hopefully will not only both incorporate some of you all's wishes, but as Counselor Payne has asked, perhaps provide some background on it of this is what happened.

And just one quick thing is

You know, I know the advertised tax rate has to go up relatively soon, recognizing we can go below what was advertised but not above.

So this is our last public work session where we can actually talk about that.

February 14th is the day we need to have reached a decision.

And again, it's not enough to say we want to advertise a five cent tax increase and therefore

That will make our budget X. We also have to have a plan for how we would spend that as well, because we've got to have that balance.

So we don't have to have exact on the expenditure side, but we need to be pretty close.

And February 14th is the day that I really need to be calling up the daily progress.

Is that something that we could sort of finalize our thoughts on on Monday?

Sure.

I think what we had talked about at the retreat was a schedule that would have us after tonight have another day or two to talk amongst ourselves with you guys so that we could have a decision given on February 7th, which would give you time to implement what you need to implement.

And what will the framing of the question look like?

And obviously, with some idea of what we would do with that money.

I mean, frankly, if I were to say right now that we wanted to have a tax increase,

My suggestion would be something as simple as, and we put the additional money into the capital contingency fund.

It would.

Yeah.

because we know that we have an affordable housing commitment we're trying to make.

We have a school commitment.

In whatever form, I know people have agreed that our schools need work.

So we know there's gonna be money that has to be put into the schools.

So I'm not making any assumptions on anyone's part on anything, including my own at this point.

But we do know that we have these massive

Big capital outlays.

And then we also have some very serious needs, like I use the phrase that we need to be cleaning up our own house, too.

I just, you know, this last year in particular has made it very apparent to me that a lot of things have been deferred and deferred and deferred internally in City Hall.

And that is part of the incredibly low staff morale.

It's that it's always easier on my, as a politician's level, to answer to the community about affordable housing or the need to increase our school spaces.

But our staff have been paying that price now for well over a decade.

and they are just as much a part of this equation and need to be honored for the work that they're doing.

And I'm just, I mean, we need to also consider raising taxes to make sure that our staff are making living wages to work in the city and the money that they deserve for the work and dedication that they have put in and that so we can attract and retain good staff,

to benefit this city.

And I want to include that a lot of people don't realize that social workers, that's our social services staff is set by us, that's our fire department, our police department, our snow plows, our public works department, our

and this class and compensation study which we've been trying to do now for over two years was already years delayed from that.

We know we have compression issues.

We know we have a couple of hundred temporary staffs total.

I know between parks and rec and if we want to be a fair and good employer, that is also very much

an important part of this conversation.

And it's much, much sexier to look at something like a building to revamp that you can put like a vision behind.

The only thing I would add there is you think about what you want to do with the tax increase.

Do keep in mind it would be extremely helpful at the same time if we get some direction on how that tax increase would impact the school formula.

So if you wanted to do five cents, is it all going to the CIP?

or do you want to allocate how you want to handle that?

if council called.

Certainly we're happy to ask any questions you'd like for us to ask about that, but you know I think that's a decision that lies with council.

Well I mean I think it's it would be useful to know whether what I was suggesting of

raising taxes, but just putting all the money into the capital contingency fund, what effect that would have on a 5%, I don't know whether it's graduated in some way, to whether the answer would be different if it was a 10% tax increase, I mean 10 cent tax increase, certainly that's one of the other numbers that's been floated around there, but I would like to know, for example, if

if a 10 cent increase or a 5 cent increase is going to cause problems for the schools and cause them to lose a half a million dollars.

Yeah, and I think we can clarify that for you.

I'm not sure if it's necessarily the tax rate that impacts the LCI as much as it is the actual tax value.

It may be the assessment value that feeds in and has the impact as opposed to the rate.

Because I think, you know, the point was raised that it may be a case that if it's based on the rate, which I don't know, that is a question.

Yeah.

Okay.

I just want to confirm that it was suggested that we reach out to the school board, and I think I certainly can reach out to Dr. Gurley, and if I'm understated, we want to let them know that should we

approve a tax increase, then right now the formula indicates that they will get 40% of it.

We would say that we would like to reserve 100% of that to go towards the school construction project.

I certainly think that would be my thought.

Clearly, if we're saving all of the money

for a tax for their project.

Right.

And so I just want to get a head nod or a thumbs up from the other three counselors to make sure that that is what that's my understanding.

And I want to make sure I represent the council correctly.

So what I keep coming back to is I have, I am concerned that we also need to raise the tax rate to cover some much needed in house uplifting in conversion of temporary employees to full time employees.

in getting people up to a wage where it is a fair market rage for the work they are doing.

I am concerned that we are going to need a tax increase on top of an increase for the schools.

And so I want to be careful that the

I don't want the accidentally at some point for the schools to feel like they've been kind of betrayed if some of that tax increase goes to something else.

I understand.

So, Mr. Mayor, I think that with her questions and concerns, I'm not sure if I can make that statement to

Dr. Gurley, if we can't say that with certainty.

Well, supposing we said we wanted to, I mean, again, I'm just throwing numbers out there, not suggesting anything in particular.

Let's say we decide to raise taxes by 10 cents.

and we recognize that three cents of that is going to be for the kinds of issues that Ms.

McGill, Councillor McGill has identified.

And the other seven cents would be escrowed in essence.

What impact would any of this have on the index?

And so again, because my goal in all of this is to

So I would just add one other point for food for thought when we talk about inadvertently adding things so if we talk about tax increase you know tonight we've talked about revenue drivers

You know, $14 million is a mic drop in terms of revenue growth and budget growth from one year to another.

More typically, we're talking in the $1 to $3 million range for just general growth.

You know, COVID has had a lot of impacts.

both in the way we projected and and protected ourselves from the impacts of COVID but also you know we're in uncharted territory and our revenue team did a great job and and kept our estimates low and so now we're getting back to sort of what's normal so a lot of factors are adding to this position that we find ourselves in this year with 14 million dollars but

As we, you know, we always have inflationary increases, contractual increases, all of those things, and the schools will have those as well.

And so as you think about either the formula or a tax rate increase,

That's really one of the only capacities that a government has to raise more revenue is to increase taxes.

So if you talk about a tax increase and you talk about, well, we're going to allocate all of that to the reconfiguration project and we're going to not do the formula.

If you say that you're giving the schools nothing, then in effect, you're saying, we're not going to leave you any room.

One of two things, we're not leaving you any room for inflationary growth, or you're going to also take the very little growth that the city government room will have.

And now you also have to cover city growth, as well as school growth out of a smaller pot.

So, you know, as you think about these things, and as you think about the formula, and you think about tax increase,

I know it always there's another layer and another layer and another layer, but I do just be mindful of that.

Well, my question right now has nothing to do with what we spend it on.

I'm really not as concerned about the agreement.

And I think, you know, in terms of a I could be wrong, but I think the answer that the best answer we can provide you is one that's a fairly complicated calculation and it's not in a vacuum.

It looks at the state overall and that it compares

you know a locality's ability to pay and there are a lot of factors that go into determining that but I think the best we could tell you is hey either a tax rate is not going to impact their LCA LCI calculation directly because it's based on the assessment value or it does affect it and here's how it might I'm not sure we can come to a exact dollar amount but we can we will certainly check I mean I know Kim Powell has spent a lot of time on this calculation

Well, I can live with uncertainty.

Sure.

We got something from Lisa.

I'm not sure if that answers that.

Certain people are texting me saying that it won't impact you.

So what was just sent to us is the composite index is based on the value of the real property, which is not affected by the tax rate, adjusted gross income, not affected by the real estate tax rate, taxable retail sales, not affected by the tax rate.

So thank you, Lisa.

You've given us the information.

We don't have to worry about that.

Tells us what we need to know.

Glad that there's somebody listening to all of this and helping us out in real time.

I have another question about the guiding agreement.

We're going to call it a guiding agreement because it sounds like

it's either been over or under many years between the school, the 40% of the property tax.

When that happens, so this year, is it each year it's 40% of the new growth, correct?

So

Right now, we are prepared in our budget to go over $900,000.

Where are you getting the $900,000?

Between the difference between the ask and the revenue.

Oh, gotcha.

to $900,000.

So that's three cent tax rate is already included in what we're planning on doing anyways at this point in our budget process.

Right, that's what I mean.

So for anybody out there quoting me, it's not Chrissy saying that.

So basically, we've already kind of, this budget was kind of already baking in a three cent

I think the way I would frame that is that that is a decision point.

You know, the budget guideline that is adopted is that we share 40% of any new real estate or personal property growth with the schools and

If we choose to fund more than that, i.e., in this case, the $900,000, then that's $900,000 that we would not have to address either CIP needs, other operating needs, or new initiatives that we may want to put in the city budget.

And so I do think that is a decision point for council.

You know, you have the option to instruct us that we want to hold the school increase to the formula amount.

I mean, I think one thing we need to do is sit down after budget season.

and really sit down in a work session with the schools and come to come to some sort of renegotiated because if you look historically, it's really just been a guiding point.

We come back to this agreement, but it's not actually adhered to.

And in some years, you know, the schools take less and some years they take more.

And

It doesn't seem to be working.

So that's my point.

It's just like, I think it's not something the schools can really count on.

And I think we ought to at least

come to a better understanding of it, whether we want to try to change it.

I don't understand its history, its provenance well enough to know why it is the way that it is and whether the reason that it is what it is still makes sense.

So I would just like to know more about it and some of that may be historical data and much of it is probably going to be beyond the scope of what anybody has the time to give to it before April 15th.

So it's highly likely if we're going to talk about it, we're going to talk about it after April 15th, seems to me.

One thing's for sure that I'm not sure that there is any ordinance or memorandum of understanding that was established.

I asked our city attorney to look into that.

Yes, sir.

I could not find anything that has the gravitas of an ordinance or resolution.

If you all look within each year's budget document that comes out, there is a section that is titled, I think it's called Budget Guidelines as Adopted by City Council, and these

things are listed in those budget guidelines, but these are all, as someone mentioned earlier, these are all decisions for city council to make.

And so, no, I have not found an ordinance.

I have not found a resolution that addresses this arrangement for

the 40% of new real estate and property tax revenues to go to the schools.

The only thing we have seen so far is a document from 1998, which was a more of a sort of a school

document of a school briefing document that that lists different options that were to be discussed in 1998 and so I don't I don't really have anything formal by city council but I do want to note that these are things because they are in your budget document every year that are essentially formally adopted by council each time you approve the budget and you you

you know assign the dollars in accordance with those guidelines, but you do absolutely have the ability to change things and you have a huge decision in front of you and and a difficult funding decision to make so it is worth some consideration.

I don't mean to cut folks off, but it's now 740 and we do have public comment on the agenda.

Can we move on to that and see if there are other public comments or does anybody else have something they're just dying to say right now?

Certainly.

A reminder that each speaker will have up to three minutes.

In the Zoom webinar, you may select the raise hand option to be placed in the speaker queue.

If you've joined by phone and wish to speak on these matters that have been discussed this evening, you may press star nine.

Well, we sort of took them by surprise here.

First person with their hand raised is Annie Suttle.

Thank you very much.

Good evening, counselors.

Thank you for your work on behalf of our community.

My name is Annie Suttle.

I'm a resident of North Downtown.

And I'm here tonight on behalf of the new coalition Charlottesville United for Public Education.

I listened to your joint session last evening with the school board.

And during that meeting, Shermora Cooper from our steering committee shared some of our vision.

And you should have received a letter today from our recruitment coordinator, Mary Coleman, in which we urge you to pursue every means necessary to fund the renovation and expansion of our schools.

all of which you've wrestled with tonight.

Charlottesville children deserve modern welcoming facilities and they deserve every effort by Charlottesville City Schools to address the achievement gap.

We urge you not to pit these two issues against each other.

Council must fund the schools, buildings and operations and the schools must teach equitably.

The two go hand in hand.

Our reality in Charlottesville is that nearly half of all students enrolled in public schools are economically disadvantaged.

The majority of students are students of color.

We're looking at a history of discrimination and disinvestments that have led to learning gaps across race and income, and frankly, poor conditions lead to poor outcomes.

We're asking council to trust the good judgment of educators who have made the case again and again that this renovation and expansion is necessary for quality education to be delivered in our city, and that not funding this project will result in greater inequities as more families and teachers flee to other schools.

Charlottesville United for Public Education is poised to engage the community with regard to the very tough budget decisions in front of you as counselors and to argue for the merit of making this big but long overdue investment in our schools that reflects our community's priorities.

So thank you on behalf of Charlottesville United for Public Education.

Thank you, Ms.

The next person to speak will be Leah Puryear.

Good evening, council and others listening.

I attended the school board meeting last night where we heard a presentation by Mr. Knox from VMDO regarding our reconfiguration.

As an administrator, I understand that we are constantly faced with very hard decisions.

And you are faced with a hard decision tonight and moving forward.

But I ask you to please consider education.

Education is a right, not a privilege, and our students are students in a public education environment.

I am the recipient of a public education in the Commonwealth of Virginia, and I know what that has done for me and others.

Our students in the city of Charlottesville deserve

a quality education.

Dr. Gurley presented to you last night research that shows the importance and the impact of buildings and environments that spar and spark positive learning experiences.

you saw the economically disadvantaged percentages.

You saw the numbers of minority students and Caucasian students.

All of our students deserve an education and deserve reconfiguration.

The current situation that we have is unpalatable.

Yes, we are concerned about paying our employees a living wage as well.

We are concerned about things in our buildings that are impacting our students and our employees.

The health and safety and education of all of the CCS employees is tantamount.

please understand the importance of education and please put it at the top of your agenda and priorities.

Thank you, Ms.

Okay.

So, council, staff, any last thoughts before we

We have not specifically, I don't think.

Well, at least one discussion to have.

It seems to me, you know, Councilor McGill in particular has talked about non-education things that might get added to the budget that would require a tax increase.

Maybe one way to think about it, right?

And I don't want to be pushing anybody to make a decision tonight, but one way to think about it that might generate some memoranda and some thinking in the next couple of days would be supposing we were to say we wanted to have five cents worth of a tax increase for non-school things.

What would that look like?

What could we, what would we do?

What would be staff's best

recommendations given what we've talked about.

What would be the staff's recommendations for how we might spend that would work out to roughly $4.5, $4.6 million?

Give us some ideas.

That's, yeah.

Well, personally, my thought would be for specifically for sort of escrowing the money towards eventual, whether it's pay down debt or whether it's debt service or capital or whatever, but one way or another, we're looking forward just

to that money going into a school project.

I'll be honest with you, when I've talked to folks both in the last couple days since assessments came out and certainly before then as well when people started talking about tax increases, there are a lot of folks out there

who are on fixed incomes for whom the notion of even just no tax rate increase scares them to death because their assessments have gone up 12, 15%.

And for one person I was talking to, it's the largest check they write every year or two checks they write every year.

And now we're talking about adding another

10 or 15% to that.

And if we're going to an increase in the tax rate, that might raise some of those 20%.

And they're not getting 20% more social security.

There are real costs and real pain that are gonna be inflicted by any increase.

And it is easier to sell that increase if we say it's going to the schools

than going specifically to school construction.

If it's going to a capital project for the schools, that makes it somewhat more palatable.

That's something that people, if they swallow hard, they can say, okay, I can see that.

If there's a way we could give more tax relief to some of those folks

That would also be worthy of consideration.

And to hear Mr. Divers say that there is room there that we're not using suggests to me, let's figure out how we might use that.

Well, I think if our baseline scenario is funding everything currently in the CIP, I would think at a minimum, we would need to discuss 10 cents because that's what would be needed to afford what's already there.

And

If we're talking about five cents or lower, again, I think we just need to be very honest with ourselves and the public that that means not funding the affordable housing plan for a decade, no investment expansion of cap for a decade, no funding of our climate action plan, no room in our operational budget for anything, no room for a wage and compensation study, no room for collective bargaining.

no room for unexpected cost increases for public housing and redevelopment of friendship court.

And I don't think that's what the community wants to see our decision to be.

So I do think it's going no matter what, we're going to need a tax increase if we're going to afford everything in our CIP.

I would agree with Councillor McGill that it's critical that we have enough revenue to cover housing commitments and other necessary operational expenses.

And I don't think we should

We should also at least explore scenarios that involve a sales tax, longer term pursuits of payment in lieu of taxes and other revenue sources.

Because again, I don't think what the community wants to see is no funding for affordable housing

or all schools or the reverse of all schools or no schools, all affordable housing.

And that is difficult.

That's gonna be very difficult conversations where we gotta look at the numbers.

But again, I think we're gonna be making a critical long-term fundamental mistake that is not what the community wants to see.

Well, I would note that the capital budget overview on page 13, if I'm reading this correctly, calls for funding the school construction project, calls for $34 million out of capital funds for affordable housing.

Well, I guess it would be in the sense of one, it would not be, we would be at our existing level of affordable housing funding, which would not be what's called for in the affordable housing strategy, would leave no room for cost increases of redevelopment of public housing in Friendship Court, and would also mean that requests like PHA's funding requests for the two proposals on Park Street wouldn't be possible.

unless we're talking about, again, with everything in our CIP, a minimum, even with 10 cent real estate tax increase, it wouldn't be enough to do that.

No low income housing tax credit applications, not enough room for that for about a decade beyond what's programmed.

Maybe, Ms.

Well, I think it's fair to say that that entire plan depends on some type of revenue enhancement, however we do that.

You know, whether is it just for those projects, that's debatable.

It's the addition of a large number in the CIP that is creating an affordability issue.

And so even when we talk about, I just remind you that debt service lasts for 20 years.

So when we're talking about two issues here, one is the debt capacity, which we know we will run out for a short period of time.

and we've talked about 2029, 2030, 2031 at some point where we could start issuing but we're also even at the 10 cents the last scenarios that we ran we're using the entire 10 cents to pay the additional debt service and we've bought down all of any debt service fund balance we have so even by the time we get back to some type of debt capacity you still have affordability issues.

in paying the debt.

So it's not a one and done kind of thing.

And even when we're back to a capacity issue, you still got to pay for it, which then still is going to put strain because you're exhausting, you know, 10 cents of a tax increase just to pay the debt service on what's on page 13.

So is it one project or another?

It's hard to say.

You know, just like it's hard to say that six cents of the tax increase is related to $75 million worth of debt.

That is true.

Six cents certainly covers or 6.7 million roughly is what is required to pay $75 million worth of debt service annually.

Yeah.

And so that's 20 years of that.

If we didn't have that project in there, we would be managing our CIP where we probably wouldn't be talking about a tax increase because we might get to year two and we'd say, look,

We don't want to raise taxes.

We don't have enough general growth in the general fund to afford the extra debt service.

We're going to defer one more year or two more years and we would manage.

That's how we've managed our CIP.

That's also how you get into this whole issue of

Deferred maintenance, deferred cost in, you know, 20 years of school not getting money for their buildings.

But it is also managing your expenses to what you have available to spend.

So it's a big piece to the puzzle.

And much of the so for example, the Friendship Court project, because of the way that it's structured, it's not bondable.

And again, what's allocated for affordable housing in the budget right now is all to specific projects.

So my point is that there's no room for any new project.

PHA's two funding requests for Park Street being one example.

And those projects will not get built without local matching fundings because of the formula

point system for low income housing tax credits.

So again, let's be honest with ourselves in the public.

If we go that route, it means no new affordable housing projects for about a decade that we haven't already been committed to.

And I don't think that is acceptable.

I don't think that's what the community wants to see.

And if it requires greater tax increases to make that possible, whether that be sales tax, along with real estate tax increase in pursuing things like pilot

So for the FY 2023 column on the capital budget overview shows $7.325 million for affordable housing.

and my understanding is that we are expecting to be asked by PHA and company for another $2 million to help them build the first of their LIHTC projects on Park Street.

That is correct.

So if we were going to fund that, we would need basically, round numbers, two cents on the tax rate just to make that happen.

Correct.

I'm getting some slight nods.

Oh, I got you.

Yeah.

That'd be about, yeah,

about three cents on the tax rate otherwise.

Okay.

Well, then I guess one of the questions, I don't know whether it's appropriate to think about it right now, but do we want to build into our scenario the notion that we would be looking to find the $2 million to give to PHA for that project?

Is that a decision that we ought to

I would definitely say yes, and I think that we need to have the larger conversation with the school board that should we just, you know, pursue the funding, the $75 million, that for X amount of years or this period of time, that

And I would say, you know, that funding for the new PHA projects is a bare minimum.

I mean, the ultimate point is the need to get to $10 million a year in funding, and housing is not going to get built without local matches for low-income housing tax credit applications.

Right, and I believe that we need to have this discussion, but I believe that these hard decisions have been made in the past, and each time the schools have been said, you know, been put on the list that it's too big, let's do other things, and I think we can continue to support

affordable housing to a certain degree, but we have to, you know, we've neglected our schools long enough.

And so, again, we have to make some hard decisions.

I think that we can try to do it all, but ultimately, we have to, you know, I believe, due to schools, that's going to be, you know, eight, nine years of some tough decisions, of some sacrifices, but I think that ultimately,

The final product, I think it will be worth it.

In the meantime, hopefully, you know, I just saw online where the school department, they have a firm, you know, that's going to try to push through that legislation.

Hopefully we get support for that.

That will make a big difference in this whole scenario.

I know we can't go through that with this process with that, you know, assuming that's going to be there, but hopefully down the road, there will be even more options, but that, you know,

To Vice Mayor Wade's point, I mean, I know I would profit from a weekend to sort of process what I've heard tonight and have some conversations with each of you offline.

And the final thing I'll say, again, whatever decision a majority of council makes, let's be very, very specific with ourselves in the community about what the trade-offs are.

What if we proposed right now a $0.05 to schools, a scenario, and proposed scenario only at this point,

because if we don't get a sales tax advertised by the 14th, not a sales tax, a personal property tax increase advertised by February 14th, it's out the door for a year.

So we don't have a lot of time to figure out if we're gonna even propose to raise taxes.

And I think at this point, I really hope everyone's understood that I am very much for raising taxes.

I think we have to do it for a lot of reasons.

And I would love to see, I guess, scenarios on if 5% was put into a savings for schools and therefore hopefully the schools would not take 40% of that.

as per the funding formula and then 5% that is not towards that that is both towards potentially affordable housing and what could staff do internally with that additional 5% to try to meet our affordable housing commitments on a yearly basis as well as like I said some much needed I'm

hearing constantly how we have basically had a full-time hiring freeze for years.

And as we have grown, we have not been growing the people we need to meet that growth internally.

And so if we look at 5% that might be hopefully crossed our fingers

Yeah, I'll just say that I'm generally in agreement with Councillor McGill.

I think that I don't know all the reasons why our tax rates are relatively low.

I've seen data this week in terms of averages compared to other municipalities in the state with AAA bond ratings and we're an outlier.

I know that it will be painful

I certainly hope that we can do all that's possible to alleviate that pain for those in most need.

It's unfortunate that we are in this kind of jam, but I think we have to, you know, I agree with Counselor Payne, we need to be clear-eyed about this.

You know, I do think I need a weekend to sort of process possibilities with conversations with y'all.

I saw Mayor Snook a note in the chat from Ms.

Thomas about having to add this formally to the agenda on Monday and maybe at that point we could pick up this conversation again.

Yeah, Ms.

Robertson, that makes sense.

So, yeah, I'll just go ahead and signal that, you know, I'm open to a 10 cent increase because I think that's what it's going to take to get where we need to go.

I think that that would be, you know, maybe we do a step five cents one year and then another five cent on top of it.

I'm happy to look at different scenarios, but I think that

So does that give

And in terms of the five cents that you would allocate to for us to give you a recommendation, is that just based on staff's judgment as to the best use of those funds?

Or do you want to define some type of priority that you would like to meet and how best would we?

So, for example, you know,

and we're not funding it beyond what we've already put in.

And so it's how do we maintain that?

And how are we looking at our deeply affordable housing?

Because I don't care what anybody says, we're not getting 30 to zero AMI.

without a lot of government support.

And we all know that the feds have stepped back and stepped back and stepped back and put more of this on the localities, just like they've done with education.

I mean, this is why we are in this tough position right now is because, you know, multi-billion dollar surpluses on the state level are not coming down to our localities.

Instead, who knows where they're going.

Anyways, this is just, I would like to under, because I feel our staff are the ones who really are seeing some of the most internal pressing needs.

So I'd really like to see from staff's perspective, if you were given that leeway, how could you make some commitments to the affordable housing plan as well as making some

One point that I just wanted to make is that the $10 million commitment to affordable housing is not all capital funds.

It includes tax relief.

It includes, frankly, the consultants recommended about a million dollars a year that we spend on building up the infrastructure within City Hall to better handle housing issues.

and we haven't done that either.

I don't know what's in this budget for a housing coordinator.

Of course, it's a vacant position right now.

I don't know what that's going to look like, but I think one of the things that perhaps ought to be looked at is what we would need to do and what money we would need to spend for that infrastructure to make the affordable housing plan work better.

We know, by the way,

that I assume in the next month to two months, we will be having some report on the efficiency study that we had asked for on the efficiency or the efficacy of our affordable housing measures.

Yes and yes, that actually comes on the 22nd.

So that's something else we need to factor in as well.

Okay.

Thank you, Mr. Rogers.

Hearing nothing else?

Looking around, seeing nothing else?

Thank you all.

And thank you to the staff and everybody else.

I noticed there are 25 people still listening.

So I'm impressed.

Thank you all.

My frustration is not with anybody here.