City Council Budget Work Session   3/10/2022

So do we not have the mayor on?

It's six o'clock.

It was on.

I saw it.

He's here.

I haven't seen Mr. Payne yet.

Okay.

Sorry.

I had to restart my connection there.

Mr. City Manager, is your side ready to go when we're all in order?

Yes, sir, we are.

Okay.

Well, let's give Michael another minute or so.

There he is.

Okay.

So,

and we can call to order this work session and I note for the record that all five of us are here and we don't need any more formal roll call than that because we won't be taking any votes tonight.

Yes, sir.

Samara Council, citizens of Charlottesville, we're going to have a discussion tonight about the budget that was presented on Monday night.

As I indicated on Monday night, we are presenting a balanced budget

of $216,171,432.

This represents a 12.46% increase over 2022.

That's less than the 13% that the headline said we made.

So this budget is balanced.

It covers

a number of the priorities that we've discussed in your various work sessions, as I indicated the other night.

Tonight is an opportunity to drill down on those items like affordable housing, discuss the reconfiguration of the school system, and to point out too that in this budget,

We have provided for $4.2 million for the school system, which is what the school system requested for the operating budget.

There's a larger discussion on the capital budget in terms of how the reconfiguration fits in.

I should point out, too, that though we had the authority

for a 10 cents increase in property taxes as you authorize us to advertise.

In this budget, we have unallocated those revenues, so there is flexibility for you to decide how much of an increase will be required based on

your very programmatic decisions.

What we're gonna do, Chrissy, if you share your screen, we have a PowerPoint to go through that summarizes the budget, kind of a recap of Monday night.

Yep.

And I might point out to the council that we have various department directors who are online and available to answer any specific questions you may have about items in their department.

Thank you.

So tonight we're going to talk a little bit more detail about the general fund revenues.

General fund expenditures are going to take a little more of a granular look than what we talked about Monday night.

Finally, we'll wrap up, try to itemize any staff follow up that we hear from you all, and then we'll move on to public comments.

So the first thing I want to highlight here is that we do have a new budget visualization tool that is on our website.

This is a new tool for this year.

It does display the general fund only.

We hope to be able to expand to other funds such as social services, human services, and transit in the future, but for right now,

It is just the general fund, but it does allow you to go in, choose a department, and you can compare the 22 adopted budget to the 23 proposed budget down to the line item for each department.

And you'll find that on the budget webpage, both under the FY23 budget development and also on the menu on the left hand side.

So as we jump in and start looking at the revenue detail, we're gonna break these down into sections for you.

The first section we're gonna talk about is the taxes.

This makes up a large portion or the largest portion of our budget.

Of the 216 million, this is 151, just over, excuse me, 151 million.

The real estate tax revenue that you see here, this number does reflect the 10 cent tax increase.

The other thing I'd like to point out is that you'll see a column here that we've not yet talked to you about, and that is our revenue team continues to meet.

We have a wonderful revenue team.

I can't stress that enough.

It is comprised of our treasurer, our commissioner of revenue, our director of finance, director of economic development,

We meet regularly, look at these revenues, and it is that team and the work of that team that has helped us maneuver through COVID.

And so as we continue to do that, we are revising revenues for the current year.

and as we are moving through COVID and hopefully moving to the end, you'll see that our revenues are generating and producing more than our budget in many cases.

And so looking only at the revenue, we are projecting a revenue surplus for 22 and we'll be talking to you in more detail about that

through quarterly reports, and we'll be coming to you with the first one of those at your next meeting in March.

So just as we walk through here, something to keep in mind.

And so with that, I'll also highlight the real estate tax revenue, both for the revision and with the 10 cent tax increase.

The $83.7 million that you see here for 22 is just over $3 million more than what we had budgeted.

That does not account for any tax increase.

So if we decide to move through this budget and approve the tax increase, the projection for that revenue alone in 22 would be just over $88 million.

Again, we continue to see increases and improvements in sales tax and meals and lodging along those same lines.

And it's very likely that as we continue through the month of March, we will have another month of those projections and we probably will be coming back to you with some amendments for the 23 budget as well.

So as you recall, as Mr. Rogers mentioned, the budget is balanced with the current 95 cent tax rate.

We did advertise at your request the $1.05 rate.

That would generate some additional revenue of $9.2 million, which remains unallocated in the budget at this point.

And so the question remains is why is it unallocated?

We did this for a couple of reasons.

When the tax increase was first spoken about, it was spoken about in relation to the decisions on the school reconfiguration project.

There are several factors.

There have been several construction options that have been presented to council.

There have been several conversations.

And so there is still questions about the construction and the funding options for that project.

Additionally, we know that the construction dollars themselves are not actually needed until 2024.

So we don't really need to impose the tax increase now if that's the way we're going to fund it.

And there's also more work to do to do in determining what impact

that project in particular would have on other CIP and operating priorities.

So for this reason, in order to give Council time to consider those questions and work through those, we left the additional tax increase revenue unallocated.

The additional thing with taxes this year is Commissioner Divers has met with you all and has talked to you about the changes in the assessed values of personal property.

He will be making a recommendation to lower the tax rate to equalize these unexpected assessments.

And so the budget only includes a modest increase of about $200,000 on that revenue.

Okay.

Moving on to license and permits, not a lot of change.

Yeah, I'm sorry.

I didn't get to my unmute button fast enough.

So I have that as a decision point on one of the last slides that we can talk about it then or you all can talk about it now.

Because the mayor had raised that as a prospect, yes, we did discuss it.

Okay.

Okay.

And on the assumption that we will have some discussion with Todd about the property tax issue, I'm not going to get into that now.

Is that a fair assumption that we'll get into that later?

Yes.

Okay.

Moving on to license and permits.

For most of those, we've held those level with the exception of a slight decrease on the dog license.

Business and professional license, we are projecting an increase.

Again, this is another solid indicator that as businesses are

improving and coming out of the pandemic.

Their gross receipts are rising.

That is what's the basis for the assessment of the BPOL license, and therefore we're projecting a revenue increase there.

Intergovernmental revenue.

These are things from the state generally or also shared services and costs that we have with the county.

You'll see there's very little change here.

There will be some changes here, but at the time we were compiling all of this, the data regarding the state budget is still not settled.

And so we are still waiting on some final numbers, but there are likely to be some small increases here.

Again, some additional intergovernmental revenue, some small changes, not a lot to talk about here either.

These are basically, you know, the library administrative fee and the fire department ops with the county and UVA.

Those are all formula based calculations.

Same with the juvenile domestic court with the county, as well as the other UVA charges here.

Charges for services, for the most part, we're holding those level as well.

A few notable changes, the recreation income, you'll notice is a slight decrease.

Part of that is, as you know, we were not open in 21.

And so our revenue was decreased significantly when we were working on the 22 budget.

We weren't really sure where we were, so we made some assumptions that we would be out of the pandemic and full speed ahead.

We know now that did not happen.

And so we have revised the 23 budget somewhat to be a little bit more realistic for where we think we are going to hopefully be in 23.

The payment in lieu of taxes, that is, again, a formula.

There's a slight increase there.

The city utilities pay that as a cost allocation.

Good evening.

The payment of those taxes is, as Ms.

Hamill said, it's paid by the city utilities as included in our utility rate calculations each year.

And what it is, it's a payment as if the utilities were a private utility provider within the city.

It emulates the tax burden that they, if they were a private corporation, what they would owe the city.

Thank you.

I just recently, my head has been filled with colleges paying in lieu in taxes.

And so I was, for some reason, I don't know why.

Miscellaneous revenue is kind of just what it is.

There's no real change here either.

And then finally, moving down to transfers from other funds.

We've talked about the increase on the expenditure side from the Human Services Fund for 23.

And we talked about the reason for that is because there have been years in which

We have sort of bought down that fund balance.

So these are those types of transfers.

We've taken all of those out for the 23 budget.

There are no one-time transfers from other funds to sort of buy down fund balance with the exception of the landfill reserve, which was a reserve that we've had for many years.

And we're just buying that down to help offset the cost for our cost share with Rivanna and the county.

and then the parking enterprise fund.

We have continued to pace that transfer down each year to eventually get that to zero so that the general fund is no longer counting on parking revenues and that those are all going to the parking fund.

And

Moving on down, we do have some designated revenues.

These are the things.

So two most notable ones here are the contractual services that we provide to the city schools, both for school maintenance and people transportation.

Those budgets have seen increases.

and so that's an increased payment from the schools to the city and then also the transfer to the CIP is a slight decrease and that's simply because we are transferring the cash that was needed for the 23 budget for the cash projects identify that we are paying for cash is just a little less than what was last year.

So that's the reason for that decrease.

Everything else remaining the same, with the exception of the meals tax.

Ms.

Hamill, I note that you have come to the end of what is in the budget as pages C1 and C2.

Don't need to fix it.

Don't worry about it tonight.

But before anything gets more finalized, the last column on both C1 and C2 is wrong in virtually every instance.

Most of the time, it's the number that's been compared to the FY 2020 to 2021 actual, not to the last year's budget.

So somebody was using the wrong denominator in those cases.

Okay, we can get that corrected online as well.

I note that your slides tonight are fine.

That's what had me checking because these are saying one thing.

Thank you.

Good job.

Could you please speak to line item three, city county revenue sharing transfer to CIP?

Yeah, so that reduction is the result of COVID.

In FY 2021, we deferred all cash-funded projects to the CIP, and the only cash that was transferred to the CIP in that year was to fund housing vouchers that are part of the CIP.

Everything else, all the remaining cash,

was left in the general fund as a reserve to hedge against any unknowns that may have happened with COVID.

And as you know, it turned out we did not need that.

Okay, and I guess it's showing up in here as a revenue, but it's essentially a bookkeeping exercise between our CIP and the general fund.

It is.

So what happens is we actually get the revenue sharing in from the county and we just show it in two places because we do generally the majority of that revenue sharing.

We put in CIP for one-time expenses

And so it is shown here is the bulk of for 21, this 13.2 million.

That's the reserve and the cash that did not get transferred to the CIP.

Conversely, if you look at 23, we're using 8.6 as part of operations and 6.7 in the CIP.

Okay, thank you.

I have a quick question.

In our book, we have a miscellaneous revenues, interest earned, and then we also have a rent category.

Mm-hmm.

Are we saying for all the properties that we own and that we rent out to various places, we only get $175,000?

So this is I'm going to want to talk a little bit more again about the potential financial impact of the

Airbnbs and that.

That would be Mr. Diver's specialty.

And let's see, are you here, Todd?

You know, so I just would like to know, you know, I know that you before when we talked about it, we talked about the capacity of staff to enforce it.

And so I guess what I would like to know, like if we allocated, you know, whatever it would be with benefit, let's say with benefits and salary, $100,000 for a staff person to

to check this and do we have any idea that if that was done and this person will get X amount in, would it be worth it?

I don't know if we're talking about this is worth

potentially a few hundred thousand dollars or a half a million or a million.

It's probably more in the neighborhood of hundreds of thousands of dollars than millions of dollars.

These folks these folks don't pay.

I mean, they you know, they're responsible for, you know, a fair amount of lodging tax, but it's not like the big hotels and the big chains like that.

And

I'm hesitant to turn down an FTE, but there is pending legislation coming out of the General Assembly this year that might help us be able to identify some of these things a little bit easier.

We still anticipate the platforms dragging their feet and making life difficult for us, but we think there may be

So things may be getting a little bit easier, so I'd rather not go there.

Right.

Okay.

So, Mr. Divers, if you had to put a guess on it, you're thinking somewhere, a rough number, say $200,000, $300,000 maybe.

I realize you're just having to sort of take a swing at that number.

Yeah.

How do most Airbnb-ers or people that are renting out their house, VRBO or whatever, how is that revenue collected?

Is it sort of on an honor system or...

Well, I mean, you know, meals tax and lodging tax are both what we call trust taxes.

I mean, ultimately, it's up to, you know, it's up to the business to collect the tax and remit it.

Now, you know, we audit and we, you know, we go behind and we try to find it.

That's our, you know, enforcement mechanism.

But ultimately, yeah, we are trusting these businesses to pay.

You know, the folks who are doing homestays a lot, you know, they're not professional business people.

So they're probably not as good about staying on top of it as, you know, hotels and motels are.

But I, you know, you know, they do go on, they'll go on the website and they file and they pay, we have a way to do it online.

The last time I looked at this, and this is a couple of years ago, it was a couple of hundred thousand dollars a year, I think.

That's been going up, you know, through the last several years.

I don't want to hazard a guess what it is now.

We believe that

Once this legislation comes in, we hope it's going to force some of the online intermediaries to start remitting on behalf of their hosts.

Now, whether or not we'll have the teeth to go behind the intermediaries and check that they're giving us what they owe us is an open question.

Right.

Sure.

I guess, again, you said meal meals tax would be at the end of the session.

We have a slide where we are teeing up some decision point.

I mean, we're happy to talk about it now if you'd like.

It's totally up to you all.

Okay.

Could you speak, Mr. Divers, about sales tax

as well.

Yeah, I mean, it's coming in much better than we anticipated.

It really never dipped the way that we thought it was going to through COVID, you know, for a number of reasons.

But yeah, it's coming in fairly strong.

We've been kind of amazed at how it's coming in.

Now, some of that has to do with COVID.

There are more businesses that pay sales and use tax now than there used to be.

The Wayfair decision, some of you may be familiar with a few years ago, made it so that a lot of online retailers and just online businesses like eBay and others are now paying sales and use tax to the Commonwealth who didn't do that.

And it was well-timed because that uptick kind of corresponded with the downtick

of COVID.

Right.

No, that was very helpful.

Well, I mean, the grocery tax is, it comes in as part of the sales and use tax distribution.

The tax on groceries is lower than the general 5.3% sales tax.

And so the governor has been talking about eliminating it, and he's got some support for it.

I don't really know where that stands.

I think we projected that if that got eliminated, it would hit us for about, what did I say, 1.4, Chrissy?

Now, the folks at VML or First Cities, their guy had a different number.

The one I came up was 1.4.

I think he might have said 2 million.

Yeah, so it's somewhere in there, somewhere probably.

That's correct.

And then in terms of utility taxes, these are taxes that are levied on utilities, I guess.

Chris, you can answer the question about where they go.

It is a general fund revenue.

I don't have much more to offer except to say that it's a tax levy down the consumer of the utility.

It's a general revenue of the city.

It's not only the city utilities, but also Dominion is obviously a large contributor.

In fact, I think they're the largest segment of that, but it's a general revenue to the city.

It's not an expense of the utility.

And that's correct.

Okay, we'll move on to expenditures.

Just sort of a couple big picture observations as you look through the budget.

Generally speaking, you should expect to see that all departments increased at least 8% over 22.

That is because of the way we budget the COLA.

So there was a 2% COLA that was budgeted

and given on July 1 of 2021.

So in the 22 budget, we also gave a 6% mid-year COLA just this past January.

So both of those are now reflected in the departmental budgets.

and therefore you will see roughly about an 8% increase in personnel for everybody.

There are also some just generally general increases in fixed costs that affect many departments such as cost of fuel, IT replacements, risk management costs related to general liability insurance and workers comp.

So just in looking at the categories

which maybe my math is wrong as I hope not on this chart but you can see that the increases in the different categories here which amounted to about 11.5% just in the operating side of the budget.

Can you hold on that for one moment, please?

Sure.

Management is several things.

It is the city manager's office.

It's council.

I would also note your percentage change

I'll take a look at it.

So moving on to some drivers, the tax and rent relief programs, we've talked to you, we've added a million dollars in new funding for the tax rent and grant relief.

This is for a couple things.

One is that we will be merging all the tax relief programs into one program.

We'll also be increasing the income threshold from 55 to 60,000.

and there are no basic changes to the rent relief for the elderly or disabled, so the changes are really in the tax and relief programs.

Again, this million dollars is based on the assumption of a 95 cent tax rate.

If we choose to increase that by the 10 cent, we're estimating we'll need to allocate about another half a million to maintain the relief program for taxes.

and then this table sort of shows you the different relief levels.

We've talked about the funding for the schools.

As you know, we fully funded the school board's ask at 62.9 million for 23.

That was an increase of 4.2 million or 7.2 increase over 22.

If you recall during the 22 budget development we talked about we held the school's contribution level and the schools used approximately four and a half million dollars in one-time money.

So I've sort of borrowed this graphic from their presentation of the thermometer.

So for 22 they were using four and a half million in one-time funds.

for 23, they're using 2.1.

Let's emphasize that.

Also in the CIP for schools, there are $7.1 million provided for in the CIP.

That includes sort of the annual recurring funding that we do for their priority projects, which is about a million and a quarter.

There are some other dollars that are attributed to just normal CIP related things and HVAC work.

And we've also included two and a half million dollars for work that could be continued to move along the design on the school reconfiguration project.

That two and a half million plus an additional 72 and a half that's been programmed for 24 is the 75 million that we've been discussing for that project.

As you will recall as well, during the school board's presentation to council, they also have, in addition to the dollars that they're using for operations, they also have additional ARP federal dollars that they have offered up as a potential use to help buy down some of the school-related projects in the CIP, and that totaled to about seven and a half million dollars.

Again, we still have lots of work to do to figure out where we are with the $75 million project.

We know now with the sales tax, that is not an option this year.

But we do have, of course, the conversations about this $7.5 million.

Yes, sir.

Could you please go back a slide to the thermometers?

And I'm sorry that I'm, I guess, dense, but talk me through this one more time.

I know you tried to on the phone yesterday, which I appreciate.

But so there had been like a normal contribution that we gave to the schools and it increased, I guess,

Generally, the percentage would increase every year.

And then I guess at the outside of COVID, we just held them flat, no increase.

Correct.

So we have a formula that we operate under, have been operating under for quite some time in which the school's operating budget or the city's contribution to the school's operating budget has generally been given 40% of any new tax revenue growth based on real estate or personal property.

For FY22, that amount equated to about $795,000 and some change.

The school board came and presented their budget to city council.

They had an increase at that time of about $4.5 million.

And their offer to the city council was that they would

request a flat contribution from the city and in exchange they would use four and a half million dollars of one-time money to fully fund their operation budget for 2022.

To fully fund the differential.

Correct, correct.

So the conversation during budget development last year, that soon became known as sort of the budget cliff that we expected to be looking at for the 23 budget.

As things would happen, we had, as you know, a significant real estate tax increase, assessment increase for 23, which equated to about a little over $3.3 million that the schools would have gotten anyway for their formula.

And so when they were working on their budget and in their desire to sort of bring this temperature down, to use their words of this use of one time money, they took that number, the 3.3 that they would have gotten by the formula,

plus they added in the increases on the contractual services.

If you recall in the first revenue slides under those designated revenues, there were some increases for maintenance, people, transportation and school maintenance.

They took those increases plus the 3.3 and that's how they got to the $4.2 million ask for 23.

Another way of looking at that is if you look at the 795 and change that they would have gotten for the formula in 22 plus the 3.3 and some change they should have gotten by the formula for 23 were very close coincidentally.

So moving on to 23 we know that they've used they're still using 2.1 bringing that down from four and a half million of one-time money

Okay I'm still struggling with the math of the fact that

We had seven and a half million dollars come in from the federal government to the system.

And, you know, that all things considered would be a positive thing.

And yet you are having to, I guess, shift the funds around, as you've discussed, to make it all work out.

No, no, I'm I'm tracking with what you said.

I'm just still

There's still part of me that rankles frankly a little bit with us getting more money coming in from out of the system and then it feels like the city's being asked to sort of catch up for one time expenses that the school board made with that extra money or interim commitments, but maybe I don't understand their backstory well enough.

and I'm not asking you to defend it or explain it.

Okay.

Any other questions?

Yeah, no.

And Brian has, you know, we have talked about me giving him a one-on-one on school budget and we'll do it over

Moving on, employee compensation.

And I'm sorry, this was an edit I did not catch.

This is actually $5.2 million in investment for salary adjustments.

We've talked to you about the 3% COLA that is currently built in the 23 budget for July 1 of 2022.

Plus, we're catching up on a full year of the mid-year salary increase of 6%.

So, Chrissy, with this, so earlier in an earlier slide, you showed how basically built into the baseline now is an 8% salary adjustment across the board, and then

You said this number should be 5.2.

The 5.2 is taking us from the end of this fiscal year through the, from June, sorry, July of 2022 through June of 2022.

Well, the COLA in all of these things.

The COLA itself, the net cost is, I mean, the total cost for just the 3% COLA, if I'm recalling the number correctly, it's just under $1.7 million.

All right.

Mm-hmm.

And also just for a little clarification for your own and for anybody else who's listening along.

So as we work through what a COLA may be for a given year, we actually budget that as a lump sum.

It shows up in the budget under employee benefits under the employee benefits section.

We also budget some number, which for 23 happens to be a million dollars for

Natalie Oschrin, Ph.D.

: attrition as a savings.

And so in this case, we budget this as a lump sum.

It doesn't actually pop into the departmental budgets until the following year.

So it's sort of a year delayed before it shows up in the departmental budget.

So in theory,

You would see an increase in the departmental budgets in a perfect world with an absolute offsetting decrease in employee benefits for the same amount.

But because we're adding a new COLA this year, it's a positive in the employee benefits.

But just so you understand the mechanics of how that works.

So next year, if we did nothing else, then everybody's departmental budget should go up by 3%.

And that would be representative of the COLA that we have budgeted for 23.

Again, debt service and capital improvements.

The transfer for debt service is $11.1 million.

The general fund transfer to the CIP is $6.7 million.

Again, a lot of this factors in just sort of our current CIP, but we're moving to sort of a

point in the road or an intersection where we really need to get to a decision on the school reconfiguration project.

And what is the basis of that?

Or is that just sort of a historic datum that we followed?

Or is there, I mean, all things considered, I'd love to see that go up to 4% or 5%.

Yeah, thank you.

A couple things on that.

We're actually, our financial advisor is doing a little research for us.

Hopefully we can have a little bit more details at the

CIP work session.

I've gone back for a long, long while, at least my time, my tenure at the city and this 3% policy has been in effect.

There's no doesn't appear to be any sort of magic to that 3% number.

You know, in talking to our financial advisor, there are policies all over the place.

We are actually, it seems to be, again, we'll get some final information for you and have it for that CIP work session.

We seem to be a little bit of an outlier that we actually state a percentage transfer in terms of PAYGO or cash to the CIP.

Many localities do not have that and they wait until their year end and use their surpluses once it's a known number to transfer that as cash.

It's a conservative measure, for sure, and it's a feather in our cap because it sets a standard that we have some desire to pay for cash, what we can, and bond, you know, there's some balance to that.

There are also localities that don't bond anything and pay everything in cash.

So it really is, there's not a measure that we measure ourselves against necessarily.

It really is a policy that we have discretion over.

But again, we'll get you some more information on, you know, some other examples.

The other thing I would say is that to your point,

Because of our year-end or our financial policy where we transfer more than anything over our 17% as PAYGO to the CIP, we actually do average closer to 5% annually with our cash transfer.

That's the 3% that we budget plus the year-end transfer actually gets us closer to 5% historically.

Thank you.

Again, we've also talked to you about some additions for the 23 budget.

We've added seven new FTEs.

Those are full-time equivalents.

All these are actually full-time positions.

So, Christy,

Over the last two or three years, we, you know, we've been short staffed in many departments.

And as far as I know, those positions had been funded because they had been advertised.

So, I mean, does that, I mean, where is that money reflected?

And it may not be significant, but, you know, if we're

looking, I mean, if you look on our HR pages, three or four pages seem like of high reason, if you add all those up, you know, it could be significant over the past.

Yeah, totally fair question.

So first of all, we do assume that there will be some positions that are budgeted and not filled.

And that's part of that million dollar attrition savings that we budget.

Second of all, though, every position is a factor of each departmental budget.

So if a department plans or has a position that they intend to fill, whether we can fill it or not, as of right now, it is part of the budget and it shows up in their departmental budgets.

This is one of those things where as we looked to even some of these FTEs and adding these, I think if you went to department heads and said, hey, are there positions that are extra that you don't plan on filling?

I think the answer is usually overwhelmingly no.

And so then it becomes a matter of making more of a management decision about which ones we will not fill.

I know there's a number of positions that were approved in last year's budget that for various reasons have not been able to be filled yet.

So I think that was only two.

One was a position in public works for the climate action position.

That is in process right now.

The second one was a discussion about a position for strategic planning, but I'm not sure that the discussion got further than whether there was

Still a question, at least from my understanding, about whether that was a position or whether that was a consultant.

And so we did add money to the 22 budget for that.

It was put in the citywide reserve.

That's the one I'm talking about.

I think that's all the same thing.

That was put in the citywide reserve, but it was not budgeted necessarily as an FTE.

Okay.

Possibly it's, I mean, I think one of the keys to that position being that we all agree that just as we're doing an affordable housing inventory of what are we, what have we been getting in affordable housing for the money that we've received from developers and the CAF, I mean, it's that same kind of idea of

on a more permanent basis to help with the Vibrant Community Grant and to it was in recognition that we want to be making sure that the money that the city is giving to various nonprofits is still going to the missions that we want and that we want to see how they're actually being achieved and that that was just too much work for

someone to take on part-time in addition to other duties.

And whether it's a measurement and solutions position or whether it's I'm definitely open to it being different thoughts on that.

So if I recall correctly, I think there was about $190,000 that was added to the budget for that.

That has not been spent.

It is still sitting here and would be available for you all to appropriate and carry over if that doesn't move forward in 22.

Or the other option would be, you know, we could work on that and look to add that for the 23 budget.

Right.

Okay, so that means out of the seven new FTEs shown on this page, that person doesn't have to be listed because that person is already in the budget.

Correct.

Correct.

I got you.

Okay.

Let me just add that one of the, to sort of add on to what Councillor McGill was saying, I am generally concerned about making sure that we have employees who are able to do a couple of different things to make things work better in government.

and maybe the standards and measurement and standards person if that person were to be hired as a person and not just as a consultant would be one such person.

It has been suggested that one of the reasons we're behind on some of the projects that are on the authorized but not issued list on bonds is that we are down one or more project managers

to make sure that work can get done, can get started, can get finished and be done correctly.

If that is the case, then it seems to me that one of the things we ought to be trying to do is to hire somebody who can help us get through that backlog and actually implement the decisions that council made in some cases five years ago.

and it haven't been able to get done.

So I'm generally interested in doing what we need to do to get things moving again or moving right or moving well and

I frankly would hope that there would be, and some of these people that are on this list, some of the seven FTEs would fall into that category, but there may be others as well.

Right, okay.

Yeah, I would second

What Mayor Snook and Counselor McGill said as well.

I mean, I know that, first of all, I will say I'm very grateful to see these NDS and engineering and facilities positions being filled.

I know that there are folks in the development community.

Anyone who wants to build something in the city will be ecstatic to see this happen.

It also, I think, impacts and supports affordable housing plans as well.

So

I'm really happy to see this and I think just in general you know I know that that Mr. Rogers you and your your team are relatively new you've done a fantastic job trying to get a handle on the organization but what we can do with existing staff to

to help them work more efficiently and get more things done.

Obviously, that's the very first thing that we should do, but I think we should be thoughtful about if we need more people to get these things done, let's say it if we think we need it.

So one of the last slides for this is that the outside and nonprofit agencies we're going to be meeting next week.

Our work session will be about that next week.

The Vibrant Community Funding Report is now available also on the budget web page.

Again, that was funded at just under $2.5 million for 23.

There's a new addition this year of about $90,000 of unallocated funds that can be used for capacity building and technical assistance for new applicants this year.

And we'll talk a little bit more about that next week.

In addition, we have the other contractual or what I'm, we struggle with how to describe these agencies, because there are also contractual agencies that fall under the Vibrant Community Fund.

But these are more sort of our contractual or regional agencies by which we participate via an MOU.

or we share regionally with our other local partners.

It includes things like the jail, the detention center, Jaunt, Blue Ridge Health Department, Region 10, the library.

All of those, we'll be talking a little, a summary about those next week as well.

But overall, they account for about $12.9 million in the budget.

And that represents about $133,000 increase over 22.

And so as we talk through all of these details for this budget, there are some decision points for council, largely the tax increase, whether or not to move forward with the Tencent advertised tax increase or some portion of that.

the personal property tax rate and then also if there are any other tax rate adjustments that you want to talk about those would we would need to talk about those and prepare those for advertisement for the public hearing in addition you know almost every slide we come back to the school reconfiguration project it does it is impactful in in every sense of the budget both operations and CIP and

Again, we're sort of at a crossroads about next steps.

I know that we started with a $50 million project.

We got up to a $75 million project.

I know there have been multiple options, construction options that have been presented with varying dollar amounts and additional questions.

And so we need to figure out what next steps are so we can sort of get to a decision factor

for that amount.

Once we get there, we can come back to you with financing options.

I think the one thing that where we are is that we know at this point we're no worse off than the 10 cent tax increase we've been talking to you about.

In fact, we're probably if you're only going to do a tax increase related to the school reconfiguration project because of the assessment increase, we're probably at something less than that.

And there are lots and we also know now that the schools have federal dollars that they're able to help contribute to that project.

So there are lots of financing options and options we can weigh, but we need to know where we're headed for the project itself.

And finally, we need to know about next steps.

What do we do in terms of the design?

Do we keep going?

Do we look at something else?

We're there.

We need that decision.

And then also one other decision point that I know has been discussed, and we'd like some guidance from you all in terms of your strategic initiatives account.

Right now, we are not adding any additional new money in the budget for that.

I believe your current balance is just over $190,000.

And so the question would be, are you interested in budgeting some additional dollars so that you have that available

to allocate for things that may come up during the year.

So those are the three things that we have as big sort of decision points for you throughout the budget.

Right.

Well, you know, we've we want to hear from council now because

We have provided the facility for council to make decisions on what the tax rate will be.

We provided the 95 cents as is the current rate, but the 105 is available to be allocated.

On the personal property tax rate, Mr. Divers is...

It's probably a good time to discuss his point of view on that, but what we've taken is just $200,000 benefit from the personal property tax rate for 23.

We have not listed here, but we did discuss other options like the mayor had mentioned that wants a half cents

increase on the meals tax, which would yield $1.2 million, I believe was the amount, Chrissy.

That's correct.

And so that bears discussion.

And if that's what you want to do, then where do you want to allocate it?

You know, is it internal or is it to the school reconfiguration project?

The issues around the school configuration project, as Chrissy pointed out, is what is the project?

How much?

Is it 75 million or is it 50 million?

Whatever it is, it's going to have to be bonded at some level.

And that's going to increase our debt service.

And the question is, what impact would it have on the debt service?

We are already paying $11.6 million a year in debt service.

Yeah, 89, give or take.

Interest rates are changing every day, but that's a good guy.

Every 10 million is about 890.

And so also we looked at it, we discussed it, we looked at including that 75 million and bonding, that would have the effect of increasing debt surface to 22 million.

over the course of the project.

And with debt service going up to that extent, what that means is debt service crowds out other priorities that we simply will not be able to fund.

And so some choices have to be made in terms of how far we go.

You know, we could, there are options in terms of for you to consider and in terms of as we look at the CIP, there are some projects that have been approved and funds allocated for that have not moved forward for whatever reason.

So perhaps refunding or reducing those projects and

allocating the funds to the school configuration project to make up that bottom line number that you get to is an option for you.

But at the end of the day, if we decide to not fund a project that is authorized but not funded, that still means that we have to use bond financing.

which still will add to the interest rate that we'll be paying and we're back into the realm of crowding out other expenditures and other priorities.

Yeah, so is this a moment for us to sort of

Chad amongst ourselves.

Yes, yes.

One of the things that I would like is, and I can send this by email separately, I would like to run some scenarios in terms of, you know, a couple cent tax increase,

Staggered over a couple of years, different possibilities in terms of the actual amount to the schools.

And so I'll be reaching out, Ms.

Hamill, to see if you could just provide that as information.

From the feedback that I've been seeing from the community in terms of raising taxes,

I still feel like my initial sort of assessment of the city as I've been getting to know it is it still feels like it's underfunded operationally and in terms of capital projects based off what people in the community have made clear that they want.

Now, obviously, it's one thing to say we need these things.

It's another to fund it.

And that's why I've been open to raising taxes.

I'm still open to raising real estate taxes.

But it is, you know, at the risk of being tone deaf, it's a lot to have, was it a 12% assessment increase and then put on top of it, even a small amount of additional tax revenue.

So I'm certainly cognizant of that and I'm thinking through it.

I agree that coming up with a decision on what to do with the schools in the budget that we're willing to move forward with you know this is the time I don't know that we have to discuss it in this meeting but I do think we need to get real about which options that were for

I'm not sure that, you know, the folks on the board, I know that there are at least two of us that are sort of, yeah, we want to make this happen.

There are some others that still have real concerns, understandably.

And so I guess that's something we need to flesh out in conversations individually.

I'll just go on the record.

This was in the paper the other day, too.

When I looked at the options that DMDO and Mike Goddard with Public Works put together in terms of the cost estimates for this project at Buford, I know this is not a popular opinion of the school board, but I still feel like option two, which defers working on the building B, the auditorium, until later, either with philanthropy or with some future tax increase.

but doing the core part of Buford well that is building the new piece that they want and a really good renovation of the guts of the existing building I feel like that gets us reconfiguration on the school board's terms of what that means and it also does a really good renovation I am very skeptical of doing a sort of cosmetic renovation because

The cost estimates are saying they're about, say, $33 million for Walker and $33 million for Buford.

From my experience, once the decision makers get in and start doing their renovations, they're going to say, well, pedagogy has changed and we need to do this and we need to do that.

And trying to keep that scope bounded well enough to where it doesn't become reconfiguration or, you know,

by accident will be hard to do.

And so we'll spend a lot of money and gotten something that's only halfway what we want.

And so from my perspective, right sizing that Buford project, again, you know, as I've written to y'all, that team was given direction last summer to basically do a $60 million project at Buford.

It went up to 75.

And I understand the reasons why, all very good reasons, but

They were told last summer, we want you to get to a $60 million number.

So I feel like between a 65 and 68, it gets them the main parts that they want out of this effort at Buford.

It lets us do Walker in the future.

I think trying to like figure out how to do everything with Walker in the future is

We can face that in three to five years.

Right now, I feel like we should face what we've got at Buford.

If we take the 65 million, say, which I would call a right-sized budget at Buford, and we take the seven and a half that the school board is willing to sort of refund back through the CIP,

and if we set aside future surpluses in the budget of another $7.5 million, that gives us $50 million that we have to dedicate net to reconfiguration at this point.

And I would like to see what the sort of cash flow, as it were, the charts that Chrissy runs, you know, what that looks like.

We're doing a $65 million project

but we're only having to impact our CIP by a net amount of 50.

And I'm also very cognizant of the points that Counselor Payne has made a number of times which are very accurate and eloquent as always regarding housing and the other more sort of I'll call it progressive sort of visionary things we want to do.

I think that if we think about what the affordable housing plan that was adopted last year it called basically for seven million dollars in direct subsidies I think we're doing that now and I think if we maintain that commitment I think we can do that if we go with what I've suggested with the schools

So that's sort of my starting point with the schools.

I do think at some point we're going to have to say are we going to do this or not because otherwise we just, you know, we can't stay in this position much longer.

And you may have mentioned this some, Chrissy, in previous ones, but I know up until a year, year, year and a half ago, we had significant funding for the West Main Street project, you know, about 15 to 20 million dollars and then the garage.

So those were projects that were like ready to go or we had allocated money for.

Has that been reallocated within the CIP or

Is it kind of in limbo?

Sure.

So to walk through a little bit of history of that, actually, if you look in the budget in the CIP, you'll see on the revenue side, 18 and a quarter million, which was the unfunding of West Main Street, plus $5 million that was unfunded from parking garage.

So stepping back through this project a little bit, when we first came to Council and when the $50 million first showed up in the CIP as a placeholder in FY25, that's when we began talking about a tax increase and getting a tax increase in that would help us pay for $50 million of additional debt.

As we progress through those conversations, the idea of West Main and what that project was or was not and what phases we were going to do or not do, that was on the mayor's favorite authorized but not issued list at $18.25 million.

and so we started talking about the 50 in terms of 75 and that was the suggestion that came from the design group and so in order to get us from 50 to 75 we defunded if you will or unfunded that 18 and a quarter that was previously allocated to West Main

plus another five million that had previously been allocated for the downtown parking garage.

And those were part already in built into our projection.

So that's how we got from 50 to 75.

We still have the issue of how do we pay for 50 million?

So if we are starting a conversation to sort of piggyback on Councilor Pinkston's scenario that he lays out, if we're at something less than 65, I'm sorry, it's less than 75, then this, you know, 22 million that came from West Main and the parking garage

helps as well as the seven and a half million that the schools are saying that they can contribute.

And then if there are other things, so this is sort of the meaning of that bullet on one of the first slides is that if we can agree on an amount, we have lots of options that we can now really concretely come to you and present to you in terms of funding options, which may or may not be all bond funding,

or all paid for by a tax increase.

Yes, yes.

So you had mentioned a couple of times that the schools would not need, you know, X amount of funds until I think you said 2024.

And for operations.

Oh, correct.

Yeah.

So actual issuance of bonds.

Correct.

Based on the drawdown schedule that was provided from VMDO, some of the last projections that we ran marched those out, and it is something less than 75 all at once.

I think it was like 30 some in the first year, 20 some in the second year, and it marched on down.

Yeah, so I think that what I see, and Brian and I differ from this a little, you know, is that we need to, over the next few weeks, see what we can do as a council for the project.

And I would like to allocate as much as we can.

and let the school board decide what that option or alternatives would be that they feel that is best for them.

Brian has a unique insight because it's his day job, but I think that we need to leave it to the school board to determine exactly which alternative to use.

Yeah.

And I agree with that.

I will say, again, from my perspective, the number that I'm prepared is 65 with trying to get these other $15 million from other sources, so to speak.

But I feel like, you know, even with that, you and I are on one page, and the mayor and Councillor Payne are on a different page.

And so...

What I'm trying to do at least is narrow the gap so that we can get closer to yes or maybe or whatever.

And so I'm interested in what Councilman McGill thinks.

I think you're the only one I've not given this pitch to directly.

I'm sorry.

I should have done that.

So I just want to

So I will say that one of the things I continue and I've actually got appointments with people in DC next week to talk about how to try to get some Build Back Better money for this project.

And I am using every single connection I can build, find or not burn to try to find money for this project.

I continue to be concerned though, that if we bond out to our max capacity or over bond our capacity, we will have a few years where if something happens, we can't deal with it.

And this is how cities go bankrupt.

And this is something that really worries me.

And I just, I cannot say that enough, that

The state of the world is always in flux.

That's the one thing we can count on is that we can't count on anything.

Yes, I do know kicking cans down the road causes more expenses.

It's not about kicking cans down the road.

It's about securing other means of funding besides our property tax, because our property tax is the only thing that we can consistently count on to raise to meet emergent needs that come across in our community.

And

It's also the only thing that we can do to potentially raise to pay people to work for us.

So I get very worried that if we are only using our own tax base to pay this debt service on 60, 65, $75 million that we are potentially crippling our city in 10 years for a few years.

and crossing our fingers that nothing really bad happens.

So this is my true and utter concern.

It's not even about the money so much and paying of the money.

Yes, so I wonder, Ms.

Hamill, maybe you can help me here.

So my understanding in reading some of the documentation is that in terms of what we could actually bond by law, it's a function of our total property that's in Charlottesville, which is like $90 billion or something.

We can go up to like 10% of that.

Not that we'd ever want to do that, but in terms of the legal sort of cap, that's that.

in terms of our, you know, what's reasonable, that's obviously a different point of view, but are you able to sort of say off the top of your head or maybe after the meeting, Chrissy, if we do get the project down to 50 and spread it over, you know, the cash flow that you mentioned, I know I've seen charts from you that say that we're still, you

fine in terms of our indebtedness, but where does that leave us in terms of tax rates?

Because for me, the issue with tax rates right now is just I'm not opposed to them, but I am concerned of adding tax rates on top of existing assessments.

I mean, if we were to get this project down to a net 50 million, right,

following the various sort of financial engineering that I suggested.

And we were to do it over the course of three or four years.

I feel confident that we would be fine on our debt service and all of those things.

So a couple of things, just for a clarifying point, you know, when we started with this conversation at adding $50 million to the CIP, we talked to you about capacity being an issue as well as affordability.

We then moved on when we started really talking about a real possibility of a tax increase from the tables that we had back in January, February and

We sort of dropped in what five cents would be or what 10 cents would be.

I think what came out of that is that capacity is not really our problem in terms of our debt capacity, because as you raise the tax rate, you're raising the general fund budget, which is then raising your percent.

The capacity becomes not so much the conversation as the affordability.

So, you know, even in Mr. Rogers opening remarks, you know, he commented that we're currently at $11 million of debt service.

If we moved on and added in for the 75, we would be approaching 23 million.

So we're doubling our debt service in a very short period of time.

To your question, if we're now talking about 50, we have a whole nother scenario than when we first started.

Because when we first started, we were talking about adding $50 million of new debt to the CIP.

Well, now where we are is we have also unfunded roughly half of that with West Main and the parking garage.

And so now we're only talking about adding 20, if you're at 50,

you would only be talking about adding roughly 25 million of new debt, which if you look at our projections is not that unreasonable.

And in fact, it's fairly doable at this point once you've unfunded half of that.

And so in that scenario, especially with our assessment increases, now it doesn't mean you won't have to attribute more dollars to pay debt service because your debt service is certainly going up, but it's definitely not going up at a rate as if you're adding 75 million or even 50 million of new debt.

25 million of new debt is certainly more manageable than 75 million.

I guess what I would just ask is if you could run that particular scenario just for me and copy others if you're interested.

Because again, what I'm interested in is if we can right-size this project

and deferred these larger conversations about, well, I know everyone wants to talk about the whole, you know, caboodle and I can appreciate that, but I don't think we're going to have the luxury to think more than like five years in the horizon.

Maybe, you know, two years from now there's a different administration or, you know, maybe we'll have more options in terms of the General Assembly or maybe Sena will find some money or whatever.

I think we're going to be able to fund Walker and other things later

But if we focus on this first sort of rock in the stream and get real about what we've really got to pay to make it happen, and then look at what happens with our taxes, which I think you can tell us when you run these numbers, if we don't have to raise an inordinate tax rate, then let's not do it.

Let's do what we've got to do.

I do also want to remind us that next year, I believe, is when

Well, and one other thing that, you know, times are crazy right now, but one other thing that we are seeing is significant cost escalations right now in CIP in general.

So we just added six, I'm getting, I'll send you the definite, I'm getting this off the top of my head, but we just added 6.7 and I think before then was like right around $2 million if I recall.

So there's roughly about $8 million in there.

I'm just,

and that is to help maybe get Brian his extra $15 million to get a $65 million project down to 50.

Well, and also with the schools, the schools have proposed to use some of their one-time funding money to take off some of our capital projects that we have, some of the school capital projects that we have budgeted for in the future, at least.

Yeah, that would be about 7.3, I think it was, according to the slide.

So my point is between the capital contingency fund

Let's say we take three-fourths of the eight-point-something and we take the seven million or so that the school division has identified as ways that they could use one-time federal money to do the things that we were otherwise on the hook for.

Now we're at 13 million of the 15 million that Brian was looking for.

No, I mean, I think those are all good things.

And there are definitely options that, you know, we're happy to run and look at.

There are options that, you know, we certainly have been discussing.

But again, until we sort of arrive at where we're headed, we

You know, in term, is it 75?

Is it 50?

Is it 65?

You know, is what what kind of guardrails do you want to put around this?

So if your idea is, hey, we don't want to do a tax increase.

And we want to see what we can get.

How much can we get with no tax increase?

That's a scenario we could run for you.

Here's what I would just request.

Let's say we've got $50 million we're going to commit net that's coming out of the CIP.

The way you're thinking about the CIP is different than the way that I'm thinking about it.

If we say that this project in terms of the commitment that we're making as a city, ever how we fund it, is $50 million plus the funds that we're getting from the school's contribution from their CI, ever how that works, plus some surplus, some of these other things.

If you're able to take that information and run some numbers and tell us what

What tax rate, if any, increase would we need to do either staggered increases over the next couple of years or or you maybe raise it two cents and leave it or maybe no tax rate increase.

If you're able to take the information that we just that I'm trying to present.

and just give me some scenarios about what impacts that would have on property tax, real estate taxes.

That would be very helpful to me because the other calculation, just to be honest, the things I'm trying to like, the circles I'm trying to square in my mind are, you know, I don't want to raise taxes if we don't have to.

You know, at the same time, I feel like this community, there's been some implicit commitment for a long time

that something's going to happen with these dang schools.

And I feel like this council needs to make it happen.

And I also feel like that all the parties involved from the school board to, you know, all the stakeholders are going to have to be willing to give in a little bit to what we all want.

I also am very committed to the things that Michael speaks up for often and very well.

in terms of housing and so forth.

And so I only want to put into the schools the bare minimum of what it will take to get Cracker Jack excellent schools done in terms of a reconfiguration and renovation.

And I want to minimize the taxes we have to raise to do that.

Anyway.

So I just have one just kind of quick follow-up to what Brian said, and I think we're on the same page, but you said, you know, we're not, I'm not looking at the CIP the same way you are, but I think I just want to make sure we need to be looking at the way

No, I'm just, the way I'm looking at it, Juan, is I'm just looking at like a mass of money, right, a block.

And Chrissy knows, well, this was programmed in two years ago.

We took out the Main Street and we took out the garage and that shifted the numbers around and all that's sort of her bailiwick.

I'm just saying,

Here's the parameters for a project.

And here's what I think we can get from other sources.

And this is the net new amount that we'll need to get bonded.

And I think that's 50 million.

So I think we both understand each other.

Right.

Or, I mean, I guess I can sort of, I'll just say sort of what I'm thinking overall.

But

You know, the challenge I see is that if we're looking at where the draft budget is right now,

And I should say, you know, I can promise that there is no grand plan on mine or anyone's part to try to pit any priorities against any other, you know, as politics.

And I know that's not the case for anyone on council.

What I'm struggling with is just trying to figure out, you know, what the specific tradeoffs are, how we look at the numbers honestly, and figure out a path forward to move forward from there.

And the challenge I see is

again, our draft budget where it is, if you're talking about a 10 cent real estate tax increase and freezing our budget for several years, taking all politics aside, is that good public policy?

To me, it seems like it's just not and that it would not be a responsible way for us to do our budget.

And some of the concerns I see is

even with...

a 10 cent real estate tax increase.

And if any of these things are incorrect, please correct me.

But I just tried to put together a list of some of the things that would be completely unfunded, even with, again, that 10 cent real estate tax increase, which some of these Counselor McGill mentioned.

Any increases in the wage and compensation study, the fire department positions funded with one-time grants, budgeting for future cost of living adjustments if inflation continues at the very high rates they've been at,

The request from CAT, which would be 2 million in local funds if we wanted to get to 30 minute routes, about 6 million if we wanted to get to 15 minute routes, PHA's proposed Park Street projects, future phases of public housing redevelopment, sidewalk funding, climate action planning and implementation,

our operational needs, because I'm imagining those new full-time positions we're adding this year are not really close to enough if we're really talking about building our capacity where we know it needs to go, anything on our unfunded CIP list, any unexpected infrastructure needs, such as what we saw with Smith Aquatic Center,

And as Councillor McGill mentioned as well, if we see the global economy continue to have any kind of unexpected swings due to commodity prices, supply chain issues, et cetera.

And I'm very, very, very concerned about what it would mean to be adopting a budget that puts us in that situation.

I do think it creates a risk if anything goes wrong in terms of not having

annual growth above what we expect, where we're going to be in a position where we've made really bad budget decisions.

And that's where my concern's coming from.

And how do we prevent ourselves from putting

ourselves in that budget position, which again, I think would just be bad public policy.

And one of the things I'm struggling with as well is, you know, figuring out these trade-offs if we're just talking one budget cycle, because I know we've talked about looking at creative

funding sources, and I have been and continue to be 100% open to that, very open to exploring some of the scenarios that Councillor Pinkston has mentioned.

I've put together a list of some funding sources that we could try to, you know, go for if there are ways to use ARPA money, particularly for affordable housing needs that could save money in other areas.

contributions from UVA.

What, if anything, is going to happen from the $5 million contribution they said they'd make to West Main now that that project is unfunded?

Plastic bag tax, as I mentioned, Airbnb or enterprise funds.

What do our departments have in any stored up, unallocated

CIP budget amounts that they had previously gotten in past budget cycles but haven't spent, as well as, you know, how can we be unified in going after money at the state level and lobbying for not only the sales tax but that comprehensive list of policies that were proposed in the State Senate's Commission on School Modernization and Construction, as well as are there ways that we can position ourselves well

to get some of the money that's being debated this General Assembly session for either school construction loans or grants, which aren't going to be nearly enough for the state, but can we position ourselves to mainly get these?

But the challenge I see is these are all things I think we need to pursue, but they may take not just one budget cycle.

In fact, clearly some of them couldn't.

And so that's sort of where I'm thinking it at.

And to me, it seems like we're in a position, unless there's a way to pursue what Councillor Pinkston has proposed, where to me, it just does not seem realistic that we can get to where we need to go unless we are planning one, two, three, four, five years ahead and chasing revenue sources beyond just the local level.

So I don't know if that provides much more clarity, but that is sort of where I'm at and how I'm thinking about it.

And to me...

It becomes a little less challenging for me in terms of the trade-offs if we're zooming out to think, how do we plan beyond just this one budget cycle to accomplish in all these things?

Because I think we can do it all, but we cannot do it all in one budget cycle.

And I know that people are frustrated with that.

And I know people are worried that that introduces some risk that maybe things won't happen if we're saying we're gonna plan two, three years ahead in order to figure out how we get there to make it happen.

Well, let me offer a few thoughts in addition to that, which I've already offered.

When we put the $50 million number in there, as I've said before, it was out of a sense that that was kind of the maximum that we thought we could put in there.

It wasn't that we made some arbitrary decision that we

and 50 didn't just come out of the blue.

So if we could get to the point where the bondable amount was going to be 50, that's kind of where I thought we were going to be out of this process.

If you'd asked me two years ago where I thought we would be, I would have thought we would be looking to bond $50 million.

Now, that may be out of ignorance of what the process was all going to look like and how things were going to develop.

But when people say, hey, you promised us you were going to support $50 million, that you were going to support school reconfiguration, my response is, yeah, when I thought it was $50 million and when I thought we were balancing all of these other things.

So my guess is that if we were to look at $50 million, that by the time we figured out what that does to the rest of the budgeting process,

and the capital budgeting and the projection that Ms.

Hamill does of debt service.

And when we run afoul of various ratios, that's the kind of thing that shows us right now, if we're trying to do a $75 million project, it absolutely shows us basically bankrupting the capital budget

for a good five-year period.

I'm not sure what it would look like if, say, we said $50 million and let's say we wanted to raise the capital, the amount of general fund revenues going into the capital budget to 4% instead of 3%.

and then we can work backward from that to say, okay, if we raise it to 4%, that's roughly a $2 million swing.

Where can we find $2 million?

Would it come out of real estate taxes?

Would it come out of other places?

For this year, personally, I would say, why don't we simply leave personal property tax rates where they are?

Let's leave real estate property tax rates where they are.

Let's leave personal property tax rates where they are.

I, as a general proposition, am not a fan of trying to change the tax rate based on whether the underlying values have gone up or down by a commensurate amount on the theory that when those kinds of things are going up, our costs are going up, everybody's costs are going up.

Nobody plans around a particular number for personal property tax rates.

Some people do plan their budget around what their real estate tax rates are, but nobody plans around their personal property tax rates.

And I just think, although I understand Commissioner Diver's reasoning for suggesting this increase,

or this decrease.

I think as a general proposition, we ought not to be tweaking these various rates on an annual basis, but let's put them at a place where we are comfortable with.

Let's leave them there.

And some years that will result in something of a windfall to the city.

Some years it means we don't, but we have not adjusted our tax rates up or down

for a very long time.

And I think that that's a good habit to have gotten into.

And so if I'm looking for $2 million out of the current budget cycle, and Mr. Divers is telling me that we're looking at perhaps $2 million more in personal property tax revenues by leaving the rates as they are,

I personally would favor leaving the rates as they are and not trying to chase the tax rates up and down depending on what the valuations look like.

The other thing is, as I've said before, I think if we were to raise the meals tax revenue, raise the meal tax rate

to by 0.5%, that keeps us in the average range.

By far, virtually the great majority of cities are between 6% and 6.5%.

I don't think we should be following the example of, I think it's Virginia Beach that's at 9% or something like that.

But between 6% and 6.5% seems to be the sweet spot for most cities.

And we could raise one and a quarter million dollars that way.

I know that that kind of runs afoul of the argument I was just making that we ought to keep the property tax rates constant, though it's not quite as inconsistent a position.

So if we were looking to raise additional funds, I would look first to the personal property tax rate, leaving it where it is.

second to perhaps raising the meals tax by 0.5%.

Those two sources would give us $3 million, roughly.

And then we can leave the real estate tax rate where it is.

We can still fund some of the additional improvements that we have all identified that we would like to see coming out of this

this budget.

I would also say, by the way, if we're talking about things that require some attention and require some attention fairly immediately, I think we are going to have to decide fairly immediately, like in the next month or two, to perhaps remedy a situation by July 1 to say that we're going to increase rather significantly the starting pay that we give to police officers.

We are down now to I think 90 police officers from 117 that we have authorized and the difference has become acute on the force levels.

that we've got and the ability to do the kind of community policing that I know the chief direct would like to do.

We just don't have the numbers to do that.

As I've said before, to people who have talked about defunding the police, I'm not a fan of reducing in gross numbers, the amount of money spent on the police department because I don't think getting policing on the cheap is a good investment.

and I don't know how the department would fare if they were to cut their staff any further below the 90 that they've got.

So I think that that's something that we ought to be paying some attention to between now and the time we actually fix the budget and say we've got some basic commitments to hire those kinds of employees who have very easily managed

They're very transportable where they could go.

We're losing people to the Fluvanna County Sheriff's Department, to the University of Virginia Police Department.

A lot of them, a number of them are going over to Albemarle County Police Department, people that we train, people that we invest in.

And then as soon as they've sort of gotten their training back, they then move to someplace else where they get more money.

And that's just not a sustainable proposition.

And so when I was talking to the police chief a couple days ago, one of the discussion points was,

You know, they look to try to hire to recruit people to go into the next installment of the police academy, which starts in July.

So as I was discussing with myself, okay, supposing you were to decide you're going to rebuild your department, you're going to build it back up to 117, you're currently at 90.

That would be, let's say, eight, seven, something like that, new employees for each one of the six-month cycles of the academy, and then in two years, you're back up to full strength.

You're not going to solve the problem all right away, but you're going to start solving it, hopefully, with the group that would go into the July Academy.

Those people are being recruited right now.

Those people, if we're gonna get them to agree, they've got to be attracted to Charlottesville and agree to come to Charlottesville and agree to go to the academy and so on based on factors that we can tell them about now.

And so one of the decisions that I think we need to make and we need to make sooner rather than later is to basically say to the police department,

Go ahead and budget for higher salaries for your people.

Maybe you cut down the number of FTEs that you're actually paying for this year, because you're not going to hire 27 new ones right away.

But the result is that you would have some additional funds available to do it with this budget.

And then recognize again, two years from now, you've got other, we've got two years to get things back into whack.

So my point is simply, I want that on the table as a point of conversation to recognize that our salaries, this is not only in the police department, I'm just using that as the most obvious example, because they're the most depleted at the moment.

But our salaries have gotten significantly below market.

and that is not a long-term good position.

And that means, although there is a raise, a relatively small cost of living raise in this budget, I think we are going to find that we will be better served by talking about not 2%, but more than that.

So we've got issues

like that that are going to require some money up front.

They're going to require some money right now.

It's not something that's going to go into a capital budget.

And maybe the way to start on that is the roughly $3.2 million that I've identified in terms of meals tax and or personal property tax.

Yeah, I guess just in terms of revenue to signal where I'm at, I agree with you, Lloyd, on the meals tax and on the personal property tax.

In terms of the real estate tax, I would like to see the numbers from Ms.

I would say I'm open to what you suggested about the personal property tax, Lloyd, and definitely interested in seeing those scenarios.

Likewise, open to the meals tax.

I would like to get a better sense of, you know, if our goal is to get, you know, $2 million in revenue, whatever that number is through some mix of them,

Which of them are the least regressive to use?

And they're all regressive or your real estate tax is often regressive.

No, not always.

The others are always regressive.

I should have added on all of this.

We said we were going to talk to Todd Divers about the personal property tax issue.

Todd, do you want to tell us what you had in mind?

Yes, sir.

You had it.

I was going to let you get run with it.

Yeah.

We think preliminarily

I've still got to run the numbers.

We just did a supplement.

And so for software reasons, we can't get in the full 22 valuations and do the mass valuation until the supplement gets done.

So we're in the process of doing that.

So very shortly have a better idea of what the actual increase will be.

I mean, I'm

And preliminarily, and don't hold me to it, I'm thinking two, two and a half million is what the increase is going to be.

You know, so if you let that ride, you know, that's what you'll get at, you know, at $4.20, which is a typical tax rate.

I can tell you some of these bills are going to curl people's hair.

And so you need to be ready for that.

And so that's the only thing.

Obviously, this is not my call.

I just want to make sure that people understand that I've given you guys an option to flatten that thing.

I understand.

It's a career for you.

It's not for us.

I'm the one who gets yelled at.

Just as a practical matter, so we have a tax public hearing on tax rates scheduled for the 21st.

Okay, so that would be sort of on the personal property tax side,

But we're not talking about changing that.

Ms.

Robertson can correct me if I'm wrong, but I think that one is fine.

Right.

There's not an equalization issue or something.

You know, even though we're leaving it flat.

I mean, there is, you know, there's going to be the effect is going to be an increase.

Right.

Well, we can go ahead and post it.

If we're going to post something, we may as well post it all.

Okay.

I don't know.

How do other folks feel about those two proposals that I've been making?

leaving the personal property tax as it is than raising the real estate.

But I would like to see the proposals that Brian spoke about just, you know, so when we discuss this, we can just really see what the numbers look like.

But as Michael said, you know, those that are at least regressive, you know, and

Yes, yes, what Lloyd mentioned, what was it, a quarter?

It's going from six to six and a half.

Yeah.

But Todd had mentioned that, you know, some people would be shocked from, you know, what their personal property increase would be.

But I mean, they already have seen what their real estate increases.

They've already seen that.

And, you know, I think that I'm trying to remember a chart that, you

Chrissy showed us where, you know, gave examples of some homes.

One was if it's a $400,000 and what taxes they're paid this year, what it would be with the increased assessed value, and then what it would be for, you know, if it was all the way a tenths and increase.

And it's close to $1,000 if I recall.

It's pretty, and $400,000 in this community is not like a

I imagine it's not like a luxurious home type of thing.

It's kind of an average home.

I think it would be classified as.

410 is either a median or an average.

I'm not sure which.

Yeah.

I would definitely be open to seeing what those look like.

If it's the 21st and today is the 10th, we need to get you those numbers by tonight, right?

Seven days, we'd have to have it in the paper by next Thursday.

That would be cutting it close.

Right.

That's just for the, we've already advertised for the property tax, real estate.

You're talking the property and meals tax.

If we advertised a half cent, I'm sorry, if we advertised a half cent, it doesn't mean we have to do it.

It just means that we have to put down that we might be doing it, right?

Yeah, my only point is that in terms of the real estate taxes, we've already advertised for that.

We've got a little bandwidth, I think, before we have to nail that down.

Correct.

And I just want to make one other point, you know, as we talk about using this personal property tax increase for ongoing expenses, be it for salary increases or whatever.

It's temporary.

Yeah, I don't think it's going to be a quick bubble, but I think it is.

I mean, it's going to peter out over a few years.

So it's not going to be here forever.

We hope.

But Todd, if we're not raising the rate, just let things stay as they are.

I don't know the answer to that question.

I don't believe so.

I think

According to the tax code relating to local taxes, you are required to give

a seven days newspaper notice of an increase in any property tax, such as personal property or any of your taxes other than the real estate tax.

So you have a seven day requirement.

And so if you're going to increase them, if you're not going to increase the rate of the tax,

You're not required the fact that your actual taxes may go up because the value of your property is going up.

That's the answer I was looking for.

But we would still have to advertise the meals tax proposed increase seven days ahead of time?

Yes, sir.

Okay.

On those things, you can vote

You're allowed to vote on the same day of the public hearing.

Well, I mean, there's no reason not to go ahead and give notice and say we're considering this possibility and then get that advertisement in and get the public hearing on

on it held and let's hear from the public and let's let them weigh in is if they've got thoughts that they they would rather to see their property personal property tax go up rather than real estate tax.

Some of obviously some of these are issues that they elected us to deal with.

Okay.

Mr. Mayor, that's one half cent on the meals tax increase.

No.

We didn't vote on the other.

Just making sure.

And I'm saying that now.

You know, and I am honestly interested still, and I'm just going to put this out for other counselors to hear.

Yeah, real estate property tax.

Okay.

again, more about so that we're, you know, even if it is just designating it to go towards debt services.

I know we're going to have to raise property taxes here within the next year or two or three.

There's too many things that are coming due.

And I think it would be easier on people if we did it two cents this year and two cents next year versus four or five cents next year.

That's

Yeah, I'm in the same headspace.

I think that I'm interested to see the numbers that Ms.

Hamill puts out, but my sort of sense is two cents this year, two cents next, and sort of spread it out based on what she comes back with.

I do understand people are going to feel like it's adding insult to injury, though, but I feel like, you know, the flip side of planning for a recession or realizing, you know, the risk assessment

And I would agree with that.

I think if you're talking about

You know, like a 10 cent real estate tax increase in one year.

I just don't think that's good public policy.

And I'm certainly open to more information or debate about it.

But in a year of, you know, level of assessment increases we've had, and when you do that, still freezing the budget just does not strike me as good public policy.

But I would agree with Councillor McGill that I think

You know, a smaller level of one or two cents is something that, you know, we certainly shouldn't tie our hands on.

And I would, again, just call attention to one of my concerns is what is not in our budget, even with the equivalent of a Tencent real estate tax increase.

And the biggest concerns to me are, again, the operational issues.

including the wage and compensation study.

I think we cannot shortchange our operational capacity.

The fire department one-time funding with the SAFER grant and the CAT funding, particularly because that CAT funding, $2 million if we're going to go a 30-minute route, $6 million if we're going to go $15 million is going to have millions and millions and millions of matching funds that I think would be really dumb for us to leave on the table, quite frankly.

And given that

Some level of revenue enhancements, I think, are going to be necessary to make those investments.

But agree with others, the level that that is and the mix of them is different.

All right.

So I'm looking at the PowerPoint.

I don't know that there is anything else on slide 22.

We've talked about both the school reconfiguration project.

We've talked about tax rate increases.

We have not talked about council strategic initiatives.

I think the point there is that, Chrissy, there's 190,000 that's unallocated in the strategic initiatives, and it was a question of whether you wanted more allocated there.

So the 190 would just roll over if we... Yes.

My own views, we just leave it as it is.

I would like to suggest, as I suggested once before, that we have a fund that I had suggested a million dollars.

It doesn't have to be a million dollars, but a fund that we would say to our incoming city manager, here's your strategic initiatives fund.

If you've got things where you're looking at the things you want to be able to do and you're looking at the budget and you're thinking, geez, there's no money in this budget for me to do something, I think it would be very attractive to a potential go-getter kind of employee to say, not only do we want you and we want you with your ideas, but we've got money we can put to it.

and whether that means that the total of the council strategic initiatives and that fund would be a million dollars or 700 add 750 or something like that.

I just think it's important that we have some amount of money there where a prospective city manager could look at it and say, okay, these folks are going to let me do what I want to do.

Do you anticipate that being an ongoing thing?

No, not necessarily.

Because I'm thinking that might be a great, you know, assignment for year-end surplus funds.

And I was funny, I was thinking a very similar thing, Lloyd, but I also was thinking that our strategic fund should probably be

funded with surplus at the end of the year, not with ongoing funds.

And we've done both.

Yeah, we've just got so many pressing needs coming at us that we need to factor in that while the strategic fund is nice and gives us these opportunities to meet emergent needs or innovative ideas, we have almost too many innovative ideas.

I just, you know, we need to, as sexy as it is to get involved in these innovative, it's also really important to get our nuts and bolts, you know, get the rust off of them or, you know, and use some WD-40 here and make sure everything's seaworthy.

No, no, I understand what you're saying.

I, I, I like the idea.

Um, you know, I think that we should, um, you know, before we, we should put some parameters or, you know, write up some description of what the future, um,

Just one clarification.

I just looked it up really quickly.

I would suggest a total of $500,000.

So the 325, if we could move 325,000 from surplus, anticipated surplus to come up with a total of 500,000, and that would be between the new city manager and city council.

That's a decision we would make in December.

So at this point, it would not be adding anything.

There would be no additional funds from the budget.

That's a December decision once we see what the surplus is.

Thank you.

I think that we finished your council decision point slide.

Let me just go back through the list and make sure we know what our next steps are.

So number one, we're going to move forward with advertising a half cent increase on the meals tax.

We're going to add to the list for potential year-end surplus.

Nothing to do now, but just sort of set that as an idea for adding money to the council's strategic initiatives account and or some money for new city manager.

But we're not doing anything in the budget for either of those line items right now.

Next, in terms of the school reconfiguration project, you'd like for me to run some scenarios that take 50 million plus the seven and a half from the schools

plus the 6.7 in the CIP contingency.

You'd like for me to run some scenarios to see what that gets you in terms of a tax increase.

Nothing else that occurred to me.

I don't know.

I mean, that's not to say I'm entirely endorsing everything that Brian was talking about, although I do think that it makes good sense.

Meaning the bondable amount to be 50 or the bondable amount to be 55?

Yeah.

Yeah, those have been, in my mind, those never existed at this point.

You're talking about the parking deck and the streetscape?

Correct.

Yeah.

I'm assuming all that reprogramming has already happened.

I mean, I don't know

What you have to do on your end to do all this is to my point to Juan earlier.

And let me just say, as the last diehard on the West Main Street project,

I decided some months ago that the only hope for that was the sales tax increase so that the schools could do what they needed to do.

And only then would we be able to contemplate doing sort of bringing back some of these other projects.

So as the last advocate for it, I regard it as gone unless something amazing happens in the budget this year.

I would only add it's a very long Hail Mary, but if some kind of infrastructure bill funding has restrictions, and that would be one of the few uses.

But the only other scenario I could think to run, and when I say this, I do not mean this as a suggestion of it should be the option we could take, or

that there's not more trade-offs to consider, but a scenario of disentangling Buford modernization and renovation from reconfiguration.

And I think VMDO's estimate for non-reconfiguration, modernizing and upgrading Buford was like 33 million.

Just to see that and know that, again, just as a scenario for us to have that information, not at all suggesting that that would necessarily be the best option when we evaluate the trade-offs, but it's what I'm interested in at least

So that would just be a total of 33 million added into the CIP for the- I believe that was VMDO's latest estimate.

Okay.

Does that make sense?

Okay.

Do we have any other decisions we need to be making?

I note that we are now 24 minutes past our assigned time, and it occurs to me, I don't

I don't know whether this was advertised as being a public hearing.

Okay.

I mean, if it had been, that would be different, but there will be plenty of other opportunities for the public to let us know what they think.

So this is still pretty preliminary.

Well, I just echo that and would likewise just to thank every other counselor because I know these are very difficult, but I really appreciate that we're all coming to it in good faith and it's very optimistic that we're, you know, moving in that way.

Likewise.

I know everyone wants to make all the things happen.