City Council Budget Work Session   2/2/2023

Thank you

Thank you.

the revenue that we have available to us and the expenditures that we are projecting, the gap that exists, and the choices that have to be made in order to balance the budget.

On March 20th will be the first tax rate public hearing.

on the 22nd the first budget public hearing April 3rd will be the second budget public hearing and budget and tax levy first reading

and April 11th, the budget and tax levy second reading and approval.

We have budget sessions, work sessions on March 9th, March 16th, March 30th and April 6th for the wrap up.

Let's talk about the budget guidelines.

Thank you.

We talk about it a lot, and very specifically, it means that we are seen as very creditworthy by the investor market, by those who buy our bonds.

and we are able to borrow money at a much cheaper rate than if we were a much lower bond rating.

So it translates directly into savings for the residents of Charlottesville by having a triple A rating.

So that's why it's important and that's why we emphasize it.

We go through an annual review of the major local tax rates and we have an outstanding revenue team that we work with in terms of our commissioner of revenue and our treasurer and our assessor working with the budget office and Mr. Cullinan and myself and the two deputies

and we look very carefully at the revenue and look at the trends and where there may be opportunities for growth and we do this a couple of times.

In fact in the course of this year in November it may not have looked so great but as they went back and dug in to the numbers it turns out that it was a much better picture.

One of the things that we also do under the budget guidelines is incorporate the council's

strategic vision areas and the strategic plan goals.

Even though we are still operating on a previous strategic plan, we have continued to identify projects as to whether they are consistent with the strategic plan goals that exist.

And we are beginning the process.

We've just selected a strategic plan consultant.

and hopefully by the end of this budget process we will have a strategic plan, a new strategic plan that will take us forward for the next three to five years.

We continue the strong commitment to education by allocating up to 40% of new city real estate and property tax revenue to schools.

Now this is a policy.

This is a guideline.

This is not written in stone except through the adoption of the budget.

I simply say that not to suggest that council change that.

but to emphasize it is your choice at some future date if you choose to do that.

But it has served us well up to this point.

We invest strategically in employees by providing adequate pay, benefits, and training.

You've heard us talk over the last several months about the compensation study that will help us understand where we are in the competitive market.

You also know that we've experienced a lot of pressures in terms of turnover in some key positions in key departments like police and transportation specifically because the salaries have not been as competitive with some of our neighbors and we've made some choices and taken some actions to cure some of the immediate situations to stop the hemorrhaging

and I think that has been effective but we try to make sure that we are being competitive and we will continue to do that so that we can stabilize our workforce.

We, under these guidelines, fund no new programs or major expansion of existing programs

without fully offsetting revenues and reductions in expenditures.

So it may be seen as a more conservative approach, but I like to think of it as being prudent.

If you want to do something new, you have to prioritize, and you have to make a clear judgment about

Maybe we might need something new, but we need to evaluate whether what we're doing is effective.

In some cases, reallocate the funds there to accomplish something new.

So there are no big grandiose programs that are coming forward in this budget.

The revenue doesn't support it.

Another guideline is we balance reinvestment in the city's existing infrastructure and facilities and creation of new opportunities for investing in the future of the city.

There's a lot of talk about streets and sidewalks and some of that revenue comes from the federal government, VDOT and our own investment as we try to address the infrastructure issues and we'll be looking for new funds from the infrastructure bill that was passed at the federal level

Another key point is that we conducted the vibrant community process.

We are a community that makes investment in our nonprofit organizations.

They are an extension of the services that we provide in the city.

They stand where we cannot stand, but where we think we ought to be and ought to support.

And you'll be examining that process and the results of that process in this budget.

Then we also transfer at least 3% of the general fund expenditures to the capital improvement fund.

It's often higher than that but that's the baseline in order to make sure that we are continuously funding the capital improvement fund to make sure that we have funds available to take care of sidewalks and to take care of ADA improvements and those kinds of things.

There's a budget reserve for the council strategic initiatives which

will give counsel some flexibility to make decisions that you may not know right now today what you want to do with it, but an opportunity may come up and try to, by policy, give you flexibility to respond in those situations.

We target a budget fund balance pool of funds to help ensure the city continues to meet important financial policies by maintaining an unappropriated fund balance in the general fund, which is a good practice.

So long-term financial policies, and these are key.

We maintain a minimum general fund balance of at least 14% of the general fund.

We maintain a minimum downturn reserve of no less than 3% of the general fund budget.

And we maintain sufficient working capital in the utility funds, water, wastewater, gas, and stormwater.

So we look to stabilize all non-general funds by ensuring that they all have a positive balance.

That includes the golf course and all of the other enterprise funds.

And debt service, this is important as well.

Debt service as a percentage of the general fund total expenditure budget has a ceiling of 10 percent with a target of 9 percent.

Nationally, they talk about the debt ceiling.

Well, 10% is our debt ceiling.

And we budget to keep it at 9%, 9%, to stay in compliance with that ratio.

and we also transfer an amount equivalent of one percent of the meals tax rate to the debt service fund so that every year we are making sure that we can add to that fund to cover our

our expenses and the budget.

So we talked at the citizens budget forum the other night about the 24 revenue projections and Chrissy will go into details about that but let me just say that

based on the assessment I think every resident of Charlottesville who's a homeowner probably knows by now that assessments have gone up.

And that's about overall between the assessments and increases in other key revenue areas like lodging and hotel taxes we have a

a $13.9 million increase in revenue.

That would take our FY23 adopted budget from $212 million to $226 million.

So you might ask, well,

What are we going to do with those funds?

Well, Christy's going to walk through that and tell you about it.

If it's okay, I think I'm going to stay here so I can flip the screen So, as Mr. Rogers indicated, our 23 budget was just over $212 million We're looking at a general fund budget based on revenues for 24 of $226 million for 24 So that is a $13.9 million increase

so where is that coming from the large majority of that is coming from the real estate tax assessment that just happened in January and the notices that just went out as Councilor Wade pointed out that accounts for 9.9 million dollars of that 13 million

Personal property tax.

This is a sort of a leftover increase from last year when we talked about the increased vehicle assessments.

We're looking at a change of about $500,000 for 24.

Public Service is that's real estate tax on business public service businesses so that's about 41,000 moving on down again sales meals and lodging are also continuing to do very well and perform strongly so those combined are just under two million dollar increase

The plastic bag tax will be new this year although that will be offset with the corresponding assistance on the expenditure side and then the vehicle daily rental tax is up slightly as well

In license and permits, business license, we don't have an early look at that yet as they are still in process.

Vehicle license, as you recall, council voted to do away with that after we passed the 23 budget.

Permits we're also seeing a slight decrease so that is shown here as well and then the intergovernmental revenues the state is still working on their budget at the same time as we are so most of the increases or changes that you see here for the state revenues are just simply based on revenues that we are collecting

and 22 and 23 and then the revenue sharing we just got this new calculation from the county and that is going up about a hundred and seventy thousand dollars

Charges for services there is a decrease in some EMS billing revenue due to some changes on how those services are being delivered payment in lieu of taxes that's going up slightly and then interest we're finally getting some good interest earnings as the interest rates are rising and then finally the school contracted services which you'll recall are pupil transportation

I always struggle with this.

It is, and we get a slight, a small amount of money from UVA for that as well.

Okay, thank you.

And the Housing Authority as well.

So if we move on this is just sort of a history of many years we looked at this slide a little bit last year it displays a trend line sort of of how the general fund budget has grown so in 2007 we were at a budget of about 120 million dollars

and we have moved up to 212 in 2023 the orange line represents sort of the annual change the trend line of the annual change from year over year as you'll know in 2011 negatives are possible and we started here with 2008 and that that was the sort of economic downturn

I think we have found that sometimes Charlottesville lags behind a little bit so there also was a tax change in that year as well but this is just to give you sort of at a glance the changes year over year

As we compare and look at new revenue, it's important to kind of keep track of where we are in the current year.

So as we've noted, Council last April adopted a budget of about $213 million.

As you'll recall since then we have added some ongoing expenses to the budget using ARP funds as well as some salary savings to help increase some pay and so basically starting with 24 our amended base that we know we're working with is 216 million dollars

Additionally, if you recall, back in January, our finance director, Mr. Cullinan, reported the FY22 year-end surplus, which was just under $23 million, which we also have appropriated and used for one-time expenses.

So in 23, our new amended budget is $239,000.

Ann?

239 million I'm sorry yes million it's just a comma I apologize and then the FY24 budget as we've noted we're looking at 226

so what are the drivers that we're expecting going back as I just referred to we added some ongoing expenses which amounted to about 3.3 million dollars that we use both with our funding and then salary some salary savings that we knew we were going to have this year with those monies we added some additional staffing for fire human resources and human rights

we were able to increase the pay for bus drivers we also used some of the COVID and I'm sorry used some of the ARP money to restore our funding for facilities repair and vehicle replacement to pre-COVID levels typically we funded those for facilities repair at about four hundred thousand dollars and

those were some of our levers that we pulled during COVID to make sure we had money as the revenues were decreasing and then in addition per the formula the schools would get 4.2 million dollars

and then as you know we have intergovernmental and sort of multi-jurisdictional agency increases and those are agreements that are for things related to the emergency communications center the jails SPCA all of those they amount their budget requests that have come in for 24 about nine hundred thousand dollars

So what are the things that we know that we also need to address?

Employee compensation and benefits.

Sure.

Sorry.

So the ongoing expenses funded by one time on $3.3 million.

Got it, got it, got it.

Mm-hmm.

so employee compensation and benefits as of this point based on some polling that we've done with sort of our peers the state and others we are looking to try to put in a four percent merit

Citywide, that would be $2.4 million.

Retirees, our policy has been that retirees receive half of what regular employees receive in terms of merit, so that would provide a 2% COLA at a cost of about a million dollars.

In addition, we are not making any changes this year in terms of costs for health insurance for employees, but the city will be taking on a slight increase on those health insurance premiums of just under $278,000.

before any conversation about class and comp studies and all of that.

That's correct.

I'm told that it should be here by February 15th.

Okay.

Okay.

In addition, in a prior work session, or council meeting, I don't recall exactly which one it was, but we talked about the Vibrant Community Fund.

We heard from council that there was an interest in at least raising that pool of funding.

So as of this point, we are trying to build in a $200,000 increase for that pool that would move that up.

If you recall, we have been funding that about $2.5 million each year in the general fund.

we've parsed off about 575,000 of that to go to the CIP as part of the affordable housing fund leaving about 1.9 in the general fund and we've increased that to 200,000 so that pool for VCF this year would be 2.1 million dollars

In addition, the meals tax transfer per the policy, the 1% that amounts for about $162,000 increase.

And I know Councillor Pinkston is so excited.

I have my debt table in a few slides.

Helping pay for the five-year plan, essentially.

And I'll show you that.

Other items that we are looking at and considering don't have specific dollars as of this moment in time to share.

collective bargaining will be a variable services for the unhoused climate action we also have the city share for regional projects such as the jail renovations and the solid waste authorities bailing facility

Fund for Pathways if you'll recall in our base budget there's about eighty four thousand dollars for pathways that we've funded for many years during COVID we used our funds to enhance that program we are funding at about a rate of 1.5 million dollars for the last two years

and so the question becomes what do we build in the base budget to continue that program and how do we sustain it so that that is something that we're looking at and then in addition departments submitted new requests this year we did not give them any guidelines in terms of what they could or could not request

Those requests amounted to about six million dollars and in that in those requests amounted to about 27 new positions

So moving on to the capital budget, this is the draft that we shared with the Planning Commission back in December.

I know the Planning Commission I don't think had any, I'm not sure their memo has come yet, but I don't think they had any big changes or recommendations they were making for the plan.

We do have a few things that we're looking at, so there may be some slight changes by the time we get to the proposed budget.

But again, looking in terms of funding by priority, we've got $42 million in for affordable housing over the five years The school project is fully funded and was adjusted for the estimates based on inflationary increases And then transportation and access is at about $30 million over the five years So where is the school project?

It's in year 24 in the education column It's in that $76.7 million

it's the blue line yeah so if you remember that's not the full amount we had some money in the prior two years for that project which gets it up to about a total of 80 million dollars the other thing about that is because we have to have a budget in order to do to issue the contract we have to have the budget available

so the budget is front-loaded in 24 but as you recall from our conversations last year we won't actually be issuing all that debt at once we'll issue it on a spend rate basis and for right now we have put that in this lovely table

for the projections over time and those were the spin rates that were provided by the architect and you know as you know from this table the takeaway here is not necessarily the exact number that is in these columns but it's more the big picture

When we started our budget process last year and talking about the school project we were way up over the 10% and we were talking about we didn't know if we could get the school project in the sort of benefit of a growing general fund budget is that we're able to add more debt and stay within our target the downside of that is that we have to pay for all the extra debt we plan to issue

so again this table as you recall from our conversations last year our current debt payment is just over 13 million dollars with the five-year plan that has been set out also leaving us some capacity in the out years and and for sake of example I've just dropped in 15 million dollars here our our debt service payment goes from 13 million up to 21 million

and so sort of the consequences side of this table is determining how we will pay for that so if you recall we have this large debt service fund balance that we've been buying down slowly over time to try to help smooth that sort of the piece of the pie that's in the general fund for debt service but as the debt service is growing we also have to keep adding because we're drawing down that fund balance faster

so as part of a way to address that council agreed last year and approved with the year-end surplus to put in some extra dollars that were just under 3.9 million dollars to that fund balance to help slow down the general fund increase but that still indicates that we have an annual increase

So just as a reminder, are these projections assuming an average growth rate for the budget of 3%?

Yes.

And we've far surpassed that in the last few years.

So but again, there's always the possibility I know people are going to think us don't tell the truth because I've said this so many years in a row, but eventually it's not going to be in double digits.

and you know the only thing that the growing general fund budget does is it saves you on your percent on your ratio but it it it doesn't help you with the affordability

so moving on as we've you know talked to council heard from council we've itemized a few things here that we think we've heard from you that are priorities for you so some of them we just want to highlight first affordable housing the 10 million dollar figure a year has been discussed

in the CIP alone without considering any of the assistance or any of the other programs that are funded elsewhere we have 10.6 million dollars in FY24 the Beaufort School reconfiguration project is fully funded

Climate Change, we're still, Mr. Sanders is still working with staff through those plans, but there are some things that are moving some needles, the gas decarbonization study, we have the transit alternative fuel study, we have funding for EV charging infrastructure, we're also researching and doing work to find out ways to leverage existing CIP dollars,

for grants and other opportunities such as energy performance improvements.

And so the question is, what else is on council's mind?

You said we just had 5.5 left over and about 80 billion, so you're just teasing us now.

Just to sort of build on that, we were at 5.5, and then you gave us, I think it was about 4.7 of things, the increases being considered, employee comp, 200,000 more for the vibrant community fund, meals tax transfer, debt service, leaving .8 million.

And I look at the page, page 20 here, the affordable housing

the 10.6 million is already in the budget Buford School is already done

I'm sorry, this is a little bit confusing now that you're asking this question.

All of these things on this list are funded, so the intent here was to kind of highlight some of the things we've heard you say are your priorities.

These are some things that are currently in the budget to address those.

Okay, so we're back then at that point again assuming we go ahead with the 4.7 for the things you've already identified we're looking at $800,000

Okay.

$800,000 is the amount that we would have to assign other priorities to unless we can also find some cuts.

So 5.5.

Minus 4.7.

The 4.7 being the sum of those.

That slide.

So what if the compensation study comes back and say, you know, in order for us to remain competitive, you're going to need another $2 million.

I don't know.

Yeah.

You know, we will have to, if that's the case,

We would have to make some hard choices about what's already in the budget.

If we want to invest in employees and become more competitive and it costs us more than is available now, we would have to maybe defer some of the capital

Purchases, you know, some of the equipment, you know, and we've done that in the past.

Never a good practice, but it's a choice.

So I have two questions.

So on the previous slide, when you said staff initiative, new staff initiative, when you asked them, that is not, that $6 million

That's just... The $6 million are new requests for equipment and other programs and projects and people.

Right.

So have you...

We're sort of at a point where it's a tradeoff at this point.

It's this last bullet, departmental new requests.

So keep in mind, don't stick on the absolute number of $6 million.

Again, when new requests are submitted, that is our best guess.

So I think it's important that

if you go to a department manager,

and say, what do you aspire to this year?

What do you think you need?

And I think if we don't do, and they really ask staff for input, because I've been into this for 32 years, you know, with the county, you know, we hear these things as well.

And if we don't really do anything, I think that it's going to give a false hope, and next year, you know, it could be the same thing type of thing.

I think we should try to do something if we can.

If you find that it's really vital that we need to do it.

One question I have and I guess this is something

is a sore subject in some parts, and I'm sure that I'll be hearing about it shortly, but on page 15, schools local contribution per 40% formula, if we did the, you know, 30% formula, that'd be, I don't know,

another million dollars.

If we did a 20% formula, that would be two million dollars.

So we're already investing a huge amount of money in our schools with this capital project that we've signed up for.

And I know we had a long discussion last year when we were trying to like balance.

It was like, you know, on tenterhooks, on the cliff's edge of trying to get this thing through.

the 40% is of any net new real estate tax and personal property and personal property yeah I for me that is not something that's sacrosanct so I'm sure that I will hear about this soon emails will come in the moment but we are investing in our schools to the tune of 80 million dollars and if you include the the

the escalation, we are making a major contribution to get our schools to the place they need to be.

And so I am very much open to reducing that number if it allows us to accomplish something else.

My general sense, and I'm interested in what Councillor Payne has to say about the housing initiatives.

I mean, a lot of this, I would be interested, Michael, when you get a chance, you know, maybe a conversation we could have some other time, but of...

Of the $10 million headline number, I think we committed to do $10 million a year, is that right, Mr. Sanders?

Yes.

Per the plan we agreed to, but that was the net result of all the various initiatives towards housing, not just building projects.

It's 10, 11, so 24 is 10.6, 25 is 11.1, 26 is 8.9, 27 is about 4, 28 is back up just under 8.

That's just CIP dollars.

I am interested and want to make sure that we've got a holistic approach to the housing crisis.

The city made a commitment in the affordable housing plan.

It seems like we're meeting that commitment as I look at this and other conversations that we've had, but that's something that's important to me.

Mostly a comment.

Can I ask a question related to the affordable housing number?

The $10 million, as the affordable housing consultants told us, should include roughly a million dollars in what I will term within the city hall.

So that number has been internally up for debate as to what were the consultants considering that $1 million to be made up of?

Was it specific dedicated staff that would have been charged with the mission of housing, which today is within the Office of Community Solutions, or is it supposed to also include

one or two of Todd Diver's team members who run the CHAP program and the tax relief program.

We have one or two people in human services, human rights, and Home to Hope, technically, that are all providing what amounts to housing navigation, which fits into that housing space.

It was not clear.

It was never clear to me.

It does not really spell that out within the Affordable Housing Plan,

and my mind leaves it up for debate.

So there's a question about what makes up that million dollars.

And a second question related to the affordable housing piece is the amount of money that we used to channel through VCF that is now going through, I think the acronym is HOPS?

Yes.

So that $575,000 that was taken from VCF was just simply moved over to OCS control

We labeled it hops because the intention was that it would not change its purpose, it would just change its location for being considered and where the resulting grant agreements will come from.

We are

Every housing pot that we have is oversubscribed.

So I think we received three times as many applications than for amount exceeded three times what we have available.

The desire is that we will consider the individuals that were within VCF and fund them the same as if they were within VCF so that no one experiences a change because we were striving for efficiency.

Right.

And some of those year over year were over like 20%, right?

Yes.

One of the things with housing I'm interested in a priority is getting a handle on what specific new staff positions are needed.

in order to implement the affordable housing strategy and how do we incorporate that into our budget.

As just one example, you know, we're going to be doing inclusionary zoning.

However we structure it, that means for every larger new development, if it's successful, the city will need a process to verify the developer is actually

following through on that commitment and not just saying, oh, yeah, sure, we're going to do it and then no one ever checks.

I don't believe we have a system in place to actually verify that at scale.

That's just one example, but it seems to me we should prioritize investing in some new staff positions to enforce and implement that plan.

There's one other question I had.

Our surplus for this past fiscal year was driven really by two things.

One, that we were very fortunate on the revenue side that some of the more dire predictions did not come to pass.

And two was that because we were having difficulty filling our various positions, we were saving a lot of money on salaries.

We're taking a very close look at that.

We have 1,089 positions funded.

in the 23 budget and carrying over in this budget.

And there are 227 vacant positions across all funds.

And it's about a hundred and

Something like in the general fund.

And I've looked at our vacancy rate going back 15 years.

and we have maintained about 100, 150 vacancies through those years that roll over and as a result you do get surpluses at the end, some spent dollars.

The position I've taken with the department heads is that

I have no interest in going beyond 1089 positions.

If there are new positions needed, we have to justify why the 227 vacancies are vacant as long as they have been.

And there will be some decisions made to retire some positions in order to

have more priority positions established.

For instance, the IT department has a request for several cybersecurity positions.

I think that's important.

And we ought to find a way to try to fund them.

but I want to look at some positions that have been hanging out there for a while for a number of reasons and maybe not do those positions.

and just one other point to that so each year we have been taking a million dollar well the last few years we have taken a million dollars right off the top in attrition savings to account for a small part of that this year in addition we have sort of scrubbed the way we are budgeting for positions

in years past sort of if you had a person who came in and worked you know their career here that position was budgeted at sort of a salary rate of you know 20 plus year person and that budget sort of stayed what we are doing now is that we are actually budgeting for the actual salary and

Last year when we increased the real estate tax rate by one cent and then we end up with a $20 million surplus, a number of folks said to me, I think quite reasonably, why did you ask us for this extra 1% when you're not even able to fill the jobs and you've got this $20 million surplus and why aren't you giving various other complaints?

Sure, sure.

I wonder if there is some way, even if you haven't pinpointed which particular departments are going to get cut one or two or three employees, to say, okay, on an actuarial basis, if we've got 200 and some openings, we know we're not going to fill more than 100 of those, or whatever the number is, and then begin to understand how that fits into the overall picture.

I think that, as I've said to the department here, we want to take a look at these positions.

The positions were requested and they were needed at some time.

And there may be circumstances, I mean, like I do know that in

In some cases positions have been advertised and they go through the process and candidates fall out at the end.

So they have to re-advertise and I think in DS you've gone through that process in a couple of positions a couple of times.

So we have to evaluate whether we continue to do that and whether there are some other strategies that we look at.

One thing that should help is the fact that we've

So what I think might be prudent though is that let's maybe just use your discretion but maybe just hold off making big changes maybe for a year until after the study because maybe we find that after this compensation study that

Yeah, yeah.

All those are possibilities.

But, you know, the

We are now at about a 20% vacancy rate.

We could make the decision that our tolerance is something much lower than that.

Anything above that, we retire the positions.

That's another approach that I've been thinking about.

not off the top of my head so I'll just say that the benefits is not a great number and I'll tell you why excuse me typically the the retirement and the health care costs are fixed we choose to allocate those by position so even if the position is vacant that is still a cost we got to cover so those don't end up being savings even though position is vacant

But if you were to retire that position, say the 20% that you have, and I'm

Cool.

Yeah.

Just some other thoughts.

I agree with other counselors about being willing to look at the vacancies and reprogramming as well as points counselor Pinkston raised earlier about just looking at everything in the budget in terms of revenue availability.

just thinking in terms of lower cost higher impact investments something that's come up and never really gone anywhere is I wonder through the Council Strategic Initiatives Fund or something like that if there's any opportunities to do basically like a smaller participatory budgeting program the city several years ago almost got there then all the staff members doing it left and it's kind of vanquished but

I think there was only like $30,000 or $50,000 allocated to that.

Fifteen?

And it's still in there.

Yeah, you know, so I don't know what it takes to get there, but that's a smaller amount of money that cities have seen some success really getting citizens involved in a more meaningful way through that.

So I wonder if that's just like a lower cost opportunity.

So just one thing on that, that doesn't save you in the general fund because they are, those things are funded by fees.

So it really just, so where is the impact?

Just within the utilities department's own budget?

Within that enterprise fund.

We don't allocate any money to the utilities from the general fund.

Okay.

Well, that's helpful.

so less easy to get money for the climate action plan.

Sorry.

And I may be separate from the general fund, but the CIP budget, you know, I'll continue saying this, but I think it's important for the city now to begin planning for the West Haven phase of public housing redevelopment.

I know that's not

this immediate fiscal year or even the one following that.

But the scale of that project I think we really need to begin planning for how we're going to afford it now.

I don't know whether that's working with CRHA to get a number from them that can be incorporated.

I don't know if it's similar to the Beaufort project where we work with CRHA to have a study that estimates the cost of the scale of the project and then we put it in the CIP after.

Given the scale of it, which is absolute minimum, $50 million for the city, like we saw with Buford, I mean, we've got to start planning for it years in advance, and I'd really like to see that planning for including that in the CIP budget happen now.

Yeah, I second that.

and I don't know if we're going to get to this later.

I don't really know what to make of it, but something I'm thinking about is in terms of the real estate tax rate, we made changes to the real estate tax last year that seems to have fundamentally changed how that tax would operate because there's no longer the limits to

the assessed value of a home and I think income limits as well have changed.

So in theory we could operate that tax much more like a progressive tax rather than the past or even with our relief it was regressive.

Great reading.

Could I ask a couple more questions before we?

Sure.

Yeah.

So I know we're not reviewing the CIP per se, but you all are continuing to have conversations about the library at some point, doing work on that, Mr. Sanders?

Actually, no.

As you know, the main library is jointly owned by the city and the county and the main library is a subject of a renovation project.

I talked with the county executive today and he's going to talk internally.

It's not currently on their priorities.

and we should move together if something is to happen.

So we don't have an answer right now.

Okay.

Friendship Court.

At the increased level.

Okay.

It too has been adjusted.

and I agree with Michael and Westhaven.

The only other thing that I would have is, I saw this somewhere, services for the unhoused.

I would really like us to, if we have to fund, I don't know, a local architect at the tune of $50,000 or something to coordinate, do a sort of proper assessment of what a

it would need to be more than just an architect it would need to be a committee of people I guess but to really sort of lay out what would it mean for us to have a proper shelter in the city if we can get there with Haven by changing their hours of operation maybe that's one way of doing it but

I think that we really need to get serious about a shelter for the unhoused that's one that we can really count on and that we've got access that meets the community needs.

Yeah, and

I see that Chief Kochis is here I just want to make sure that we are able to address the increase whether it's real or perceived gunplay gunfire that's going on in our city and I've talked about this that the last shooting was particularly close because it was a young man that I knew very well so I think that more and more people are starting to feel like it's

Right, absolutely.

And that's a top-of-the-mind issue for the Chief, and we've discussed it recently.

And it's not just the Charlottesville issue, but a regional issue, the county issue as well.

And he's talking with Chief Longo and the chief in the county.

And so, yes, and I think that is definitely part of the, you know, those discussions need to take place, but...

I've said it many times that I think that part of that is with the vibrant community funds and these organizations given our young people there's really two categories that I'd see our young children kind of you know six or seven to 18 and then our kind of young adults kind of 18 to 30 kind of we just need some options and some positive things for our residents to do

So, and with that in mind, part, you know, that I think that we always need to have to give you or us some flexibility that we could do all of the planning now, but something could come up in six months and say, you know, we want to do this.

is a project and it may take, you know, I don't know, X amount of dollars, not, you know, I'm not talking about millions of dollars, but 20, 30,000, whatever to do.

And I just, you know, we want to be able to give you or us some flexibility just in case something.

And I know sometimes we always seem to be able to find it, but if it's,

What is the city manager's fund?

Yes.

On that note, the existing balance in the council strategic initiatives account is pretty close to zero.

So at this point, I don't know if council has landed on a number or if you have some idea.

We're working around 150,000 right now.

So we, and Lord, I forgot the number that we landed on that, you know, that, you know, as part of the recruiting 500,000 is what we're down to now 500,000, yes, and that's right, yeah, and so

That needs to be part of this budget, correct?

What are you talking about?

Oh, yeah.

No.

You're on the year end.

Okay.

It's not in the 24.

That was...

The focus was on a new city manager having some flexibility and that was for 23.

I think in past years, before I was on council, before I remember, I think the council's strategic initiatives fund would normally be around like 100,000 or so, and then it went up when Councillor Bellamy implemented the equity fund that was

you're marking like a portion of that I think it went up to like a million but I guess we're close to zero now historically we've been around like a hundred thousand it wouldn't seem unreasonable to me to at least try to get back to the more historical baseline because there's certainly there's always smaller things that are going to come up

of 150?

Like 100, 150, you know, something in that ballpark.

And I think there could be use of it if we want to, you know, even more than that.

We have 150 in right now in our numbers.

For 24.

Oh, that $150,000 is in the current draft of what you're thinking the budget's going to look like?

Mm-hmm.

Okay.

What is it right now?

Okay.

Not even... No, it's...

That's right.

Basically zero.

Yeah, and that account's kind of been, has a history, it's kind of been all over the place.

Our share is what, 2.3 million?

Our share?

Okay, that makes more sense to me.

Okay.

They've got one bailer that they're replacing because it's old and then they need to find a permanent home for that facility.

Yeah, it's facility improvement as well.

Yeah, because they don't have a long-term lease.

At this point, no, it would be in the general fund, and that will be about, that starts next year, I think, if all goes as planned, and that'll be a little over a million dollars Okay, so that would be in FY25?

And I'm wondering, with Ms.

Correct.

So roughly $700,000 a year.

But if you're asking about projected usage of that funding, I would feel comfortable saying that what Human Services has seen is that there certainly has been a need for that, and some of the individuals who they have been helping through that funding may be four or five thousand dollars in arrears, so they didn't necessarily get in that hole

Okay.

So $500,000 might cover a third of the need or half the need maybe.

Correct.

I would say that it's hard to tell.

Okay.

All right.

There we go, look at you.

Apparently you're just supposed to tap not press, didn't I?

I would say that yes, counselor, it is possible because we are having people come to us so deeply in our ears.

Even the amount of funding that we're providing them is not clearing their debt.

It's lifting them up, but again, if the maximum amount that we provide an individual in a year is $3,000 and they're $5,000 in arrears, we certainly have helped clear quite a bit of their back owed rent, but we definitely didn't clear all of it for them.

and that also pathways also is used for utility support as well.

Yeah.

Well, I would definitely agree with Councilor Pinkston that that's a priority in longer term.

We need to figure out what I think a more permanent baseline should be.

You know, I know I get reached out to every few weeks from somebody who's facing eviction at the beginning of the month.

They have no idea where they're going to get any money to cover that.

and the only resource I've ever at this point that I can really turn them to is the Pathways Fund.

Some of them they qualify for and it works.

As you said, some people may have already utilized too much of it and don't qualify, but we talked about the homelessness issue previously, but this is certainly our only program that for some people who may be on the margin of becoming homeless for some period of time or being evicted

Absolutely, and unfortunately the way that HUD dollars work for rapid rehousing is just part of their requirements.

You have to hit homelessness in order to access that funding.

So it can't support you when you get a letter threatening eviction, for example.

You need to have actually been evicted to be able to access rapid rehousing dollars, which is another resource potentially in the community, but again, it doesn't help you stay in your home

That also raises, in my mind, the question of, I've lost track of all the acronyms, but ARP and the infrastructure monies and so forth, and they kind of come to us in different ways and places, and it's not part of the budget per se, but we end up being able to leverage some of those funds, and it would be interesting to have

Okay, that would be helpful to just sort of know.

We talked about that today.

I would agree with that and also that for all our remaining art money, I think we really need to kind of

really justify any future expenditures and look for the highest impact because there's not much of it left.

So I said in my opening comments that

We would share with you our revenue projected for 24 and expenditures, drivers of expenditures and the pressures that we're feeling and that we would get to a point where we'd ask you based on what your priorities are and what you understand our pressures to be

What are you thinking about the tax rate for the next year?

We have to make a determination whether we hold or whether we plan to propose an increase and what that increase is.

Last year you will recall that because of the school configuration project,

you landed on a proposed 10 cents increase and in the budget we gave it back to you unallocated.

Thank you for that.

We didn't use it all and you determined that you would only take one cent of the 10 cents that you had advertised.

Do you have a sense of

And I'll just slip to this next screen.

That's correct.

All the others only have to be advertised seven days before the public hearing, but real estate is 30 days.

Yeah, I commented on this last year, this kind of preemptive decision you have to make before you have all the data in.

And if you don't advertise something, then if something comes up two weeks from now, you're sort of, or three weeks from now, four weeks from now, you're hemmed in if you didn't put a headline increase out as an advertisement.

I'm honestly I'm interested in what my colleagues think last year I was very much like we need to push the envelope because we have this school project that the city says it supports and yet the money wasn't evident this year you know this back-to-back years of revenue increases significant increases on proper real estate taxes

Like Brian said, it's hard to be able to make this decision without having fully fleshed through what the tradeoffs are and what we're looking at.

I guess as a practical matter, it's just advertising it to give us some flexibility throughout the budget process.

I'm a little bit more comfortable publishing something or advertising something so we can at least discuss it, even if our preference is not to increase anything.

just as a practical consideration for the budget.

It's hard for me to say exactly what that number would be, but one to two cents or something doesn't seem unreasonable.

Again, just to advertise, not even saying that we're going to increase it.

But I would also say,

I would favor increasing the lodging tax before the real estate tax, to be perfectly honest.

And looking back on it, I think that probably would have been the better path for us last is if we had just increased that.

I would need to go back and look at other localities to be sure, but I think we're lower than other localities.

It's arguably less regressive than real estate tax.

If we're going to go any direction, again, I would put that above real estate tax increase to get to first.

Again, I would also say with the changes we've made to the real estate tax, we could adjust it to operate much more like a traditional progressive tax, which is something we haven't really discussed or thought through what that would really mean and how we would do that.

So my thinking on it is, of course, last year we raised the tax one cent.

I was the lone vote against that.

I'm feeling at this point that we've got where we will have had basically back to back 12 to 13 percent increases effectively 25 percent over two years that the logic is basically the same for me that I don't think we should be raising the taxes.

I say that in particular because I hate to make it sound like I'm trying to spend a savings that we haven't figured out yet,

But if we're truly not going to be hiring roughly 100 people, again, my best case scenario is if we're down 200 positions, we're not going to hire more than 100 of them.

If we've got that much room in the budget, even if we haven't figured out now exactly which 100 positions they're going to be,

We can have enough confidence that we're going to not fund 100 positions this year and that ought to provide whatever additional room we need on the tax rate.

Again, it gets us away from the notion of having a $20 million

Could I ask a question of my colleagues?

How do other people feel about the 40% of, and help me make sure I'm right about this, so the policy we have is that 40% of any new revenue raised with the real estate tax goes immediately to fund school operating budget?

Real estate and personal property.

Okay.

How do folks, in other words,

I'm not saying we do away with that policy this year or modify it for a particular year this year, but it's $4 million that is already kind of the way the math is showing here encumbered when it's not necessarily encumbered.

I mean, that is still something we have some flexibility over.

Here's my doctrinal reason.

We know that the largest percentage of the school's budget is personnel.

In other words, teachers.

We know that teachers are not overpaid.

If anything, they're underpaid.

And we also know that they've just approved or are moving toward approving collective bargaining.

It would not be wise, I think, to assume that in this year of all years, as they are about to be moving into collective bargaining, that we're somehow going to be able to convince them to find a way to economize on teacher salaries.

If we're not going to do that, then if we don't give them as much money as they have been expecting, and frankly as much as we have over the years put in, then we're basically saying to them, hey, you're on your own, cut somebody else.

I guess I would say philosophically I don't think there's I think anything in the budget is worth looking at I mean I think philosophically I'm open to that you know this isn't absolute law which could never be looked at and changed I would agree as a practical matter though I mean I think I don't think there's going to be and I also

I share the perspective of we've invested a massive amount of additional money through the capital budget, almost $100 million and that's not even having touched the Walker phase of school reconfiguration yet that we could work together to figure out how to share that burden since we've increased our capital expenditure so much.

But I would agree this year as a practical matter

I'm okay with advertising one to two cents, not as a commitment that it will happen, but to have some flexibility as the budget process goes on.

I have to double check.

Seven days before the 20th, I think, is when we'd have to do that.

I think so.

It's either that or by the first reading of the tax ordinance, which would be April 3rd.

Yeah.

And again, my preference would actually be to look at an increase to the lodging tax rate before touching real estate.

And I share others.

I mean, in two years, we've had...

25% average assessment increase.

Something like that.

Yeah, I don't think we need a split vote tonight on this hung jury.

I mean, I suppose I would prefer, well, I'm thinking out loud here.

I just don't think it's realistic.

I mean, there's a part of me, for sure, that's like, let's just advertise, like we did last year, a higher number, and then come back to reality.

Last year, the reality was only one cent.

So we went 10 cent, and then we came down to one cent.

Practically speaking, I think that assessments in the city have just gone so high that last year it felt like to me that I could justify doing it because we had this huge school thing hanging over our head.

Now, even though there's lots of needs, I do feel like the budget that we're seeing is a responsive budget, it's a thoughtful budget, and I see a path forward to funding it.

So I think I'm going to have to say no to advertising because I don't see I just don't think there'd be anything that would cause me to want to

to actually ask for a one cent increase.

Two questions for other counselors.

One, how does anyone else feel about the lodging tax as a potential source of revenue if needed?

And then two, it sounds like it won't happen this budget cycle.

Thank you all for being here.

It's not as progressive as you think.

We still have some limitations on what we can do.

The real estate program for elderly and disabled folks, there's no home value limit, but there is an income limit on that.

We've gone ahead and made some really good changes to that and CHAP to peg those income thresholds to the median family income.

So as the median family income increases, we have a formula to increase that.

With respect to CHAP and the home value, we also have a formula as the median residential property value increases, we have a formula now to keep up with that.

I really hate to get away from that because you know we've been struggling

I've been struggling to try to get these programs into a rational kind of place every year to where we know what we're going to do next year.

And we don't have to, you know, there's not this debate of, well, do we spend this or do we spend this?

Do we raise this level or do we raise that income threshold?

We've got it to a place where it's going to do that.

But it's, you know, I don't think you can ever

No, and it would be very imperfect, and I'm not saying it would even happen this budget cycle, but in theory,

Given that we don't have any other options that around the country some other cities might have like an income or wealth tax, we could in theory adjust it so everyone below a certain assessed value, which would correlate with income, would get

Yeah, and we're kind of there.

We've got a formula that we've got tiers of relief based on income.

The CHAP program, you've got to remember,

That's not a real estate relief program anymore.

That's a grant.

So whatever you do, you've got to decide how much you're going to give at the relative tiers that we created.

Right now, we're giving $2,500 to folks, which

To me, that's pretty generous.

When we're talking about an upper income or a housing threshold of last year, we were going at $420,000 home value, you could qualify for a $2,500 grant.

This year, with the reassessment, I think it's going to be like $450,000, $460,000 maybe.

So you're talking about giving a grant to someone who can afford to live in a

almost $500,000 home.

So you got to look at yourself and decide, is that what we're going to do?

Well, and again, it's not really relevant to this year, but in theory, you would target it at lower, could you not target that at lower assessed values to have a higher relief and just either add in more tiers or the lowest tier, you added more subsidy.

We could hash it out.

So, you know, I just wanted to point that out.

I was looking at some of the numbers for lodging tax among cities because I've just been dealing with that quite a bit.

There are a few cities that are above us.

Most of them are in Northern Virginia and in Hampton Roads.

But, you know, among Central Virginia, if you're talking about Roanoke, Lynchburg, things like that, we're 8% is ahead of them.

So just for what it's worth.

I can get you full list tomorrow.

The other thing I wanted to note is that one of the folks that wrote me last year for whom I had a great deal of sympathy was somebody who is living in a house.

He's 84.

He and his wife were 84 years old last year.

They were living in a house that they were basically afraid they were going to get taxed out of.

because their values continued to rise and they were at that point their house had risen to well over $400,000 and these are folks who were living on Social Security and that was it and I think we need to be careful about somehow

I don't think we want to be in the situation of saying that it is an affirmatively good thing to tax people out of their homes.

Well, that additional amount all by itself would probably be in the nature of $6 million.

So it's a half of 12% is 6%, and the basic taxable amount is $100 million.

But, yeah.

We still are required to place an ad that calculates an effective tax rate.

So if we have folks in the virtual audience, I don't see many people here live or in person, but if we have folks in the virtual audience who would like to address council, now would be the time, and you've got three minutes to do so.

As I recall, if you're on a phone and you want to speak to us, star nine is the way to get there.

Yes.

Okay.

Hello.

Good evening.

You'll be pleased to know I don't have all sorts of prepared comments this evening, but I do want to just touch on one thing in regards to budget.

I'm pleased to understand that

you know the climate group there in the city the staff members have requested a couple of staffing positions to bolster their activities and I certainly want to voice my support for you know honoring funding their positions the other thing though I want to come back to something I've talked to you about a few weeks ago and that's a green bank I've heard recently from city staff and climate arena that they just don't feel that they have the bandwidth

to set up a green bank for the city of Charlottesville that they say we just need to look to the state.

And I just think that's unrealistic.

I mean, we have a Republican governor and the House of Delegates is in Republican hands.

We shouldn't hold our breath on the state setting up a green bank any time in the near future.

And financing is so important, right?

You spent however many minutes just now talking about people that are pressed financially.

And there was a report out of the Community Climate Collaborative a couple years ago about energy burden, how much of people's local income goes to pay their energy bills.

And they said in Charlottesville, 851 households, this is probably 2020 data, 851 households

paid more than 20% of their income to pay their energy bills.

And we need to attack that.

I mean, if you're serious about dealing with those who have been disenfranchised, those who are low and moderate income, we need to stop taking as much money out of their pockets, including to pay energy bills.

And you can do that with a green bank.

And so that may take additional staffing beyond what your staff has requested.

But I, for one, would say I think it would be money very well spent for our community to say, hey, what do we need?

How many people do you think we need to actually organize and institute, implement a green bank?

It's going to be really valuable for our community to do things like energy efficiency upgrades, insulation, weatherization, not just solar panels and things like that, but all sorts of opportunities where we can cut the expenses and perhaps people can start to accumulate a little wealth instead of paying it out drafty windows and the like.

So I just want to put that in your mind.

I'm prepared to spend time to help you figure out what does it mean?

to have a green bank.

Fairfax County is well on its way to setting one up so our staff could go and talk to Fairfax County.

What's involved?

Thank you, Mr. Groves.

All right.

Ms.

Can you hear me, counselors?

Yes, we can.

Okay, thank you for having me tonight.

I've been listening both in my car as I ran errands and then back at home now that I'm here.

And I took particular interest in your conversation about Pathways Funding.

For the past three years, I've been an anti-eviction advocate both in the city and the county.

And I wanted to talk to you about what I see as an anti-eviction volunteer and the difference that the Pathways Funding makes.

I also was part of some food aid through the Seville Community Cares Program at the beginning of COVID and one thing that I can say is that COVID was kind of an excuse to help folks have money to make ends meet but folks were not making ends meet before COVID they weren't making ends meet during COVID and they are definitely not making ends meet now

As we knock on doors of people who are facing eviction, who are on the eviction docket, I work with Seville DSA's housing justice team to do that, but I'm speaking today as an individual.

We used to have all these different programs we could connect people with, and right now, especially because I think in the county, I'm not sure in the city, but the Pathways Fund is out of money, so we literally have no recourse to offer folks

And, you know, we've even had to do fundraisers through our own organization and to try to help people in desperate need.

So, you know, I know that you are balancing so many different needs and costs and

important work that you're doing with the city's money.

But I just really want to advocate that, you know, as you said, as your city staff said, that we know this funding gets used.

It really helps people who are literally facing homelessness.

There's not affordable housing for them to move into.

And, you know, many folks just have a little slip.

They, you know, have an injury or a car accident and

This Pathways Funding really does allow them to kind of get back on track and stay in their homes.

So I really hope that you'll consider fully funding the program at COVID levels.

I don't know if that's possible, but I do know that if you did, it would be used and needed and welcome in the community.

So thank you so much for your time.

Thank you, Ms.

Doran.

All right.

All right.

Ms.

Good evening, everyone.

I just want to say this has been a really good meeting listening to.

I am so thankful for our council members, our counselors for

Talking about affordable housing and, of course, what's needed for our school system.

I've seen in the past how these two become more competitive.

They're both areas where there are dire needs.

And I'm just thankful that you all are considering that.

And I hope that we are able to find a resolution when it comes down to what is needed in those two areas.

I also will piggyback to what James said in regards to looking at ways for saving energy.

I know that for rental neighbors, that is always a struggle.

Sometimes they spend more than that 20% just depending off of the condition of the rental unit that they have.

For example, Baseball Heaton is so much more.

And so it would be great if we had some kind of program that would look into solutions for those rental units.

But I do just want to thank you all counselors for speaking up and advocating tonight on those important issues.

Thank you, Ms.

There are no more hands raised at this time.

Okay.

Ms.

Thank you.

My name is Emily Dreyfus and I'm a community organizer with the Legal Aid Justice Center.

And I'd like to say that I agree with everything Lakeisha Washington and Elizabeth Stark just said, so I won't repeat those things.

I would like to add that the real estate relief, tax relief and the rent relief

really need to be maximized.

I know you've been tweaking it over the last couple of years and those have been some very helpful changes, but I think it would be useful to look at or ask Mr. Divers to look at specifically what could happen that could be deeper or of more assistance to the very low-income households in the city.

Pathways funds are immensely appreciated.

And the issue I wanted to point out is how low the limit is.

It's a maximum allotment of $1,000 for any household over the course of a month.

um and like Misty Graves mentioned there's a maximum over the course of a year for many households who have two or three kids that is not going to do as much as it needs to do in this town at this point rents have risen so rapidly and um

Some landlords I'm sure will be passing on the cost of their additional taxes through the rent.

So I think we can just expect to continue seeing rent become such a difficult burden for a lot of people.

There was a meeting recently where the Thomas Jefferson Planning District Commission mentioned that they have seen data where the average, I believe what they said was the average housing cost in Charlottesville is now 50% of people's income, which is a really startling amount when the HUD recommended percentage is 30%.

The other

Thing I wanted to mention is including funds to compensate lower resource people to participate in city boards and committees.

We would really like to see Council find a way to help make it possible for people to bring their lived experience and their wisdom of being a resident to the table.

And I think that's the only way that that's going to happen in a significant enough amount.

and I appreciated what Councilor Payne mentioned about the West Haven CIP and we would really love to see that included.

I think the LIHTC application will go in in a little bit over a year so construction would start toward the end of fiscal year 25 or early fiscal year 26 so it's very relevant to start planning for that sooner rather than later.

Thank you.

No more hands raised at this time.

Last chance to speak.

Oh, there we go.

Ms.

Yes, I was just calling to end to

speak about the Pathways program in my individual capacity.

I would like to see more funding going towards the Pathways program as it does assist with numerous households.

And as Emily said, with the increase of rent, $1,000 does not even cover rent.

I'm not sure if you all are up on the cost of living in Charlottesville at the moment.

Even a single adult in a one bedroom or efficiency is well over $1,000.