City Council Budget Work Session   3/6/2025

I call the city of Charlottesville budget work

Budget work session to order.

We have roll, so everyone is here in present.

So on Tuesday night, I presented the proposed budget for FY26, roughly $264 million.

The goal that I set for myself was to ensure that the budget reflects each of you by ensuring that your priorities can be found throughout the budget.

I believe I accomplished that.

And I do consider that this to be a good budget.

Tonight, we start with the unpacking of the proposed budget.

So over a series of work sessions, the goal will be

to help you understand what's in it, what's not in it, and have further discussions about that, giving you the opportunity to consider what other things that you would like to talk about along the way.

But we do look forward to answering your questions and providing any clarity.

And Ms.

Sam mentioned, we're going to talk about the revenue changes from 25 to 26.

Talk a little bit about where we are in the current year with both revenues and expenditures.

We'll also talk about the categories that make up the general fund.

We'll look at details of expenditure changes from 25 to 26.

We'll look at tax rates, some highlights of what's in the budget, an update on the year and surplus, and then we will revisit some important dates for the work sessions and public hearings and things of that nature.

I will remind anybody for anybody at home or anybody who's here, all of the online budget book can be found at www.sharlottesville.gov.

There's an online budget book with all the details that we'll be discussing throughout all of the work sessions.

So jump right in to the revenues to look at what has changed.

Also look at some of the revisions for this year as well.

You'll notice that here on this screen, this is for the local taxes.

There are some taxes that are in red here for the first time in

A long time we are actually seeing some of our revenues not performing as well as they have over the past.

Some of this we believe is coming out of COVID.

You'll also note that transit, the lodging tax and meals tax are both down despite tax increases with last year's budget.

However, real estate and personal property are still going strong.

The commissioner's office is still working through the personal property assessments.

And so before we're done with this budget, there may be an adjustment there, but we're still working on that.

And so overall, for the

from 25 to 26 budget.

There's an increase of about eight just under $8.7 million in local tax revenue.

In addition, based on our adopted to revise budget for the current year, we're looking at about an additional just under a million three, largely carried by the real estate and personal property.

Any questions here?

Moving on, license and permits.

The B poll is due, had a due date of March 1st, excuse me, 4th.

So that is still under review as well.

before we're done again, that we'll probably see an adjustment that we'll be bringing to you.

The budget change here is about a million dollars.

A wood caution that the verb, I believe, is one of the permits that's in here, which is skewing the numbers this year a little bit.

That was a

larger than normal permit fee.

So you'll notice that for the projection, well, you don't see it here because I haven't combined, but we did adjust for that.

So 25 is an outlier a little bit in that category.

Sorry, I'm confused.

FY25 is revised is

So the 25 budget was a million three.

Our revised projections now have that at 12 three, which is the column all the way to the far right.

Correct.

But in 26, it's actually a slight decline of just about $3,900.

All right.

Thank you.

State revenues, we still do not have a lot of information from the state regarding their budget.

So we've generally made our best guess here based on what little bit of information we have.

So that is accounting for that increase.

The biggest part in the intergovernmental is we did see a very large increase in county revenue sharing this year.

And so there's a portion of that that we allocate to the operating budget, which is what you see here.

And then when we get down to the designated revenue portion, we do put the other part of that as we use that to transfer to the CIP.

So overall, there's about for in this current year, there's about we're anticipating about $168,000 change and about 2.2 million for more in 26 than what we budget in 25.

Charges for Services, no real change here.

We talked Tuesday night about the waste disposal fees.

Right now this budget assumes no change there.

So there's really no change from there.

The landfill reserve.

That is a reserve that we've had for a number of years.

We're actually using that reserve to buy down our cost share for the post closure fees related to the Ivy landfill.

Miscellaneous Revenues.

We are seeing or anticipating a slight decrease in interest income.

And so that is reflected in the 26 budget.

We did make a change with how we're handling rent this year.

As you know, we've had several meetings and

renewed several leases for city owned properties.

But we have not really caught up with a budget for maintaining those lease properties when there are things.

So this year, we have diverted some of that rent to our facilities repair fund, excuse me, to help create some additional funds for maintenance on that.

So that accounts for the slight decrease there.

And then the designated revenues at the bottom.

This is our other portion of meals tax as follows our 1% or the equivalent of 1 cent of our meals tax that gets transferred to the debt service fund.

The county revenue sharing that portion that goes to the CIP.

which you can see we're increasing that transfer about $500,000 this year facilities repairs remaining about the same and then the school contracted services are going up just a little over $400,000.

So overall from 25 budget, adopted budget to the 26 proposed budget

Those revenue changes account for about $12.5 million or an increase of 4.97%.

And our revised numbers for $25, we are looking at about just under $2.5 million revenue surplus based on these current projections for $25.

We're anticipating that much more revenue collections than what we actually budgeted.

It contributes to it, but we don't know what the offsetting expenditure side looks like, but it is a part of the equation for the surplus for sure.

Any questions on that before we move forward?

I don't think there's anything really new there

Moving ahead.

So as I just noted, our revenue surplus right now looks to be about two and a half million.

I meant to go back earlier today to see what that number looked like when we were having this meeting last year.

I know in April, we were anticipating, I believe, was about $13 million revenue surplus at this similar time.

So our revenues, our projections are

Getting closer to the actuals and also with the declines, we are not anticipating the revenue surplus that we've seen over the last few years.

This is a picture, a snapshot of our second quarter financial report.

This is also part of our budget explorer that's on the budget web page.

This represents general fund expenditures in the current year through December.

And you'll notice that about halfway through the year on the expenditure side, we're about 58% spent.

it's it's hard to sort of gauge expenditures because there are many things that are very cyclical.

For example, Parks and Rec spends a lot of their money towards the end of the fiscal year.

A lot of transfers and different things happen here.

But it looks to me or we look as if we are tracking pretty closely to the expenditure budget.

That being said, you know, we still have

another quarter to go.

8% of 58% versus 50%.

And that at some point, you look at, OK, some things may have been paid for that haven't happened yet.

And some things have happened yet, but haven't been paid for.

Correct.

Yes.

and you can see at the bottom the trend of the last four years of where we've been tracking at this same time.

Excuse me.

So to answer your surplus question, I mean, anything that's not spent on this side adds to the surplus.

Any additional revenues collected adds to the surplus.

So moving on to the 26 budget expenditures, this is just a pie chart.

We talk a lot about the general fund sort of being the

the collector of all the tax revenues.

It's sort of the central business of the city.

This is where all the operations happen.

In term, this is how the budget divides up for 26 basically in categories.

You'll note that the school contribution makes up about 29% of the total budget.

Your debt service payment is around 4% at this point.

Public safety is about 23%.

and then it varies with the other sort of categories to get us to the total general fund budget.

So we're gonna take a look at, this is not meant to be a, you know, the everything list, but these are the major changes, what we would call the major changes from the 25 budget to the 26 budget on the operating side.

As you know, from the work sessions and conversations we've had with school board,

The city's contribution to schools this year is going up $4.9 million.

That's about $900,000 more than the formula based on our current revenue projections.

But that does fully fund their ask of the city.

Rent and tax relief gets adjusted each year based on the results of the annual assessment.

Those dollars are going up $202,000.

In addition, we are going to, through a joint effort through the commissioner's office as well as NDS, we will be purchasing and installing some short term rental compliance software.

We're fully operationalizing, well, excuse me, we are operationalizing part of the safe routes to school position.

That is a grant funded position that's been funded for many years and the match has historically basically been covered from vacancy savings.

We know now that grant is going to probably not be

Renewed, or we'll go away in 27.

Not go away.

So just to be clear, because you would be mad about that.

We're not losing the grant.

We're not able to pay the salary out of the grant.

So that's the change.

So we'll still get the grant.

It just won't be eligible.

That eligible use is the difference.

Is it a federal or state grant?

It's VDOT.

I'm Chrissy for the second bullet, the short term rental compliance software.

Well, we hope so.

I mean, it should give us a better idea of where these things are.

You know, right now, that's the trickiest thing is finding finding whether the short term rentals are taking place.

We should be getting most of the lodging tax from them because the online intermediaries or Airbnbs, excuse me, and your VRBOs are

It's supposed to be paying that.

This will help us check to make sure that they are.

So just for my information, right now, if someone operates an Airbnb or short term rental,

Depending on where they are, most of them should.

If they're in a residentially zoned neighborhood, they need to get a home state permit, which is $100 a year.

Right, but if they don't, then

Then, I mean, a lot of people just may be not knowing that they have to do it.

That's correct.

That's what we're looking for.

It's going to help.

You know, it may help in the NDS more than it helps us because they're the ones responsible for the home state permits.

And so this will give those folks a leg up on finding out where this is taking place.

Right now they operate just because of staffing and other issues operate on a complaint basis.

This will hopefully allow them to be a little more proactive.

Moving along, we're also operationalizing some of the costs related to collective bargaining.

So the labor relations manager, also the legal and costing fees related to that.

Previously, Council, when we first started talking about collective bargaining, there were some one time dollars that were set aside for that.

And those are going to probably be exhausted by the end of this year.

And so we are adding those to the budget.

compensation and benefits.

Every unaffiliated employee will receive a step plus a 1% pay scale adjustment that came at a cost of just under 1.3 million.

We have four collective bargaining contracts

three of which are basically funded in the general fund.

So you don't see the ATU contract here.

You see that as part of our transfer.

The police second year of that is about 434,000.

The fire is 826.

And then the labor and trades, which will, which was just completed, and will take effect July one, that's a million eight.

That involves placing everybody in a pay scale and the other terms of the contract.

So the total of those was also, you may recall, last year as part of the budget process, we were in the midst of negotiating those three contracts.

as well as implementing our class and comp.

And so what we did was, as part of the budget, we allocated a lump sum pot of money.

It was about $6.2 million to cover all of those.

Once everything was said and done, we had about $1.7 million that was not allocated for that.

And that is basically the 6.2 was part of the base budget.

And so that was

Basically a prepayment on the increases for this year.

Additionally, we've been talking now for several years about vacancy savings and the impact it's been having on our surplus.

Last year was about $6 million.

A year before that, I believe it was $7 million.

We've taken a bigger slice of that pie this year.

We're taking a different tactic to try to better manage that.

So we are we are taking off $5 million off the top as part of our vacancy savings that we are budgeting for 26.

So last year, previously we were budgeting.

That's the change.

So this year we budgeted $2 million and then we've increased that to $5 million for $26 million.

In my tenure here, we started at, we budgeted a vacancy savings of 250,000.

And then we thought we were being really aggressive.

We bumped that to a half a million.

And then we had bumped it to a million and we had stayed there for a long time.

But both with the addition of new positions, we've had a lot of just turnover, a lot of positions that were hard to fill for various reasons.

We've had a lot of vacancy savings.

We are seeing that turn around.

We are filling positions.

Positions are turning over.

They're getting posted and filled faster.

But this is something that we'll be tracking on a monthly basis with for the city manager and see how we do.

Hopefully we're working on.

We do not want to continue to have vacancy savings be a contributing factor for surplus.

This budget, we also added several new positions, most of which were offset by eliminating or reclassing other vacant positions.

So you'll see those listed here.

There is a zoning inspector, urban forester for NDS.

There are two positions for human resources.

There is a FOIA public records officer for the police department.

That's a civilian position.

We are reclassing a position in communications from the communications specialist to an assistant director.

There's an admin assistant being added to the city manager's office.

And then we are adding a city staffed concrete crew of five.

to help with that work.

So the four-year position, I know that, Madam Clerk, you had a four-year position.

Is it enough work now to have a four-year for, I don't know if you're planning to hire one for it?

Foya requests for the police department are currently being handled by a foreign officer.

So this would be actually giving that person the opportunity to do their other job.

Yeah, yeah.

But there is enough work.

We actually have FOIA separated out for general requests and police requests.

How many FOIA requests do we get?

I don't have the numbers, but it's a lot, and it's actually started to pick back up with the numbers.

Well, I can say in conversations with the chief, the current staff person who's managing FOIA, I think we're saying is using 83% of his time.

So currently, there's a sergeant, the sergeant in internal affairs handles our internal FOIA request.

Like, like the manager said, 83% of his time is done doing FOIA, so he can't do the internal affairs work.

Most of that is from law firms, car accidents or vehicle accidents.

Just to kind of put it in perspective, an officer shows up to a vehicle accident, their body cameras on.

I know that we're looking to find somebody who can review the school speed camera tickets.

that would fall into

It's a separate thing, but we're going to do more of a pilot and kind of see what that looks like.

We know what other jurisdictions have seen, but what you're talking about is the state code that requires every ticket that goes out be reviewed by a sworn police officer and signed off on, which is, I mean, it's the law, so it's a lot of work.

So you'll see that on next year's list, based on what he's telling you.

Yeah, so, I don't know where he went.

Give James his moment.

So, Stephen Hicks, our director of Public Works.

We've talked about this for a long time.

And I think he kind of witnessed me laboring over some of the conversations in this room with you all and with the Planning Commission.

in trying to get our VDOT portfolio rebooted and moving and just being able to respond to some of the very basic requests for getting sidewalks in places that we haven't had them and the requests have been coming in for 30 years is what I've heard in many instances.

Once Stephen got into place, we started just handling small things like East High Street in front of the AT&T building, for example.

I remember hearing that that has been requested for 30 years and it just never was done and he got it done in no time.

He said, we can do more of this if we had a crew internal, because it's just the timing for curement in all the steps.

Not that we're trying to get around that, but we want the flexibility to be able to do more of the small things.

We found in doing the analysis of the VDOT portfolio that there were probably some ways that we could reimagine some of the projects, go down in scope, and get more done.

So he has been talking to me about, I need a concrete crew.

I need a concrete crew.

He, of course, wanted me to just give him five new people and I said, can't do it.

But because he has vacancies in the department and he's been working to reorganize, my question to him was, can you really rethink this and see if you can use some of those positions?

So he did.

He went back, he took three positions and turned it into five.

and we're going to see what this is going to work out to be.

I may have to have further conversations with him.

I'm sure he's having conversations with James already about what he gave up and what he still needs.

So we may end up finding at least one of those coming up later.

Yeah, we would have that control.

I mean, we've done we put in a sidewalk ourselves on Monticello going down down towards the interstate as well as on Elliott.

We put in a section ourselves for just a little piece that was missing for a long time.

So he's proven to me that we can do it.

So he just needs the hands.

The other benefit to having this five man crew is that's now five more people

who can help us with no removal.

With the illuminated positions

Presumably like communications, I'm guessing turned into the assistant director position.

But for the eliminated ones, what was the justification for specifically eliminating those?

Yeah, most of it was time vacant and most of it was me.

saying that we can't let these go.

We can't carry vacancies any longer.

We need to do different things.

The Home to Hope Navigator, it was really an exchange of take the position and increase the direct assistance so that we can put more money out on the street to help those in need versus carrying a position that we might actually be able to live without because we have.

It's an adjustment to the current workflow, but I think we can try that out and see what works in that sense.

but Chrissy knows that I've been, all I've been talking about is vacancies.

This whole time that I've been in the seat, that's all I seem to talk about of just trying to get this turned around in a way that we can start to realize what is normal because it doesn't, it hasn't felt like it's normal when you see six and seven million dollars in surplus and we have truly learned how to live without some of the positions.

I won't say that's comfortably in every situation

I know both with the project manager position and the sustainability engagement position those obviously relate to two things we've talked a lot about about

being aligned with our strategic plan.

Yeah, the project manager position because we actually have more capacity on the project management side because I have, that's really what I've been asking for the two years that I was in the deputy seat.

I came to you all twice and asked for additional FTEs.

That was just one that we hadn't filled yet, and it was just one that I said to him, okay, try to use that to come up with this version of what you're trying to do.

The difference on the sustainability position is it's actually not a technical loss of a position.

We're going to allocate the plastic bag tacks because we've been collecting that for

2 years at least.

And we have not utilized it.

So it's been sitting ready to be used.

So in exchange for taking that position, I think we put in 90.

We put in $90,000 into the sustainability budget.

Okay.

Yeah, that makes a lot more sense.

I thought I remembered recently seeing like

Yeah, it was it was well, I hadn't told anybody what I was thinking about doing.

So I didn't want to scare anyone yet.

But I was studying the list and trying to make decisions on what I might do.

And that was the trade off.

I was trying to in each of these situations, I was looking for a trade off.

It was really a chance to work with the director to make a different decision and to try to see if we could meet in the middle and not have it be one of these moments of, oh you took my position away, now I can't do what you're asking me to do.

Contributions to outside agencies and nonprofits.

Again, this is just sort of a list of some of the major changes.

The pot of money for VCF remained flat.

Well, we increased it by a whopping $552, but that's still at $2.3 million.

the there were several increases, the regional jail, the increase there.

Part of that is operational, but also part of that is realizing some of the increase related to the the debt service for the renovations.

The library, the health district, ECC, Glowridge Detentional, most of those increases are again related to operational increases.

both for salaries and benefits in their shops as well as, you know, just software and other things that they had in their budget.

Slight increase for John at 176,000.

The Visitors Bureau actually went down by 179,000.

Again, that's based on a calculation on our

lodging tax, lodging tax.

Yes.

The first they get a portion of the first 5% that we collect.

The SPCA that is this amount, this increase is representative of a new contract that we have finished negotiating that will become an counsel for approval.

and then two line items that were added to help address the homeless interventions are there's $500,000 for low barrier shelter operational support and then additional $250,000 to go to BRAC to help with that.

You may recall also that last year we parsed out some agencies and for what we called as fundamentals.

And so most of those were funded flat this year.

There were a few increases.

Offender aid did get a slight increase.

Pathways was increased to account for the increases administrative cost.

And then Foothills and Child Health Partnership got some slight increases as well.

And next week at our work session, we'll be talking about the vibrant community process, the hops process.

And I doubt anybody from the public who

particularly cares about it, is watching.

But if anyone is with that new SPCA contract, that for the first time includes board seats with representatives from Charlottesville and our moral government, correct?

moving on the intergovernmental or interagency transfers.

As we have continued as our five year CIP plan has continued to grow.

That will be our third work session in this series.

We'll be talking about the CIP and my favorite topic debt service.

Our debt service is continuing to grow as well, which means that the transfer from the general fund also needs to continue

to increase, and this year will be increasing about a million four.

That transfer is still not fully covering our debt service payment as we have been supplementing that with a fund balance and the debt service fund that we built up in anticipation of being at this point.

So we'll talk about all of that, but the general fund, again, that increase is going up another million four in 26.

Our transfer to CAD is going up 600,000.

They added eight FTEs, eight drivers in 25.

Most of that was funded with a lump sum money at the end of our budget process in 25, but those positions were added this year with

They show as an increase from 25 to 26, excuse me.

So they are still in the process of being hired.

We also are adding in 26 one new transit mechanic.

And then this 26 budget will be the first time we will realize a full year of the ATU contract.

And that's it just under a million four for 26.

In addition, our transfer to human services is going up about 500,000.

So the request that some people have made about doing eight more FTEs to CAT for this coming FY26, I think what you told me the other day was that

You'd have challenges on-boarding, finding an on-boarding eight from last year.

Right, and in addition to that, I mean, we have a half a million dollar, I mean, a $600,000 increase without adding really one position.

And that is because we're recognizing no more federal money to help suppress what our local contribution is.

So our contribution locally to transportation went up just because.

and the county went up as well.

So we have increases already to absorb.

Adding positions would cause us to have to absorb even more.

I guess I'm not understanding how last budget we included the funding for the eight drivers, how

It's not an increase.

It is confusing.

I paused there when I said this.

So the method to the madness when I did this is if you go to our FTE count in the budget book, you will see that the FTE is for cat from 25 to 26.

have increased by eight FTEs.

But that is because the FTEs were not, we just budgeted as a lump sum in 25.

We didn't put it in personnel because at the time it was just for additional capacity.

It has since then been decided that that was for drivers and so they've been added.

So this was just

But I agree with you, it's confusing here.

I think I understand.

I don't know when they were first to advertise, but it wasn't a big deal.

I mean, it has been through Mustace.

Yeah.

So the positions were available July 1.

That was the earliest that they could have been advertised.

We've been, we constantly advertise.

So there was no stop to that process.

Part of what I've said, and James and I have been talking a little bit about, we need to try to figure out

where we are with our ability to attract drivers because the market might be speaking that we just don't have enough people who want to be a bus driver, especially when you think about we actually have four different operators in this area.

That's the same market, UTS, us, John and ACPS with their public schools.

So

There's a challenge in our ability to ramp up by just adding these positions.

I felt like based on what was happening in the current year.

I would be potentially adding more that might not get filled thereby contributing to a surplus again.

So this was really just a matter of let's see if more time will get these spots filled by the time we end this next fiscal year.

I'm certain that there will be a recommendation for more if things continue like they had been.

I just don't know at this moment what really is happening and not being able to fill every single seat.

Yeah, well, I'll tell you that.

That's already understood that if we were to get to a place where all driver's seats were filled,

We still need to look and see, is there a way for us to bridge?

That's what I call it when I ask Chrissy to help me spend money that we don't have.

We will bridge into the new year.

And in doing that, that would be giving Garland the authorization to start filling so we would over hire in that moment.

And then Chrissy would go to work to figure out where do we find the money to make sure we pay for those folks for the rest of that fiscal year.

And then there are automatic decisions that have been made for the new year.

Well, because we're always looking, I mean, we're still to Councillor Payne's point, because he's probably going to say this next.

So I'll say it first.

We're not back to our pre COVID level.

That's a priority of mine is to get us there.

But we really should have been back by now.

We really should be going past that at this point.

No, I think I understand, even though you didn't classify that money as drivers, you never had full capacity, so you were just continuously advertising.

But you're right.

My concern is just what investment do we need to make to just get back to pre-pandemic baseline?

And we're not even where we were in 2018.

Right.

So moving along our transfer to human services is going up about a half a million dollars.

Part of that is the anchor team that council approved in the 25 budget.

That is the part of that pathways and then also just local matches to the many grants that funnel in through that department.

Social Services, there was a position added there that is making up part of that $200,000 increase.

In addition, I forgot to mention, there were a couple of position reclassifications.

That was another department who took a look at some positions that were vacant and reclassed those to better utilize some in different areas.

The CSA fund, the local match is going down about $100,000.

The transfer to the parking fund, everybody's favorite thing.

That is $900,000 this year.

That is a change you might remember for many, many years.

The parking fund was transferring money back to the general fund.

It's going in reverse this time.

That is to help cover the $1.4 million increase for the Water Street parking garage lease.

The parking fund has absorbed 500,000 of that.

900,000 is coming from the general fund.

The hope is that, like the parking revenues that we weaned off of the general fund off of to the parking fund,

Hopefully we can wean the parking fund off the general fund for match for this lease as time goes on.

Fund balance target adjustment.

So this was a tool that we used, we had used for many years.

It was, you know, our fund balance policy is that we maintain 17%.

of the budget as our reserve.

And so as your budget grows, the amount of dollars it takes to make that 17% also grows.

We had basically been budgeting about a half a million dollars to make sure that we were meeting that target.

Essentially, we were budgeting a savings there.

As we've continued to have large surpluses, it's silly to be doing that.

So we have removed that out of that budget.

as our surpluses continue to come down.

If we start to feel like we're getting risky, that might be something that comes back.

So is that 17% one of those things required by the rating agencies?

So it is a city policy.

The fund malice policy is a city policy.

It is one that is scrutinized during our bond rating process.

You know, we have

Over the years, we have upped it up a little bit for a AAA bond rating.

City from our peer, 17% is a little low.

But we have not, it has not been a problem because we have not had to dip into that fund balance.

But it is, it is a, it is a policy that the rating agencies review and for compliance for sure.

And so then just in general, some of the other changes, we took a look at Parks and Rec.

As you know, they utilize a lot of temporary seasonal workers.

They have been budgeting many of those programs at 100% capacity.

One of the things one of the budgets that operational budgets that has been largely impacted by COVID and a slow recovery has been Parks and Rec.

So each year we have continued to look at the temporary salary budget and adjust accordingly.

So that was reduced about $217,000.

Information technology, the computer and infrastructure replacement, that account went down because we have a fund balance in that fund that we think is sufficient for next year.

So we did not fund that.

Vehicle repairs and maintenance are going up.

That's an increase.

Just generally contractual increases.

Most of those are, a lot of those are driven by annual increases that are related to the CPI and other things.

They're citywide cross departments going up about 325,000.

utilities are very similar.

The the rent for sort of outside spaces that we're paying is going up.

Council should need strategic initiatives fund.

This was recommendation of the city manager.

This will bump up your strategic fund up to half a million dollars.

I think I told you but ultimately you're contributing to the surplus that you're mad about us having so we're going to spend it going forward.

Ideally what the plan is is that by increasing this amount I made the decision to increase it based on what it has felt like in the past couple of years when we have requests that come in off cycle.

and instead of trying to define an off-cycle process which I really didn't want to do because I would really like to have as many of the folks who come to the city to request to come through our competitive rounds on the cycle that we have so that we can manage it to the best of our ability.

What this will now do is it will allow me to receive requests that are outside of those competitive cycles, bring them to you and allow you to actually take that moment to determine is this worthy of an allocation from that fund that is available as a flexible fund for that purpose.

And I have, I believe the number is seven.

The goal would be wherever I feel comfortable making a recommendation I will make that because in each of these instances I will have had a conversation myself or one of the deputies will have met

with these parties to find out what is going on.

We will steer them to the competitive process for going forward if there's a need to do so, but there are a couple of them that are not their emergency situations that other factors are at play.

Just a few other things.

We did look at the budgets that departments were budgeting for overtime.

There were some very small budgets that were being budgeted for bonus pay and other things that we removed.

We are increasing the tuition assistance program by about 15,000.

We're also launching a new employee engagement program.

Do you want to talk about it?

So prior to COVID, the city had a sort of peer recognition program where employees could nominate their coworkers or teams around the city for extraordinary work that they were doing.

and so this is just an effort to sort of bring a program like that back and so the city's innovation team along with the city manager's office has been working on sort of developing the framework of that and so there'll be nomination forms, quarterly recognition and the basis of the program is your admission and values so you can nominate someone in one of those categories, we'll try to recognize employees that sort of represent all of those and it's a good way to

And there will be a big celebratory moment that will be the crescendo for recognizing those special employees and the name of the program is Thrive.

Moving on down, we do have some designated expenditures within the general fund.

This was a term that goes back for several years and basically these are called designated because there are certain parts of revenue that we collect that are designated for these specific purposes.

So as I mentioned, the revenue sharing, there's a portion of that that we transfer to the capital projects fund.

Our transfer to capital projects overall is going up about $500,000 in 26.

The contracted services for building maintenance and pupil transportation, which are both contracts that the city schools pay the city for.

The pupil transportation budget is going down a little bit.

That is largely attributed to the fact that there was a position that was a city position that has been absorbed as a city school employee.

which accounts for that reduction.

The building maintenance contract, the biggest part of that increase is related to the labor trade or Teamsters contract negotiation that goes into effect July 1.

And then finally, the transfer to debt service for the meals tax portion that is actually going down in 26 and that is representative of our reduced projections for meals tax overall.

Quick question.

So transfer to Capital Improvement Program Fund.

It is.

and then the mall vendor fees.

That is for the cafe permits and that those fees we counsel designated to go into the mall infrastructure account and that had been budgeted at $78,000 for a while and we've actually been collecting closer to 100,000.

So that's the reason for that increase.

Any questions on any of that?

So one thing Sam is very happy to say, there are no tax fee increases included in this budget.

Real estate tax will remain at 98 cents for every hundred dollars, meals tax at 7%, personal properties at 440 for every hundred dollars of assessed value, and transient or lodging tax will remain at 9%.

few other highlights of what's in this budget.

As we've noted, all employees will receive a pay increase either through the terms of their collective bargaining contract or the class and comp system.

We are providing additional $4.9 million to the city schools.

We're adding $750,000 for ongoing funding for homeless intervention.

We're increasing the general fund transfer of debt service by a million four

our contribution to cats going up 606,000.

We're increasing our contribution to social services and human services by 804,000.

This budget also includes 189 million five year CIP plan that does include increases for the school priorities account as well as the lump sum account for schools.

It includes $7.8 million for new sidewalks and sidewalk repair.

A million dollars for safe routes to schools.

Includes $52.9 million for affordable housing projects.

That number includes the Carlton Mobile Home Park as well as the commitment for the Salvation Army.

Could you please go back to the slide that had the transfer to Capital Improvement Program fund that was two slides before?

So I'm sorry, I should know this is my fourth time doing this, but this is to sort of just top off for the next fiscal year, the needs for the CIP.

So we have a financial policy that says that the CIP will be funded by at least 3% of your general fund budget.

So that was 7. something million dollars.

We're actually contributing about 8.3 million dollars in total to the CFP.

It's just increasing by about 500,000 from 25.

Correct.

So stop there.

So that list, again, that is that's an attempt to remind you that's supposed to be you on that slide right there.

The goal is to make sure that it reflects what your priorities are.

and as you have expressed them, I didn't check Chrissy's list to make sure that I wasn't thinking there was something else to go on it.

So I trusted her to pull it together and I'm okay with the list.

So I just want to make sure that that's the way you look at that.

And the goal for us is over the next few weeks is to find out from you.

Is there something else?

Is there something in the way of the numbers needing to be adjusted to make you feel satisfied?

I guess is what I'll put that to you.

Yeah, you'll have a session on the CIP specifically.

So all the details will be there.

I believe you'll see more distinction about what else you can think of that you would have asked for.

I think that's the 20s.

The increased city's contribution to CAT.

That's really what that reflects.

I see.

It's not expanding capacity.

But it does also reflect an increase for disappearing our care's money.

I see.

Increases to see these contributions of social services and human services.

Those are our local match contributions for both of those funds.

So social services,

is basically grant matches as well as a new position.

I would say

and I know that there are operational considerations going on, but I think being able to have a commitment to funding actually building out a permanent year on homeless shelter is still a top priority for me.

And again, maybe that's coming in the surplus and not, you know, our general fund, but that still jumps out something to me that's really big.

Maybe we're just not in a position to do it with CAT, but I'm also really concerned that

in terms of council preparing to fund what's necessary to expand CAT.

It seems like we haven't grappled with how expensive and transformative that's going to be, certainly, even just to get to pre-pandemic service, much less the regional transit vision plan.

And so I feel like there's still a lot more work to do to actually make that a priority that we're funding in practice.

I just feel like we haven't gotten there yet.

I expected you to bring that up.

I'll say that, yes, I agree with you.

I agree with your observations on CAT.

There's still some work to do there, and I think that's what we know that our focus is on that and trying to figure out, as I said, what really is happening and are not having that moment of getting all the positions filled at one time.

We really just haven't had that in a while.

So there's some things to figure out and we're going to keep working on that.

And just to better manage the moment of yes we're going to lose a driver or two and it shouldn't set us back and there's something off there and I think that's what we're going to look at.

Yeah, I mean, the number for affordable housing could be exponentially more based on our need.

We all know that.

As I said, we're second most expensive real estate market outside of DC.

That means that number technically could probably be four or five times that and still not solve our problem.

And then the last part of the ability to have that

Flexible Acquisition.

If we aren't forced to use all of the surplus, we should have a sufficient amount.

That was always the intention that I had once I was told what the number was going to be.

There would be a good number left that we should just be able to allow ourselves to sit on and make it available whenever something came available.

I do worry about that now.

Absolutely, I'm concerned about that and I'm paying attention to all that happens and the flow is daily at this point.

Every day I hear something else that gives me a little lump.

It makes me a bit nervous and the question is what's going to land and how does it actually land for what it is we're going to have to do.

We're hearing from organizations

The Desire

So we're going to need to be able to consider what we can do, what we will do while at the same time I have a team of staff who some are worried about their jobs because if money starts to dry up from the feds in the state that doesn't come in to us to support those various initiatives.

It's only our local dollars that can do it.

So there's there's real heartburn there.

It's a real concern for what it could feel like.

And it just looks like it's going to be real.

Very much so.

That's absolutely what I would imagine our competitive round to feel like on everything that we do, that they will have realized impacts and they'll line up and we'll probably have double what we've been seeing as the, but we always had an increase over what we have available.

It'll probably be twice as much or more in some cases.

and then again our own issues like I can't separate the fact that this is not excluding this organization.

The year in surplus so we have heard lots of requests lots of exciting sort of fun interesting new things new ways to spend there are some potential housekeeping items that we do need to consider that

We will be talking to the city manager about, for example, if you recall last year with three collective bargaining contracts, there is an impact on the pension liability with the contracts.

The impact of the team source contract is about a million one.

We're also looking to reserve the health care fund to replenish that reserve.

Ideally at three and a half million.

and then there's also an opportunity which we'll talk about when we get to the CIP work session.

Our debt service costs are are rising quickly.

They're outpacing what reserves we have in the debt service fund, which will be putting more and more pressure on the general fund on an annual basis.

So this is an opportunity to use some one time money to help buy some of that down.

So those things are not

So what she's saying is that's how much she might want to spend first.

So that's part of the conversation.

So what I've asked Chrissy to do is to build out that list of what are the things that we would normally revisit when we have a surplus, because we've been able to condition ourselves to do that now.

for a good number of years at this point.

And as she mentioned, we were able to absorb the impact of three collective bargaining contracts coming on last year because we had a sizable surplus.

We were able to go ahead and prepay that and absorb the new cost.

So the goal is to try to do that again because it just saves us that pressure.

but these are things that we need to do first and then we start working the list of other things and I already have what is the beginning of a list and everybody who works with this organization has something to put on the list if I let them so that 22 could disappear very quickly and we still have other desires that we know that you would like us to prioritize so

I can say to everybody, it's not enough to do all those things.

That's very easy for me to say.

And because, again, of the uncertainty, it definitely won't be enough.

With the health care fund reserve replenishment, is that something we would nearly do every year?

We is not something we do every year.

It is our health care fund has had very healthy reserves.

Largely, again, it's COVID impact, we think.

People aren't going to the doctor.

Our health care costs were our claims costs were low.

until now they're not.

And now we're seeing extraordinary claims costs on a regular basis that continue to trend up.

We're not an outlier in that everybody's seen that.

And so there's only two ways that that fund gets funded is either to increase health insurance premiums for employees or for the city to pay more.

And so much like the debt service fund where we have the fund balance, we try to find that balance, but that reserve is dwindling.

Yeah, so there are some industry standards.

And the health care fund had, similar to the pension plan, it was an actuary to help.

There's a consultant that helps us determine what those should be.

And they typically recommend that they're about 30% of your annual claims cost.

And so as as Chrissy mentioned, during during COVID, people were deferring elective surgeries and that sort of thing.

And so we had a fund balance close to 50% of our annual claims, which was too high.

We didn't need that much money in there.

But very quickly, that began turning around, you have a couple bad years of claims experience that you have to pay out, a few extraordinary claims, and we've fallen below that 30% threshold that we'd like to be at.

It's around that.

I can look and certainly let you know.

But we've gotten like a little below.

In the 20s probably.

So just a few reminders.

Tonight was our first of four work sessions.

Next week, we'll be talking about nonprofit agencies.

The 27th is the CIP, April 10th is sort of a wrap up.

We have a couple of public hearings coming up.

March 17th, we will have a public hearing on the tax rate, although there's no increase there.

April 7th will be a, it's a sort of a second public hearing on both the tax rates and the budget.

The formal public hearing on the budget we do as part of our community budget form on March 20th.

And then finally, just under the wire, you all will be adopting

the final budget on April 14th.

And that's a special meeting.

Can I ask a question, Sue?

Yes.

Yep, they're all at 6 o'clock.

And this schedule is on the budget webpage as well for anybody who needs that schedule.

So that's it.

Is that a regular council meeting?

Yeah, it's a special meeting.

What time is it?

City hall.

and just a reminder, if you go to this city's budget webpage, you click the cover that'll take you to our online budget book, which will provide you with all of the details of the budget.

There's a summary here.

The CIP is all in one department and fund budgets can be found here.

There's also under the more there's an index, which will take you

is our table of contents, which you can directly click to go to any of those pages.

But you'll be able to find any of the information related to the budget.

And we're happy to answer any questions.

I know it's not new, but

I feel like it always should be highlighted what an incredible transparency tool that is.

Thank you.

My colleagues, Brian and Lauren, spend a lot of time.

Brian designed the budget explorer tool.

Lauren did the work on the budget book.

We all did as part of a team, but most of the lift was done by Lauren.

but the budget explorer to that end.

This is where you will find quarterly reports as well as CIP summaries.

So we've been asking questions as we've been going through the presentation, but any other comments?

Yeah, again, I said this Tuesday.

I think this is a great budget.

I appreciate all the thought.

I've went into it like always every time.

I'm very sensitive to the point about the risk that we're trying to mitigate right now.

It's real and I think we're in a good place to mitigate that risk compared to a lot of people

We have a lot to be grateful for, but we also just have to be thoughtful and wise.

So, anyway, again, thanks for all the great work.

Yeah, I mean, I can think of several ways to spend the surplus, but also acknowledge that we are in unprecedented times again.

So there's like little things in here that obviously we're going to work on in more detail as we go.

So I'll save comments for that.

So you'll see hops next week.

CAF will be a council agenda item.

So that's separate action because those are different fiscal year funds that you'll be addressing.

But we're going to.

I'm sorry.

CAF on the 17th.

Oh, 17th of the council meeting.

So CAF will come on the 17th as an action item.

OK.

But yeah, I mean, I think as others have said, I think a lot of, you know, priorities were kind of front loaded in terms of, you know, engagement beforehand and are included in the budget, which is very good.

There are still some additional investments I would like to see as I outlined in terms of funding for the homeless shelter, in addition to flexibility in terms of affordable housing acquisition.

And on top of that, if Albemarle County funds that position for eviction prevention, making sure that we have flexibility to fund our half of it as well, which I think would be very important.

Lloyd?

I'm not quite sure how seriously or how committedly about the notion of having somebody within the city government whose job it is to be sort of the overseer or protector of them all.

There's no one in this budget like that, but that was on the list for surplus.

That was what my intention was was to be able to bring forward more of the interventions that you all remember that I made to you back in October.

as we were working through the budget and hearing all the feedback from the different departments for what was slowly evaporating in the space that we had.

I shouldn't say slowly, quickly evaporating for what we had.

I knew we had the surplus, so I started to determine what could go towards that.

So to Councilor Payne's point, I have interpreted the surplus as the opportunity to get the things done that aren't in the budget.

But with the uncertainty that's out of our hands, the question is, do we get all of it or not?

Or to what degree do we get it?

But I do have the mall manager was still on the list, the homeless outreach team to actually have that ambassador presence on the mall.

The chief and I have worked on a strategy for resources also to be allocated to the mall.

There's a chance that maybe Parks and Rec could be supported in a way to do something else in support of more activity on the Mall.

So I think we can do it.

Again, it's going to just come down to how much of a hit do we take with the things that are being forced through the various changes that are going to be coming out of DC.

But it's on the list.

I mean, the list will be

All the things that we've talked about, anything that's not in the budget is on that list today.

Sorry, this might have been said.

Yeah, we'll get there.

I mean, I don't want to get you excited about it.

I'm trying to be disciplined as I try to get you to be disciplined.

But honestly, in all honesty, what I did was I said to Chrissy, as soon as we finished the budget, as soon as she got a little sleep,

I said, I want you to now shift to what are the things that we normally do when we have a surplus, especially a surplus of size that we would do to try to shore up the organization.

So that's what she's working on.

And the request was, I think I said next week,

I think that's what I said next week.

And we'll take a look at what that is.

And I will I am right now building my own list.

I haven't asked them yet.

They're waiting.

So and they've already been making their own list to give me other things to go on it.

And then we're going to sit down and start to work through it.

So I just had a couple of comments I concur with my colleagues.

So if you can give me an idea of when you started this process, I guess back in September, October, the whole budget process.

And how did the conversation, how does the process go when you go to different departments?

It is so much fun, right?

It is so much fun.

Sometimes tell me it's not fun.

We've done it differently every year.

This year in particular, we provided an agenda to the departments.

We start scheduling departmental meetings with the budget team, which includes the city manager, the deputy city manager, budget team.

The departments, that's their time to shine.

We gave them some things that we wanted them to cover.

The first thing they do as part of the budget process is they submitted all their new request.

And along with their proposal for what we call discretionary, excuse me, discretionary part of the budget.

So we kind of split that up non discretionary being personnel.

and Fixed Costs, which come directly from the budget office.

The discretionary pieces are the things that they have, the departments have control over.

They bring all that to the budget team.

They go through that, they discuss their priorities, their wish lists, and then we deliberate once we come to sort of

come to truth moment where we look at, you know, we continue, excuse me, the budget team continues to work on the revenues.

And then we know what the expenses are.

And then we figure out how much we have to pay her back from there.

And so so that first wave is it like

We always send that message.

It's always going to be.

We're always going to say that.

It's a tight year.

Don't send everything.

But what we've tried to do and it's my desire to get to more consistency so it doesn't have to change every year.

I want them to predict what the process is going to be like so they can just get ready and submit.

But ideally, if we know based on revenue projections that things are going to be less than the message that would be released would say something to the effect of really prioritize, send a few things forward that you really, really feel like you want to be able to defend needing, but don't send the laundry list.

I'm not a fan of a laundry list, mainly because we can't do it and we know we can't do it.

So there's no reason for folks to be allowed to create this hope and dream of getting all these things that just can't happen.

If we just said send me everything, I'd be asking you for a tax increase every year.

I'm not going to drive myself to that crazy moment of doing that every year.

I'm going to let you drive me to the crazy moment instead.

But I will say that the desire is for it to be a collaborative process.

So all of the department heads have a resource and a deputy or myself, depending on how they report of, that they can work with to put their budgets together.

So that should help.

The process on the budget team side, because that's one of the people that's in that room, possibly fighting for them or saying, I'm going to let that one go because I agree that that's more important for the global organization.

So all of that does happen.

But when it gets tight, they get messages, meaning the deputies get messages, go back to your people, start telling them that's not going to happen, that's not going to happen, that's not going to happen.

I would say that.

That is my answer right now.

One, because it was Kevin's presentation as a part of the financial update, I had missed that there is consideration of changing the municipal tax bond.

If that happens, tax exemption goes away.

For everything.

Everything that's in there.

I mean, for every locality.

But that's everybody.

So we all will suffer in that regard.

And that just means for new borrowing.

Yes.

But that means that the dollar that we have accounted for there won't go that far.

It's just not going to happen that way.

It's going to be more expensive for us to be able to do that.

That would force us to revisit our CIP for sure.

Oh, hopefully quickly, Mayor Wade's questions made me think.

So this is seemingly an easy question.

And this is one of our as our continuous process relook.

And it's both a

Kahn and a pro of being online we the everybody went in and submitted their request we can tell you there was roughly about six million dollars of new requests that were called new requests there were also things that were put in their proposals on in the electronic format that were increases and then through our review we just go in and we start changing and we didn't track that piece and

But there were at least about $6 million of new requests, including personnel.

There were some CIP requests in there.

There were some things that were given an opportunity for art consideration.

So there was a lot.

So interesting you asked about this.

Within the departments

the departments themselves, there aren't any reserves.

We have most of our reserves.

We've tapped out to be quite honest with you.

Beyond the sort of financial responsibility, you know, best practice like the health care fund, the debt service fund.

We are not we really don't have reserves.

In the general fund, we have a citywide reserve account.

You'll find that in the budget.

It's about, I think, $700,000.

That's a combination of money that gets paid in performance agreements that get paid to CEDA for different projects.

There's about a half a million dollars there that is discretion for things that come up as an emergency or off-cycle things.

You know, there's the Council Strategic Initiatives account, which I would say is a reserve for Council for one time off cycle kind of things.

The CIP contingency is a reserve.

That is all cash.

Beyond that.

And I know this one has been reallocated, but just using it as an example, is that an inclusive of accounts like the Strategic Investment Area Fund where it was built up over years for a policy priority and maybe that priority change?

It does act like a reserve, but that is really a CIP account that has a balance, so you would see that in the Budget Explorer.

And I would say, even just using that example, so we have just recently hired a long-range planner, and in the reimagining of that fund, it's now a small area plan implementation fund that includes the strategic investment area.

So just by having that staff person in place, we're now about to start spending that money.

Yeah, I would say too that part of the responsible, the work that we have to do to be responsible for just the management of taxpayer funds, part of what the department's experience this time was me being a little nosier.

going into their general fund budgets and asking more questions and making changes.

We did make changes to budgets as proposed.

And I think we know that there's a little bit more that we can probably do in the CIP itself, but it's not going to generate a lot of money.

There'll be some things that can be short up and we're working on processes and procedures and making sure that we follow some consistency in that.

But that's just all making sure that we're just following to the letter of the law that is issued in how to do it.

But yeah, to Chrissy's point, I think we've found the nuggets.

I used to call her money bags.

And I'll just end by saying I think we've absolutely been moving in the right direction, but just looking

several years, the amount of vacancies, the amount of department requests that are unfunded.

I don't know the right way to do it, but I wonder if, like at an internal process way, something could change in terms of how departments go through their own budget each year before it's kipped up to you, because that

It is what we did this year.

We did that.

We literally did a number of things like that.

And some of the things that were added to the budget were added because we took money in these other areas, combined it and made that possible.

Other questions or comments?

I think, yeah, I think this is a public hearing too.

It's not.

Okay.

Any other?

I don't see any public hearing.

Yeah.

In, oh, yeah.

In the other comments or if not, may I get a motion to adjourn?

Thank you.

All those in favor say yes.