When Charlottesville’s city manager unveils his recommended budget for next fiscal year, it will be based on a 1 percentage point increase in the meals tax in order to close a budget deficit.
“I would agree to one percent on the meals tax because it will bring in $2.1 million,” said Mayor Satyendra Huja.
That was one of several decisions made at a City Council budget work session this week.
“There are a number of important issues that we need to get an understanding of where council is as we’re putting together the budget,” said City Manager Maurice Jones.
Before Jones formally presents the budget to the council in March, city budget staff need to know where elected officials stand on several issues, including the School Board’s request for additional funding and whether the city would invest in eight additional police officers.
“By state code we must advertise the real estate tax rate 30 days before the public hearing on the tax rate, which is on March 16,” said Leslie Beauregard, the city’s budget director.
That means the advertised tax rate has to be set by Feb. 10, the deadline to get notice of it in the newspaper. The council cannot raise the tax rate any higher than what is advertised without starting the whole process over again.
The real estate tax rate has been set at $0.95 per $100 of assessed real estate property value since 2008, and councilors opted to keep that the default rate during budget negotiations. With rising assessments, they acknowledged that doing so would be an effective tax increase.
None of these numbers is official until the council adopts a budget on April 15 following two public hearings and several budget work sessions.
The council began Thursday’s meeting with a funding gap of about $2 million but closed it to $420,000 after a series of decisions including the plan to increase the meals tax.
“If the charge back to the staff is to find [additional cuts], we can do that,” Jones said. “But there are going to be services that will be curtailed.”
Councilor Kristin Szakos said she would be open to advertising a higher real estate tax rate, but Huja said he was completely opposed. He said he could support the meals tax because it would not affect everyone on an equal basis.
The meals tax is currently 4 percent of the bill at restaurants within city limits.
Szakos said she would only support increasing the meals tax to 5 percent if a portion of the increase went to a marketing campaign to explain what the additional proceeds would pay for.
While councilors agreed to provide the city school system and additional $909,198 — about half of a requested $1.8 million in additional funding — they declined to spend $116,774 for the city parks and recreation department to switch to organic pesticides.
The council did agree to spend $99,000 to cover two months of tree maintenance along the John W. Warner Parkway. One of the city’s conditions for accepting the parkway was extensive landscaping, but a warranty that planted trees expires at the end of April 2016. That means the city will need to pick up the difference for the last two months of next fiscal year.
The council opted not to fund the police department’s request to hire an additional eight officers next fiscal year at a cost of $481,000. Additional officers already hired this year will be maintained.
The deficit also was reduced by cutting spending on infrastructure and planning.
Huja expressed concern that the capital improvement program budget for the next five years has increased by $19 million.
Beauregard said that that reflects the council’s desire to keep Albemarle County courts downtown, which means spending $6.5 million over that time to co-locate the city and county general district courts.
The other big driver in the capital spending increase is the implementation of the West Main Streetscape. The draft recommendation handed to councilors on Thursday depicted $10.75 million in spending over five years with $750,000 of that in the first year.
Councilor Bob Fenwick suggested reducing West Main spending to $50,000 for next year. Huja countered that he would like to reduce funding by $250,000 to $500,000 in the first year. After further discussion, the council said the West Main project should be reduced to $4.5 million over five years.
Huja suggested that West Main property owners should pay a portion of those projects’ cost through a special tax district similar to what was done to finance improvements in the Corner District and on some Downtown Mall side streets.
“We should see if we can get someone else to share the expense,” Huja said.
Huja also recommending cutting the amount set aside for small-area plans. The draft capital budget had set aside $200,000, but Huja said that work could be done in-house.
Councilor Kathy Galvin, however, said that bringing the work in-house would put a large burden on a Neighborhood Development Services department that does not currently have a director.
“We don’t have the staff,” Galvin said. “Taking that down to zero is going to put staff in a terrible position.”
The council also agreed to reduce funding for new sidewalks from $285,000 to $200,000.
“In a year when we can’t even be sure that we can fund public safety and education … this might be a year we want to pull back from that,” Szakos said. “I would rather do that than cut teacher [positions].”