At a budget work session Thursday evening, Charlottesville City Manager Gary O’Connell said he was certain his funding request would not include a real estate tax rate increase. O’Connell also told City Council he was not yet prepared to make a recommendation on whether city employees should receive salary increases.
The current Charlottesville tax rate is 95 cents per $100 of assessed property value. Even with the rate held steady, the city’s revenue from real estate taxes is projected to fall as property values are forecast to decline over the next two years.
In an interview after the work session O’Connell said funding the retirement system would be his top priority for city employees and that his staff had not yet discussed compensation.
“I suspect our employees are not expecting an increase,” O’Connell told City Council. “The emphasis will be on maintaining a sound retirement system.”
City budget director Leslie Beauregard said this was the first time city council has held a budget work session in advance of the city manager presenting his budget. O’Connell said the meeting was scheduled at the request of the mayor so council could take some time to review financial forecasts and council funding priorities.
“We are still in the very preliminary stages of planning the 2011 budget,” said Beauregard. She described the challenges facing the city as unprecedented. “It is kind of scary looking down the road.”
Councilors learned that the projected gap between revenues and expenditures for fiscal year 2011 has increased to $2.81 million. Staff said that they will be working over the next two months to eliminate the deficit in their budget proposal.
Staff also showed projections of how the deficit would hypothetically grow to $9.86 million over the next five years if no adjustments were made. The budget that city council will approve in April will ultimately have to be balanced. City Manager Gary O’Connell is scheduled to present his financial plan to council and the public on February 11th.
Beauregard said in an interview that there were no plans yet to increase the salaries of city employees in the next budget. “We are already in the hole almost $3 million without [cost of living] increases,” explained Beauregard.
In the current budget, the city has a $2.8 million economic downturn fund. Beauregard said a similar fund would be in next year’s budget. In the first five months of this fiscal year, the city has already utilized $2 million from the fund.
The city is going to have increased pressure from unmet social service needs,” said councilor David Brown in an interview. “I think we are going to face a lot of pressures in the next couple of years and at the same time have less and less money. I think it is going to be a really hard time, so the more things we can avoid committing to the better.”
City leaders also discussed a balance of $1 million remaining in surplus from FY2009. Council decided to set aside $500,000 for a down payment on land know as Davis Field near Northeast Park in the Locust Grove neighborhood.
Brown said this was a unique opportunity he felt he had to support. Staff told council the property was assessed at $802,000. If purchased by the city, the land would be used for park and playing field purposes.
The remaining $500,000 in surplus was set aside for consideration later in the budget process when additional information is expected to be available about state and local revenues.
Councilor-elect Kristin Szakos participated fully in the work session raising a number of questions of staff about their presentations. Szakos takes office January 1st replacing councilor Julian Taliaferro.
Szakos said in an interview that even with the financial challenges, she thought the lengthy budget process would lead to a positive outcome for the city.
“You have to set your priorities and really concentrate on that,” said Szakos. “It’s painful, but that’s how you get a budget that reflects your priorities.”