Balancing the Budget
This budget continues to provide substantial investment in the services that our residents, businesses, and visitors have come to expect from the City of Charlottesville. It makes some reasonable choices all while we continue to look at efficiencies and making every effort to preserve and improve the services provided by our departments.
General Fund Revenues
- Real Estate Tax revenue is budgeted to generate $9.9 million in new revenue over FY 23, for a total of $99.4 million. The general reassessment resulted in residential assessments increasing by 11.94% and commercial assessments increasing by 12.89%. City Council approved a $0.01 real estate tax rate increase with the FY 23 budget which raised the City’s real estate tax rate from $0.95 per $100 of assessed value to the current rate of $0.96 per $100 of assessed value. There are no tax increases proposed for FY 24.
- Sales and Use Tax is projected to increase by $500,000 or 3.6% from FY 23. The last few years saw larger growth trends year over year as revenues continued to surpass pre-pandemic levels. Although the increase for FY 24 is lower than in previous years, trends continue to indicate a strong performance as we reset to a more normal annual growth rate.
- Personal Property Tax revenue is budgeted to increase by $600,000 or 5.0%. Due to COVID and recent supply chain issues, market values, particularly for used motor vehicles, were unusually high in FY 23. industry experts believe these valuation increases will gradually return to lower or more normal values over the next few years. For FY 24, the City’s personal property will remain at $4.20 per $100 of assessed value. The increased values decrease the percentage of the Personal Property Tax Relief (PPTRA) that can be provided.
- Business Licenses Tax revenue is currently projected at $8.9 million which represents a $200,000 or 2.30% increase over FY 23. Indicators continue to project strong gross receipts for local businesses in FY 24, although, some caution is being exercised as the impacts of rising inflation is currently unknown locally.
- Transient Occupancy (Lodging) Tax is budgeted to increase $1,300,000 or 18.57% over FY 23. A recent law change which now allows collection and remittance of the tax by accommodations intermediaries on behalf of their hosts is also contributing to the anticipated increase.
- Meals Tax revenue collections have continued to show improvement throughout FY 22 and FY 23. Last year, City Council increased the tax rate 0.5% moving the rate from 6.0% to 6.5%. The FY 24 projection for this revenue is $18.4 million, an increase of approximately $1.8 million from the FY 2023 projections.
General Fund Expenditure Highlights
Strategic Plan Priority Areas
- This budget includes $8.4M in FY 24, and over $34M in the five-year capital program for several affordable housing initiatives, including redevelopment of public housing sites, supplemental rental assistance and MACAA and Park Street apartment projects.
- $1,360,000 in funding is budgeted to provide homeowner assistance grants to qualifying City residents who own property in the City. For FY 24, eligibility requirement for the household income threshold is $60,000 or less and the maximum assessed value for the Charlottesville Homeowner Assistance Program (CHAP) program will increase to $459,073.
- In addition, the Rent Relief for Elderly and Disabled programs will receive $1,265,000 in funding for FY 24.
- Funding for a new Homelessness Coordinator position is provided. This position will help track and advance efforts to address homelessness.
Race and Equity
- $155,000 is included and continues to fund a grant match for the Food Equity program.
- Provides additional funding to add a new position to the Office of Equity and Inclusion. The new REDI Coordinator will help advance citywide REDI initiatives.
Workforce Development and Economic Development
- The FY 24 Budget continues to invest in the various programs that support both priorities, including the Downtown Job Center, Growing Opportunities (GO) workforce development programs, the Home to Hope program, job fairs and community events, and work done by staff to promote Charlottesville as a premier location for business, collaborate with entrepreneurs and existing businesses who are seeking to grow here.
Safety & Security
- Civilian Police Oversight Board (PCOB) remains fully funded and adds one additional Management Analyst FTE.
- $335,997 was added to fund the City’s first Office of Emergency Management and a new FTE for the Emergency Manager Coordinator. The Physical Security Specialist position will also be transferred from the Police Department to this new office.
Other Budget Areas
Compensation and Benefits
- The living wage for FY 24 will remain at $15.00 an hour and a 6% cost of living increase (COLA) is included for active employees.
- There are no changes to the employee healthcare plans or premiums and the gym subsidy program fully funded in FY 24.
- The required annual contribution to the City’s Pension fund is fully funded and 3% COLA for Retirees is provided. The retirement costs for both the defined benefit and the defined contribution plans total $19,167,056.
- This budget continues a commitment to the City Schools by fully funding the requested local contribution amount of $67,092,134. In FY 22 and FY 23, the School Board used one-time Federal CARES funds to balance their budget. However, the City’s contribution for FY 24 is increasing by $4.2M and will fully eliminate the gap and reliance on one-time funds.
- Through the City’s Capital Improvement Program (CIP), $90.3 million is funded for school capital improvements in FY 24 which fully funds the Buford School reconfiguration project. $111.1 million is planned for school projects over the next 5 years.
General Fund Transfers to Debt Service and Capital Improvement Program (CIP)
The General Fund contribution to the Debt Service Fund is $13.4 million to support the five-year CIP and to keep the City within its debt limit policies. This represents a $325,982 increase over the FY 23 budget. A portion of the increase ($162,298) is the result of meals tax revenue growth being projected for FY 24 and the City’s financial policy that designates the equivalent of $0.01 of the meals tax revenue to the debt service fund.
Outside and Nonprofit Agencies
For FY 23, the Vibrant Community Fund process adopted 4 broad funding priority areas: Education and Youth, Health, Jobs and Wages, and Community Safety as well as an Arts and Culture category. This year also continued funding opportunities for startup and developing organizations. Additionally, in keeping with the new procedures for implementation of the recently adopted affordable housing plan, applications relating to funding requests for affordable housing initiatives were directly to apply through the CAHF process instead. For FY24, $575,000 of the VCF funding pool was re-allocated to the Charlottesville Affordable Housing Fund (CAHF) in the CIP to help fund this change. For FY 24, $2,342,653 is allocated in the budget for VCF awards. This represents a $417,653 increase over the funding amount allocated through the Vibrant Community Fund process for all non-affordable housing related programs in FY 23.
The Pathways Fund provides emergency financial assistance and prior to FY 24 was part of VCF funding. However, since FY 21, one-time federal funds were allocated to this program to help address increased needs because of the pandemic. In FY 21 and FY 22 the Pathways Fund distributed approximately $1.5M each year and it is anticipated that the funds needed in FY 23 will be of a similar amount. While funding the program at the same levels is unsustainable without the additional federal funds, this budget attempts to continue address these needs by allocating $500,000 in local funds to support this program. Although the funding amount of $1,000,000 represents a funding decrease for the Pathways Fund levels of the last two years, this amount represents a significant increase ($915,484) in the General Fund Budget.