Charlottesville City Council officially adopted a $265.2 million budget for the next fiscal year at a special meeting Tuesday.
The 2026 budget includes a $13.3 million increase in projected revenues over the previous year. Council decided against raising certain tax rates. Instead, hikes in real estate taxes as well as contributions from neighboring Albemarle County will account for the majority of this year’s budget increase.
Council voted unanimously to pass the budget with all five members present during a meeting lasting roughly 30 minutes.
City Manager Sam Sanders’ original spending plan was slightly less than the $265.2 million budget he presented to Council in early March. The budget passed Tuesday was amended to include $774,263 in increased revenue projections, including $700,000 from business and professional licenses after final assessments on dues started to roll in.
The budget includes no increase to taxes on lodging, meals and personal property, meaning Charlottesville residents will be paying the same rates they have since the start of the current fiscal year until at least June 30 of next year.
An increase in the assessed value of residential and commercial properties earlier this year will more than compensate for it.
The city expects to bring in roughly $117 million in revenue from real estate taxes in the next fiscal year, which is $8.6 million more than the previous year. The Charlottesville Assessor’s Office reported an 8.81% increase in residential property values and 6.14% in commercial this year. Residential property values, alone, in the city have increased nearly 42% in the past five years.
Although there is no increase to the personal property tax — the tax levied on vehicles owned by individuals and businesses — the city still expects a 12% increase in revenues for the next fiscal year.
The city took note of declining revenue trends when it comes to meals, lodging and sales taxes, which it estimates will generate $1.8 million less in revenues in the coming year. A summary of the budget says that revenue collections for lodging — which is a tax paid by consumers when booking a room in hotels or other short-term rentals — “underperformed” in the current fiscal year, despite of a rate increase of 1%. The budget summary says that, excluding the COVID-19 pandemic, “the city has not experienced underperformance since 2008 for sales tax revenue and 2009 for lodging tax revenue.”
Most of the city’s expenditures for the upcoming fiscal year will be allocated to compensation to city employees — which includes salaries and benefits — as well as Charlottesville City Schools, transportation and affordable housing.
In the coming fiscal year, the city will invest $12.7 million toward affordable housing projects — top of mind for many in the second-most expensive real estate market in all of Virginia. This includes $1.5 million to the Charlottesville Affordable Housing Fund and $1.1 million to provide homeownership assistance to qualified city residents.
The budget also includes a $1 million for Charlottesville’s Salvation Army that will be spread over four fiscal years starting in 2027. The four $250,000 payments will help convert the religious nonprofit organization’s thrift store at 604 Cherry Ave. into a permanent low- to mid-barrier overnight shelter.
Homelessness has been on the rise in Charlottesville, as it has been across the country. Between 2018 and 2023, the number of people in Charlottesville who fell into homelessness grew by 25%, according to the Blue Ridge Area Coalition for the Homeless. The coalition’s executive director, Shayla Washington, recently reported 234 people in the immediate Charlottesville area have registered themselves as “homeless” with her organization.
The Haven day shelter downtown does not offer overnight accommodations; the People and Congregations Engaged in Ministry, or PACEM, nonprofit group only offers beds during the colder months of the year; and the Salvation Army’s 58-bed high-barrier shelter on Ridge Street regularly has to turn people away.
For years, the public has pushed back on the construction of a low-barrier homeless shelter. But in the past few years, the tide has turned — especially after a homeless encampment was erected at Market Street Park in late 2023.
When Sanders presented the idea of helping the Salvation Army fund a new shelter to Council late last year, he said a solution to homelessness in Charlottesville is well within reach.
“This is doable,” Sanders said. “I want us to stop getting in our own way and to start solving our problems that have been staring in our face.”
In total, the city is allocating $53 million to various affordable housing projects over the next five years.
Other notable items in the budget passed Tuesday include a $5 million increase in funding for Charlottesville City Schools, for a total of $79 million; $5.4 million in new sidewalk construction to accommodate an increase in volume in bicycle and pedestrian traffic in the city; and a $2.4 million increase in projected revenue contributed by Albemarle County, part of a revenue-sharing agreement that prohibits the city from annexing of the county’s land.
The city has also added 11 new positions at a cost of roughly $1.1 million, including a new assistant director of communications and a Freedom of Information Act and public records officer to help manage the volume of requests that are received at the Charlottesville Police Department. The new positions were offset by six vacancies, which accounted for roughly $650,000 of the $1.1 million sum.
The city continues to operate with a hefty — and so far, untouched — coffer of $22.4 million in surplus money left over from the 2024 fiscal year.
Sanders on Tuesday said he continues to track the ongoing uncertainty in financial support provided by the federal government in light of a tumultuous first three months in President Donald Trump’s second term in office. The White House has terminated hundreds of millions of dollars in grants and other financial assistance to institutions that the administration claims do not comply with its directives, including recently cutting $2.2 billion in federal funding to Harvard University.
Sanders noted that a number of nonprofit organizations in Charlottesville have suffered losses as a result of rescinded federal grants. For now, the city of Charlottesville has avoided a direct fiscal hit, but that is certain to change, he said.
“It’s not a matter of if; it is actually a matter of when,” Sanders said.
Sanders told councilors Tuesday that within the next two regular meetings, he will present a preliminary plan on how to use the city’s surplus money. Council will consider the plan and will have the final say.
“The goal would be that we will continue to take our time to see the impacts of what’s happening in D.C. Because there is a lot that’s unknown,” he said. “But before we get too far down the road, we need to really make sure that we give it enough time to be ready to respond to what may come.”
Source: www.dailyprogress.com