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Charlottesville passes $607M budget with tax hikes and little public pushback

The Charlottesville City Council officially adopted its $607 million budget at a poorly attended meeting Monday night. No members of the public weighed in on the matter during public comment.

As usual, the focus of Council and city staff was the general fund: a repository of all the city’s tax revenue that serves as the city’s annual operating budget.

In a 4-0 vote, Council adopted the budget, with $253 million allocated to the general fund. Mayor Juandiego Wade was absent due to a death in his family.

It marks another year where the city has raised taxes.

Councilors chose to raise four taxes in total: the meals tax by 0.5%, the lodging tax by 1%, the personal property tax by $0.20 per $100 of assessed value and the real estate tax by $0.02 per $100 of assessed value.

The increases will raise millions of dollars for the city, some of which will be used to increase salaries for City Hall employees. Retaining current employees and attracting new talent has been a priority for City Manager Sam Sanders and for Council, as the city continues to rebuild a team that was woefully understaffed just a few years ago.

But with another consecutive year of tax hikes — contributing to a budget that’s increased by $73 million since 2019 — councilors have expressed concern that it’s an unsustainable pattern. They don’t want to put additional strain on taxpayers in coming years, and they want to see results from the investments the tax increases have afforded them.

“We are asking a lot of our residents. Now is the time when we have to ask a lot of our staff to do right by that revenue production,” councilor Natalie Oschrin told The Daily Progress.

Councilor Michael Payne agreed.

“It’s not like this is the first year there were tax increases,” he told The Daily Progress. “The meals tax has been increased multiple times in just a four- or five-year span. The real estate tax has gone up on top of assessments on their own.”

A couple hours before their vote, councilors met with the city transit planner about sidewalk construction, bike lane projects and transit improvements scheduled in the coming years.

“Those are visible, literally concrete examples of the city at work, but a lot of the budget is going towards less obvious outcomes. So I think the city needs to do a good job of explaining what those are, telling people about them and making sure people feel those less tangible improvements as well,” Oschrin said.

The tax increases are slightly different than those originally proposed by Sanders.

As law requires, a budget process starts with city staff creating a proposal to present to Council, which can then be amended as councilors receive feedback and manage priorities.

Sanders presented his proposal on March 5. It recommended raising the meals tax by 1% and not touching the personal property tax, which is largely a tax on vehicle ownership.

But Oschrin spearheaded a move to raise the meals tax by 0.5% instead of 1% and raise the personal property tax to make up the remainder.

Raising the meals tax — a levy residents will see on their bills when they dine out at restaurants — by 1% nets the city $3 million in annual revenue. Slashing it by half a percentage gave Council a $1.5 million gap to fill. So it raised the personal property tax by $0.20 to recoup those funds.

The city received an unexpected windfall between Sanders budget proposal rollout in March and last week: A review of the financials found that several sources of revenue netted more money than city staff had anticipated, and the city was also spending less than expected.

The updated figures brought Council an unexpected $1.5 million to work with.

Some was used to balance the budget, and Council chose to use the remaining $600,000 to hire eight bus drivers at salaries of roughly $75,000.

The fiscal maneuvering was one of the ways in which Oschrin is seeking to deliver on her campaign promise to make the city less car-centric by investing in sidewalks, bike lanes and public transit. The platform proved popular with voters last year, netting Oschrin the most votes of any candidate in the race.

Raising the personal property tax may dissuade people from investing in cars. But it’s a delicate balance, as the city currently lacks a fully functional public transit system.

Resident Downing Smith took issue with the personal property tax increase after the vote.

“Is the reason really that you want to make people more aware of not using their car? Because if it is, then that’s a really bad reason,” he told Council.

He argued that the increase was not going to keep him off the road. He walks when he can, but crossing major thruways to get to the grocery store is dangerous, Smith said.

“I don’t take the buses because they don’t work very well for me,” Smith said. “Now if you said that 20 cents was to get the extra bus drivers you want, well that would’ve made sense.”

He left before councilor Lloyd Snook could respond.

“The 20 cents that we’re adding is basically funding the new bus drivers,” Snook said. “If Mr. Smith had stuck around, I was going to point that out to him.”

Council also voted Monday night to increase the threshold at which people can get a full exemption on the personal property tax. Previously any car worth $1,000 or less would be exempt, but on Monday, Council raised the limit to $1,500. Those exemptions are paid for by state funding. Whatever additional state money is left over will now be split evenly between anyone with a car valued at less than $20,000. Oschrin said 75% of cars in the city are valued at $15,000 or less.

Payne emphasized the budget also includes major investments in schools, climate action and affordable housing, including $10 million to the city’s affordable housing fund.

At a previous City Council meeting, a number of residents voiced their frustrations over proposed tax increases. But on Monday, not a single person in the small crowd chose to speak for or against the budget proposal before the vote. The lack of public comment was a surprise to Oschrin.

“This is my first budget cycle, but it seemed light on public comment for what my expectations were,” she said.

Payne said he has seen decreased engagement at City Council meetings since the pandemic, not just regarding the budget but with community issues broadly. Both did say, however, that they received many emails, both in support and opposition of the tax hikes, and that people came to speak during the public work sessions.

Still, it’s a marked difference from pre-pandemic years when Payne recalls at least a dozen people showing up to speak on budget matters.

“My completely honest interpretation is I think the vast majority of people have no idea that the city just voted on a budget. I think the first time they are going to be aware that a tax increase came is when they get the personal property tax bill for their car,” he said.


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