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City has $5.5 million surplus, may give employees raises

Charlottesville’s government employees may get raises in the new year after the city learned it ended fiscal year 2021 with a $5.5 million surplus.

At a City Council work session on Monday, the city’s Director of Finance, Chris Cullinan presented the results of the city’s annual comprehensive financial report. He said the city’s general fund finished the year with $5.5 million in surplus revenues. While COVID-19 impacted some revenue areas, Cullinan said the city saw better economic performance than the city expected in areas such as real estate tax.

“We were confident that COVID was going to impact our revenues, but we were unsure of exactly how,” Cullinan said. “The more economically sensitive revenues such as personal property tax, meals tax, lodging tax underperformed compared to the budget and underperformed to their actual results in the previous fiscal year. Fortunately, though, the city’s largest revenue source, which is real estate taxes, performed as well, if not actually a little bit better than expected, and then also sales tax performed better than I expected as well.

Cullinan said some of this can be explained by the fact that sales tax is applied to online purchases made within the city, and that people still had to buy groceries and other necessities during the pandemic.

“Those two revenue results help offset the poor performance of some of our more economically sensitive ones,” he said.

Cullinan also said reduced levels of service from some city departments and closed facilities during the pandemic resulted in expenditures being less than expected.

City staff is recommending using the surplus funds to give bonuses and raises to all city employees. Albemarle County made a similar move earlier this month, approving a 6% raise for allfull- and part-time county employees with surplus funds from the fiscal year.

“We’re recommending that the five-point-five million be set aside for a series of employee compensation adjustments, the first one being a one time bonus- a thank you for service and dedication and essential work performed during what’s been a difficult year, for work already performed in the past calendar year,” Cullinan said.

“The second one is a mid-year market adjustment to acknowledge the challenges and competition in the local labor market, to make sure we can retain and attract the most qualified candidates and retain our employees to do the essential work that they have been doing and need to continue to do,” he said. Cullinan said it would be a 6% increase to adjust to the market.

Deputy City Manager Ashley Marshall said depending on hours worked, employees will be eligible for up to $3,500 in bonuses.

“Nearly every employee outside of 18 will walk away with some funding as a thank you from the city for their hard work and dedication during what we hoped would be a less complicated year, but continues to be complicated thanks to various reasons,” Marshall said.

Cullinan said this recommendation reflects discussions with City Council as well as city management and leadership regarding employee compensation and recognition.

“This is good, and I hope staff understands that even though things have been really challenging, that we do appreciate the work that they do and the effort,” Mayor Nikuyah Walker said. “It’s not one person, it’s not just upper management, it takes all of us.”

City Council will review more year-end budget information at its Dec. 20. The second reading of this item is slated to take place Jan. 6, but Walker has asked for staff to see if the vote can be pushed up before the end of the year.


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