The URL can be used to link to this page

Home My WebLink About2A. CITY MANAGER’S PROPOSED BUDGET 3.19.24FY 2024-25 City Manager’s Proposed Budget Kevin Chatellier, Director of Budget and Management Services March 19, 2024 1 FY 2024-25 Operating Budget Highlights •Overall budget growth is 2.77% •Expenditures •Proposed Budget is positioned to maintain most baseline services •Revenues •Reduces Real Estate tax rate 2¢ to 97¢ •Establishes a penalty and interest 5-day grace period •Real Estate revenue growing 4.6% but others remaining relatively flat •A few fee adjustments are proposed to maintain services •Policy Discussion Total Net FTE Change (17.15) City 19.25 Schools (36.40) 2 Long History of Tax Relief Policies Real Estate Tax Relief Relief Provided Elderly and Disabled (annual local program)$15 million (FY 2024-25 est.) Veterans Tax Relief- Mandated $27.5 million (FY 2024-25 est.) Personal Property Tax Relief Relief Provided Reduced Personal Property Rate Disabled Veterans Lowered rate of $1.50 per $100 Assessed Reduced Personal Property Rate- Personal Boats Lowered rate of $0.000001 per $100 Assessed Reduced Personal Property Rate- Machine and Tools Lowered rate of $0.000001 per $100 Assessed Business, Professional, and Occupational License (BPOL)Relief Provided Two-year Exemption Program Qualifying new businesses $0 license for two years 3 Fiscal Relief Initiatives Since March 2020 Real Estate Tax Relief Relief Provided Reduced Real Estate Tax Rate by 2.75¢ 4.75¢$37.4 million (FY 2024-25) Absorbed $567 million bond referendum = 4.1¢$32.3 million (FY 2024-25) Total $69.7 million Personal Property Tax Relief Relief Provided Reduced Personal Property Rate for EMS Volunteers $70,000 Reduced Personal Property Rate for new business (2 years) and Individuals over 65 or disabled $336,000 CY22 Personal Property Fair Market Value Adjustment $38 million (est.) CY23 Personal Property Fair Market Value Adjustment $20 million (est.) Total $58.4 million 4 Fiscal Relief Initiatives Since March 2020 (continued) Local Business Tax Relief Relief Provided Suspended ABC license tax $325,000 (est.) Reduced BPOL Taxes $1.1 million (est.) Total $1.4 million Other Citizen Tax Relief Relief Provided Meals Tax Holiday $12 million (est.) Local fiscal relief initiatives $43.5 million Federal fiscal relief initiatives $34.3 million Real Estate and Personal Property Penalties and Interest $500,000 Total $90.3 million + Grand Total of Local Tax Relief $219 million + 5 Guiding Principals in Budget Development •Maintain current services •Focus on preserving public safety and health •Utilize Public Feedback in decision making •Focus Action Plan (FAP) Adopted by City Council •Reduce Real Estate Tax Rate 2¢ •Minimize new spending •Redistribute resources •Identify one-time costs •Eliminate vacancies before filled positions (if necessary) •Share reduction with existing policies and dedications 6 FY 2024-25 Operating Budget Public Safety 13.3%Convention & Visitors, Economic Development 2.2% City General Fund and Flood Protection Debt Service 2.8% Education 45.1% Financial/General Government 7.9% Human Services/Health/Housing 7.7% Parks & Recreation, Libraries, Aquarium, & Cultural Affairs 4.6% Planning/Public Works/Public Utilities 13.4% City Capital Projects 2.9% $2,634,032,570 total 7 FY 2024-25 Budget - Unlike Previous Years •Lower overall general government tax revenue growth •General Fund- $35 million ($21 million City and $14 million VBCPS) •Revenue growth used to cover cost of budget drivers or “must do’s” •Additional investment in Focused Action Plan initiatives minimal per direction to minimize spending and reduce taxes •Reduction in operating budget accounts, redirection of vacancies, identification of one-time costs used to address recently identified needs •Responsive to City Council’s request to discuss public policies in more depth 8 Baseline Budget Drivers •Virginia Retirement System - $6.0 million •Debt Service- $3.6 million •Risk Management- $2.3 million •Elderly and Disabled Tax Relief- $2.0 million •City Garage Charges- $1.5 million •Sheriff’s Office Body Worn Camera- $2.3 million •Police Technology Licenses- $0.9 million •Line of Duty Pay- $0.3 million Balance $21 M Balance $2.1 M 9 Maintain Public Safety and Health •Fire Department- 17 FTEs $1.7 million •Emergency Medical Services $0.5 million - 4 FTEs, Operational Supplies, equipment •Virginia Beach Rescue Council Grant $0.8 million •Emergency Communication and Citizen Services -Technology Services and investments $0.3 million •Sheriff- Medical Contract/Food Services $0.5 million •City Department’s Security Contract increases $1.3 million 10 Balance $2.1 M Balance -$3.0 M Maintaining Other Baseline Services •Voter Registrar- 2024 Presidential Election $1.2 million •Housing- Owner Occupied Rehabilitation $0.1 million •Compensation/ Retaining Qualified Workforce •Recommend approx. 3.5% compensation increase $19.5 million •Allows one step increase and 0.5% general increase •Allows 3% merit increase and 0.5% general increase •3% Employer health insurance contribution $1.5 million •Employees premiums remain flat 11 Balance -$3.0 M Balance -$25.3 M Reductions and Redirection of Resources •Elimination of 17 vacant FTEs- ECCS ($1.3 million) •Elimination of 10.5 FTES and closure Kentucky Ave ICF ($1.15 million) •Economic Development- Bio-medical ($1.0 million) •Reduction of Fuel ($0.9 million) •Reduction Operating Supplies accounts ($0.6 million) •Human Services, City Treasurer, Courts, Finance, etc. •Switching Budget Software tools ($0.5 million) •Elimination of 5 FTEs- Libraries ($0.3 million) •Elimination of Housing Maintenance FTE ($0.1 million) •Elimination of Planning Right of Way FTE ($0.1 million) •Reduction in Non-Departmental Grants ($0.1 million) Balance -$25.3 M Balance -$20.3 M 12 One-time Costs Identified •General Fund- Fund Balance $2.5 million •Presidential Election •VB Rescue Council •Fire Department Equipment, etc. •Attrition $10 million •Utilized $10 million to balance General Fund •Projected Fund Balance does not fall below 8-12% •Between use for Attrition and Year 1 CIP- Estimated 9.97% Balance -$20.3 M Balance -$7.5 M 13 Reduction in General Fund- Pay-go to CIP •General Fund- Pay-As-You-Go ($7.5 million) •Put more fund balance toward one-time projects •Eliminated some projects no longer priority •Example: MOCA Building, Roadway Cost Participation, Aquarium Parking, etc. •Relied on some dedications to avoid project reductions: •Agriculture Reserve Program- $500,000 •Open Space- $500,000 •Tourism Advertisement Program- $500,000 •Tourism Investment Program- $800,000 •Economic Development Investment Program Project Balance -$7.5 M Balance - 14 “Modest” Redirection and Sharing Reduction •Methodology was three pronged: 1.Does dedication/fund have a budgeted reserve or positive fund balance? 2.If redirected, will capacity remain to cover existing obligation/intent? 3.If redirected, will fund balance remain above 15%? •Narrowed focus to ARP, Open Space, TAP, TIP and EDIP •Increased pay-go from each dedication reduced General Fund obligation by $2.3 million •Example, TIP $800,000- “Oceanfront Capital Project Reinvestment” and “Virginia Beach Amphitheater Capital Maintenance” 15 Department Specific Revenue Increases •Aquarium and Convention and Visitor Bureau •Increase covered security cost increases •Human Services •Growth in State and Federal Revenue for specific programs •Public Works •VDOT Revenue increase supporting 16 additional FTEs and equipment needs •Parks and Recreation •Fee increases supporting park maintenance, 10.5 Out of School Time (OST) FTEs, and 4 Lifeguard FTEs 16 Waste Management- Recycling Resident Satisfaction Results Virginia Beach Atlantic Region National Average Bulky items pick-up and removal services 72.9%43.8%47.3% City waste disposal and recycling centers 66.5%42.9%46.2% Residential yard waste/leaf/brush collection services 65.8%59.7%54.6% Residential curbside recycling services 70.7%65.3%56.6% Residential trash/garbage collection services 76.2%76.8%68.6% Services offered at the City landfill 70.8%N/A N/A •Curbside Recycling contract doubling in cost •February 20, 2024 City Council briefing on issue •Proposed Rate Increase of $3.05 is included to maintain this service •Including as part of Proposed Budget will afford the public time to provide input at Budget related Public Hearings 17 Citywide Funding Requests •Listed in Operating Budget document in the “Requested But Not Funded” Report •Current Services and New Services •Across all funds •Total unmet funding request by Departments of $32.7 million and 242.34 FTEs 18 Budget Process Timeline- City and VBCPS November Five Year Forecast December Governor’s Budget January Budget Deliberations February 6th SEON February 13-14 City Council Retreat March 12th VBCPS Adopted March 19th City Manager Proposed April Public Hearings May 7th City Council Reconciliation May 14th City Council Adopt Budget 19 Virginia Beach City Public Schools •Superintendent Estimate of Needs (SEON) is reflected in the FY 2024-25 Proposed Budget- (February 6, 2024) •Growth in revenue: •Local Revenue Sharing Formula $13.3 million •State Revenue $0.5 million •Federal Revenue $1.2 million •Annualized compensation equal to 3.5% •Annualized additional 2% pay increase provided in January 2024 •Provide resources for step increase 1.5% •Net Reduction of 34 FTEs •City Manager negative reserve balancing budget as Proposed 20 FY 2024-25 to FY 2029-30 City Manager’s Proposed Capital Improvement Program 21 CIP Guidance •Council Retreat •Maintenance of existing infrastructure and assets •Modernization of existing facilities and infrastructure •Expansion of existing infrastructure to meet community needs •New Facilities and Infrastructure •Added Guidance to Consider •Construction timelines •Match funding obligations •Age of project in terms of public expectations •Insufficient funds to meet all CIP needs 22 Programmed CIP $5.4 billion total, including appropriations to date 23 Buildings & Assets 9%Coastal Projects 4%Economic and Tourism Development 10% Information Technology 4% Parks and Recreation 7% Roadways 19% Water & Sewer Utility 9% Stormwater & Flood Protection 24% Schools 14% PROGRAMMED FUNDING CIP Highlights- Roadways Infrastructure and Transportation Resident Satisfaction Results Virginia Beach Atlantic Region National Average Overall conditions of major City streets 60.1%60.5%50.9% Ability to predict travel time to places in Virginia Beach 64.4%N/A N/A •Roadways leverage State and Federal funding: $155 million over 6-year Program •Projects Previously Delayed- •Cleveland Street- additional programmed funds now reflected as fully funded •Shore Drive Phase IV- additional State, Federal, and Local out year- BTC $48.4 million remains…. •Elbow Road Extended Phase II-D- additional State, and Local out year- BTC $25.5 million remains…. •Notable new projects or projects now fully funded: •Great Neck Bridge •Pacific Avenue Turn Lanes- federally funded •17th Street Phase I- TIP Funded 24 CIP Highlights- Stormwater and Coastal Resident Satisfaction Results Virginia Beach Atlantic Region National Average Stormwater management and flood control major City streets 47.3%64.8%51.0% Overall efforts to protect natural resources and environment 45.8%N/A N/A Quality and condition of trees and open space in the City 64.9%N/A N/A Condition and Maintenance of Virginia Beach Beaches 82.8%N/A N/A •17th Street Regional Stormwater Management Facility- State funding, fully funded •USACE Regional Coastal Storm Water Risk Management Study (3x3x3)- Local share $3 million 25 CIP Highlights Parks, Recreation, Library and Human Services Resident Satisfaction Results Virginia Beach Atlantic Region National Average Availability of trails and pathways 75.0%N/A N/A Overall quality of parks and recreation programs and facilities 88.6%50.0%50.6% Physical conditions of City parks, trails and outdoor facilities 88.4%68.6%67.3% Overall quality of City Library services 89.1%71.9%65.6% •Rudee Loop Park Development- Fully Funded $60 million (TIP) •Southern Rivers Watershed Site Acq. Program- $7 million State Funding (redirection possible) •Recreation Center Modernization- Increase $4 million (P&R Special Revenue) •Accelerate $10 million previously programmed •Library Automated Materials Handler- $3 million 26 CIP Highlights- Others needs won't find on survey •Central Plant Loop Replacement- $29 million •Beach Maintenance Facility- BTC •Mosquito Control Replacement- $4 million (Stormwater Dedication) •Waste Management Facility- $2.2 million (Waste management Fund) •21st Century Enterprise Resource Planning (HCM)- additional $4 million 27 Unfunded Needs and Delayed/Deferred Projects •Insufficient funds to meet additional funding requests for existing and new projects totaling more than $634 million •Including Flood Protection Section requested need grows to $991 million 28 FY 2024-25 Revenues 29 FY 2023-24 Revenue Highlights Real Estate Tax Rate reduced to $0.97 Real Estate and Personal Property Extension of time before penalties and interest Gills Cove Dredging SSD Increased to $0.16 Schilling Point Dredging SSD Increased to $0.58 Parks and Recreation Fees Increase Various Fees Stormwater ERU Fee Rate remains 49.3¢ per day Waste Management Fee $3.05 monthly increase Water & Sewer Fees Various Service Fee Increases 30 Tax Burden and Measures Resident Satisfaction Results Virginia Beach Atlantic Region National Average Overall value that you receive for your City tax dollars and fees 52.8%33.8%33.8% Tax or Fee FY 2023-24 FY 2024-25 Monthly Change Annual Change Single Family Median- Real Estate $3,621 $3,766 $12.08 $144.96 Waste Management Fee $27.50 $30.55 $3.05 $36.60 Water Utility $26.00 $28.70 $2.70 $32.40 Sewer Utility $31.58 $32.37 $0.79 $9.48 Change $18.62 $223.44 Real Estate tax avoidance median home value $388,200: ($78) annual or ($6.50) per month 31 Hampton Roads Real Estate Tax Rates per $100 Assessed 1.16 1.25 1.3 1.09 1.01 1.18 0.99 $0.90 $0.95 $1.00 $1.05 $1.10 $1.15 $1.20 $1.25 $1.30 $1.35 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY24 Hampton Norfolk Portsmouth Suffolk Chesapeake Newport News Virginia Beach 32 Comparison of Tax Rates Virginia Beach Chesapeake Norfolk Portsmouth Suffolk Hampton Newport News Real Estate (per $100 /A.V.)$0.97 $1.01 $1.25 $1.30 $1.09 $1.16 $1.18 Personal Property (Vehicles & Business) $4.00 $4.08 $4.33 $5.00 $4.25 $4.50 $4.50 Personal Property (Machinery & Tools)* -$0.64 $1.70 $1.50 $0.63 $1.23 $1.25 Personal Property (Boats)*-$0.09 -$0.50 $1.50 -$1.00 Automobile License Registration $30.00 $26.00 $31.00 $32.00 $26.00 $35.00 $26.00 Cigarette (per pack)**$0.75 $0.65 $0.95 $0.95 $0.75 $0.85 $0.85 Solid Waste Fee (per month) ***$30.55 -$28.51 $29.16 $25.25 $31.42 $31.63 Meals 5.5%6%6.5%7.5%6.5%7.5%7.5% Admissions 10.0%10.0%10.0%10.0%10.0%10.0%10.0% Hotel ^8.0%8.0%8.0%8.0%8.0%8.0%8.0% Hotel Flat Tax $2.00 $1.00 $3.00 $3.00 $1.00 $2.00 $1.00 33 Budget Adoption Timeline March 26 Council Workshop – Budget and CIP Presentations April 2 Council Workshop – Budget and CIP Presentations April 9 Council Workshop– Budget and CIP Presentations April 16 Council Workshop– Budget and CIP Presentations April 17 Public Hearing at Virginia Beach Convention Center April 23 Council Workshop– Budget and CIP Presentations Public Hearing April 30 Council Workshop– Budget Presentations & Discussions May 7 Reconciliation Workshop May 14 City Council Votes on Budget 34 Questions & Discussion 35