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Revenue-sharing money will help Charlottesville avoid operating cuts

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Tarron Richardson

Charlottesville City Manager Tarron Richardson speaks during a virtual City Council budget work session in May.

Despite expecting to lose millions in revenue from the coronavirus pandemic, Charlottesville will be able to help avoid deep cuts to its operating budget using money it receives from Albemarle County.

Revised budget documents released Monday show that the city will nearly double the amount it uses from the revenue-sharing agreement with the county toward its operating budget in fiscal 2021, which starts July 1.

The City Council held a public hearing and first reading on a scaled-back budget proposal during a virtual meeting Monday.

The revised budget is $191.2 million, a decrease of $5.4 million from City Manager Tarron Richardson’s original plan.

City officials have said they are expecting a loss of revenue of at least $8.4 million over the current and next fiscal year from the pandemic, but the number could be a conservative estimate.

The city is projecting a 2.7% loss in revenue, but Albemarle County is projecting a loss of 7.2%. Because of that, the county is scrapping pay increases and a plan to raise its minimum wage to $15 an hour.

The county’s revised budget is $396.9 million, a $59.7 million cut from the current year. It’s also $54 million shy of the proposal originally presented in February, before the pandemic hit.

The revenue-sharing agreement was approved by referendum in 1982 in a deal to prevent the city from annexing valuable county land, requiring the county to share some of the tax revenue generated by that land with Charlottesville. Through a complex funding formula, the county is projected to provide $14.5 million to the city in fiscal 2021.

Richardson’s initial proposal called for $6.8 million of the money to go toward the city’s operating budget, roughly in line with fiscal 2020, with the rest typically going toward capital projects. However, the revised proposal increases that amount to $13.3 million.

After The Daily Progress published a story online about the revised budget documents during the council meeting, Richardson said, “It’s sad because it’s just another clear misrepresentation about what we do and how we do it.” He added that it “doesn’t make any sense” and he’s “too upset to talk about it right now.”

Councilor Michael Payne said the revenue-sharing agreement has not come up during budget conversations.

Krisy Hammil, a senior budget and management analyst, said that because the city is not putting part of the cash into the Capital Improvement Program, the balance of the money is sitting in operating expenses.

Albemarle County has no say in how the city uses the money, although the agreement continues to be a hot topic. Legislation passed in 2018 requires Charlottesville to submit an annual report to the county that shows the amount of money transferred to the city and how that funding is used. The localities also are required to hold an annual meeting “to discuss anticipated future plans for economic growth in the localities,” according to the legislation.

Supervisors could not be reached for comment by press time Monday.

If city revenues decline further than projected, the council can amend the budget, but it must approve a balanced spending plan by June 30.

The council has given the greenlight for increased funding for the school division over fiscal 2020 levels to cover unavoidable expenses. The total contribution would be $58.7 million, a $1.3 million increase over the current year.

Capital projects also have been delayed or had funding stretched over different budget years so that the city could set aside about $8.5 million for any unplanned expenses caused by the pandemic.

Only three people took the chance to speak during the virtual hearing, with one advocating for more investment in affordable housing and all acknowledging the difficulties created by the virus.

Councilor Lloyd Snook highlighted that the revenue projections could worsen as the pandemic continues, but he believes the revised proposal funds the council’s priorities “as much as we can do.”

“We just don’t know what’s going to happen next fiscal year,” he said.

The budget will go before the council for final approval at its June 1 meeting. After that, the council can make any necessary amendments to reflect revenue shortfalls from the pandemic.


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City Hall reporter

Nolan Stout is a reporter for The Daily Progress. Contact him at (434) 978-7274,, or @TheNolanStout on Twitter and Facebook.

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