City Council Informal Meeting, 3/24/2026

Mhm.

I now call this meeting Mr. Mayor, I understand we have a special surprise today. Yes, Mr. Mayor.

I asked the Deputy City Manager to come in and present to City Council and announce to the public a tremendous honor we received from ETC regarding the resident satisfaction survey and Monica's going to let let Council know about the award we received and also just the meaning of it and and where it places Virginia Beach as relates to our peers in the nation.

Thank you, Manager. Mr. Mayor, Vice Mayor, members of Council, we got this award last week. It came in through the mail and we're really excited.

Just to give you some background on why it's so exciting.

Often time in statistics they call it the bell shaped curve and they talk about how you usually hear from folks on either extreme, really happy or really sad. So, with the resident survey being random sampled, it gets you what they call that silent majority on the bell shaped curve.

Remember the survey is statistically significant, so that's social science research standard quality data.

Also important, it's demographically representative across key demographics, race, gender, age and also geographically representative. So, we got to hear from folks across all of your districts across the entire city.

There's really two firms who are really major in this space. ETC is one of them.

And one of the benefits is that you tap into their benchmarking database. It's good to see how we score over time ourselves, but it's also interesting to see how we perform against our peers.

So, ETC has this award called Leading the Way and essentially it's a composite score across three indicators.

Overall quality of services, the quality of customer service provided to them and satisfaction that people feel as though they get for the value of their tax dollars and their fees. And you can see how we compare to the other folks. In order to get this award, you had to have at least a 192 composite score. We had a 195, so we squeaked in, but we're still in there. The average rating is 114.

So, it's just a tremendous honor and in the letter that they sent us last week, in addition to these three composite scores, they listed the areas in which it's small font cuz so many of them, where we scored 20 points or higher. And it ranges from parks and rec to libraries to our schools to our bulky item pickup and I mean there's other services where we rank higher, maybe five points higher or

four points higher, but these are 15 areas where we scored 20 percentage points higher than other large cities.

So, we are in the top 10% of large cities and they mailed us this beautiful award. It's called Leading the Way and it's 11 pounds. Yeah. And 11 pounds represent the 11 cities that did the initial survey when they started decades ago. I think when I was like a little girl, they started doing these surveys.

So, we wanted to present it to you all just like the letter that they sent They work in communities across the country and to be able to create this type of culture that really trickles down from the top to the bottom of where we really excel when being excellent in delivering services to the community really starts with your stewardship, your support and your leadership. So, Mr. Mayor, members

of Council, wanted to present you with the Leading THE WAY AWARD.

AND YOU EACH REALLY HAVE TO TOUCH IT because otherwise you're not going to believe it's 11 pounds, but Kevin, it's deceivingly heavy, so you each have to you have to pass it around.

Thank you, Mr. Manager.

I got to sign my box.

Yeah.

Let me say this is an honor bestowed on every member of the City Council, everybody that works for the city of Virginia Beach, 11,000 volunteers that we have working and all of the organizations that do so much to help, that give their time, talent and treasure. For now, we'll just put it on my desk right next to the tailhook that the Navy gave us. You know, the best place to live ever says on it. Once

again, this is a tribute to the city of Virginia Beach. You know, like we often said, you know, we can't do it ourselves. It's the people that live here, work here, have their businesses here and devote their time, talent and treasure to make us such a great city.

So, on behalf of this we are grateful. Thank you.

Oh, yeah. Thank you.

The keeper of gifts over here and but I'll tell you what, the tailhook they gave us is about 25 pounds, so it was hopefully my desk is strong enough for a little while.

Okay. Okay. Okay to move forward. All right. So, Mr. Mayor, members of Council, we're at that time. We're at the We're at the part of the budget process where the City Manager and the Budget Director presents the proposed budget for you all to consider for the next 60 days where you all work together, listen to the public and deliberate amongst yourselves to create a City Council adopted budget.

So, Kevin will will give a presentation to let you know what we propose as it relates to funding and meeting the needs of the city of Virginia Beach.

Welcome Kevin.

Thank [clears throat] you very much, Mayor.

Vice Mayor, members of Council, as the City Manager just introduced, it is budget time.

It's that time of year again, but in reality, as City Council is well aware, budgeting is really truly in Virginia Beach a year round process. Um So, I would certainly like to, before jumping in, take a moment, thank my staff for their hard work and due diligence in compiling the budget documents that are before you today, as well as the various departments across the city for their thoughtful input

and thorough discussions of their operating budget and their operational budget needs and as well as CIP.

So, jumping in to the operating budget, [clears throat] here's the first slide here for um opening discussion the operating budget is a kind of high level takeaway looking at expenditures, positions and revenues.

And really kind of more bulleted talking points, right? So, the FY26-27 operating budget is positioned to maintain all existing services while avoiding service interruption delivery or interruption to service delivery.

There are several operational redirects of resources to meet emerging needs within various departments in the operating budget. There were several operating budget drivers that we've been flagging and talking about throughout the budget process. I'll jump into more of those in just a little bit.

Per the direction of City Council at the budget focused retreat, there was direction to make additional, if the opportunity presents itself, make additional investments in the workforce, infrastructure and look to provide tax relief if possible. So, I'm happy to announce that the proposed budget does all three of those.

Looking at positions, this is always something that City Council and the City Manager are mindful of and trying to ensure that we have a sustainable operating budget.

There's a total net FTE add in the city of about 27.27 FTEs. And you can see there in the blue section of this, the number of positions that were added through what we call bill payers was about 25.68. And what do I mean by bill payers?

Through other funds and the addition of these positions does not come at the detriment of the general fund resources or create a long-term need for the general fund.

So, majority of these positions here, quickly highlighted, are within the enterprise funds as well as the EMS compassionate billing fund. Again, more information on that in a little bit. But in terms of the general fund operating budget, the total net FTE add is actually about 1.59 FTEs and even those really don't come as a result of additional general fund resource needs as those are

attributable to the redirection of resources and the appropriations of some additional state and federal funding for a position.

Quickly on revenues, I'll get more into this a little bit later, but I'm happy to inform City Council at your direction of the retreat being a top priority if it afforded itself or presented itself to provide tax relief initiatives in the proposed budget. This budget does include that.

So, looking at the operating budget with a quick visual, here's a pie chart. The total operating budget is about 2.88 billion with the city side representing about 7,780 FTEs and the schools about 10,579 FTEs.

Looking at the pie chart visual here, you can see schools are roughly about 44%, 43.4% of the total operating budget.

With the second largest portion of the pie being in public safety departments, about 14.1% and then the third largest portion being the infrastructure related departments such as planning, public works, and public utilities at 13.7%.

So, at [clears throat] the retreat, City Council gave very guided direction.

Um and so, this is a bulleted points of the retreat um takeaways that was compiled by Fountainworks that really cap recap as what the direction was City Council coming out of that. And so, I've kind of got them grouped in um a few groupings here. That first group um up top, the first five bullet points, are really reflective as they had a direct impact on the development of the budget in terms of the allocation of

resources within the proposed budget.

[snorts] The next group is really operating budget process related um as well as policy related discussions that should be forthcoming. And then the last grouping are tax policy discussions that direction was to have continued conversations with these throughout the budget development process as well as for future conversations by City Council.

Back up to the top, really the top three bullet points were really the driving factors that help determine the outcome of the proposed budget. With City Council, when asked the question if additional resources were available and afforded themselves, what should be the priority direction for City staff and City Council's number one priority was to provide additional tax relief. The

second overall priority was to invest to ensure City of Virginia Beach maintains and attracts a qualified workforce. And then the third priority was for additional investment in capital projects and mat and maintenance backlogs.

So, going into the retreat, there were some assumption changes that were already reported reported and we were informed of right before the retreat that we informed City Council of. Um the VRS, Virginia Retirement System, we had gone into the budget process knowing that it was going to be an update year.

This is a rate that's determined by the state who manages the overall health of the state pension plan. And based on the actuarial returns of the pension fund, the VRS um the board notified the City of Virginia Beach that we were actually going to have a reduction in our budgeted rate contribution for um on behalf of Virginia Beach.

So, we had informed City Council of that going into the retreat into the retreat.

The overall result of that was a net reduction of expenditures of about 11.3 million dollars.

One of the things that changed from the baseline assumptions that we were going into at the beginning of the budget process was learned in February when the real estate assessor provided City Council a brief and update based on the real estate assessment growth that's projected for next year. So, Sue informed City Council the real estate's projected growth is 6% whereas we had assumed 2.8% going into the budget

process. So, really between those two factors there, that created about 33.4 million dollars creating this opportunity for a reduction in the taxes in tax rates or to provide tax relief as well as additional investments in the proposed budget.

[snorts] So, some of the baseline budget drivers that we have been talking about throughout the budget process really didn't change. Uh they remained pretty consistent. The largest of the budget drivers that we've been talking about are the tax exemption programs and what we're seeing in terms of year-to-year growth in those exemption programs. You can see at the top in the orange orange

section, the first bullet point there, the disabled veterans program. This is the mandated program. And what we're seeing is the growth of this program about projected to be about 10.2 million dollars next year growing to a total tax exemption amount of about 46 million dollars. So, the large contributing factor to growth in this program really is overall enrollment, not just the assessment growth, but we're seeing

about 22-23% of enrolled participation enrollment each year in this um tax exemption program.

The next tax exemption program worth noting seeing some additional growth is the elderly and disabled program.

This is the local option tax relief program that City Council's had in place for many years. Uh we're projecting a growth in this program about 1.3 million dollars providing an overall tax exemption uh for those that qualify for this program about 16.8 million dollars next year.

[snorts] Worth noting also is that there are adjustments that occurred to this per um policy established by City Council, I believe in 2015 or 16, where the income thresholds of qualifications for this program are to be adjusted annually to keep in line with overall assessment growth. And so, the proposed budget does include that.

Um we've spoke about the line of duty pay, again a mandated program. Um year-to-year growth of that's about 1.2 million dollars. We're based on the most recent bond issuance, general fund debt service has grown year-to-year about 6 million dollars.

One of the things that changed um from the original assumption to right before the budget was proposed is the anticipated increase in fuel and energy cost. The city purchases fuel at market rate, so we're certainly seeing some increases unanticipated increases in the um fuel prices at the pump, but also close to a month ago, the city received notification that um there's a chance

that Dominion power bills could be going up starting July 1 for government entities.

There's an organization that negotiates these rates with Dominion Energy on behalf of localities. Uh the possibility of a rate adjustment going up starting July 1 is about 32% for the city. So, this could potentially sing create a pretty big year-to-year swing. And so, we positioned the budget try to account for that.

Health insurance, I know it's typically referred to as a compensation benefit um whenever you're developing the operating budget. It's also seen as a budget driver year-to-year, especially in light of the rising cost of health care that we're seeing. I'll get more into this in a little bit.

But then again, um the last one there, software and subscription. This is really the cost of technology that we're seeing go up year over year. Uh I can't imagine um a police department in today's today's environment, today and age, uh operating without the use of body worn cameras. So, it make the initial investment, purchase them, however, there's an annual subscription cost associated with that, maintaining the

data and being able to have access to that. So, we're seeing those and those are becoming a larger part of the annual year-over-year increase in the operating budget.

So, those are really kind of the baseline budget drivers. Uh but back to the direction in which City Council gave specific guided direction to at the retreat um being the top priority, uh tax relief. So, there was a good discussion at the retreat with um discussion of tax relief being provided through the real estate tax rate or potentially exploring a reduction and tax relief being provided through

personal property.

Ultimately, the takeaway was direction for staff to go explore and provide an option for consideration that maximizes the amount of tax relief to the highest number of Virginia Beach residents.

So, what this slide here does is kind of provides a a quick side-by-side and the rationale as to why the proposed budget has provided a proposal to um provide tax relief through personal property in lieu of real estate tax.

So, starting at the top, real estate tax, as we know, is a tax uh a tax for resident property owners. Um as City Council discussed as a part of the retreat, there's not always a guarantee that any relief provided through that mechanism works its way down to other than property owners, but perhaps renters. Sorry, I got a little lively with my hands.

Um so, yes. Yes.

Uh so, um in looking at the real estate tax, what staff was able to do is get a profile of what Virginia Beach looks like in terms of home owners and renters. So, looking at census data, the American Community Survey, uh Virginia Beach has a profile of about 113,535 home owners.

And then the number next to that represents the number as reported by the American Community Survey of the property owners, the number that are cost burdened. So, completing that um in the first line across there, Virginia Beach has 113,535 property owners. Of that number, 20 It's an estimated that 27,477 of those are considered to be cost burdened indicating that 30% or more of their income goes towards

their mortgage payment.

The next row down looks at the renter profile for the City of Virginia Beach using the same concept. Uh in Virginia Beach, per the American Community Survey, there's 66,408 renters. And of that number, 35,399 of those are considered to be cost burdened.

So, looking at a hypothetical a 2 cent rate reduction scenario of looking at the real estate tax rate, based on the median home value of all residential property types, a 2 cent rate reduction would translate to an average median savings of about 77 dollars per residential unit.

Um for the city and schools, that translates to a revenue loss of about 9.1, 7.9 million, being 17 million combined.

Uh the next group down look does the same methodology more or less using census data um as well as the information we have working with the Commissioner Revenue looking at personal property tax. So, based on last June's billing and personal property, there is 495,000 identified um privately owned personal vehicles subject to the personal property tax here in Virginia Beach.

The average vehicle value of those was about $11,913.

Per the res- excuse me, not resident census action survey but the American Community Survey, the average vehicles per resident Virginia Beach is about two.

So, a 10.1% local tax credit if that were to be applied to that tax bill based on the average number of vehicles that are owned per residents, that would translate to about $96 dollar estimated savings per residents for Virginia Beach.

In terms of the revenue loss, translates to about $12.8 million dollar reduction in revenue and for the city, that would equal $6.8 million dollars and once run through the school funding formula, about $6 million dollars.

So, the application of this 10.1% would be applied up to the first $20,000 of a vehicle. So, even though this scenario is looking at an average price of a vehicle, if a vehicle is $20,000 or over, that would translate to about maximum $80 per vehicle and it's not limited in terms of a per residents but based on number of vehicles that a resident or homeowner might have.

Uh the second priority and direction City Council was to make an investment to ensure that Virginia Beach has a qualified and retains a qualified workforce. The proposed operating budget includes a compensation adjustment of 3.5% for the workforce. For the general fund, this tran- this 3.5% translates about $17.3 million dollars and it would be allocated um 3.5% for the total workforce, but those that are on the

step plan would receive a step equivalent, which is 3% and a half half of a percent general increase and those employees that are not on the step plan would receive a 3.5%.

City Council might recall that in the current year, there was an implementation or partial implementation of a market salary survey adjustment.

It's about a year ago that discussions were occurring regarding the findings of a market salary survey that found Virginia Beach workforce, about 48% of the workforce was under what the market value of comparable positions were.

Due to funding constraints and limitations, City Council made it a priority to implement a portion of it.

However, they weren't able to implement all of it. The portion of the workforce that received the compensation or the market salary adjustment, the priority was for the public safety departments translating to roughly an average about 11 to 14% increase for the personnel that received it.

Uh the remainder of the workforce only had the general increase. So, included in the proposed budget is an allocation of $7.5 million dollars for a mid-year implementation of the remainder of the market salary survey.

So, it would be effective beginning January 2027 um for the non-public safety portion of the workforce that didn't previously receive a market adjustment to be evaluated um and potentially receive a market adjustment.

The third priority is the investment in the infrastructure.

Uh this has certainly been a topic conversation um in-depth conversation with City Council over the last several years and City Council's well aware of the maintenance backlog that the city has as well as the cost of increases on the CIP.

So, the existing CIP has several dedicated maintenance projects for facility types. For example, fire stations, aquarium, rec centers through the special revenue fund and historic homes.

The remaining roughly 300 facilities all share the the funding between these two projects, various building HVAC rehab and renewal and various building rehab and renewal. Combined annually, the total between those two projects is about $6.3 million dollars. So, this is not really a project that's kept up um in the long term with the cost of inflation or received annual increases

much above the static amount that's been allocated each year the CIP.

So, what's included in the proposed budget is an allocation of additional resources to the CIP with standalone projects to be set up for the municipal center facilities, uh library facilities, human services as well as public yard facilities, public works yard facilities. Some of the facilities here at the municipal complex are near 60 years old with a lot of the various components near in the their useful life

expectancy.

Um to give context as to how much uh the actual true maintenance and repair needs of the facilities are in relation to this project, one elevator today costs roughly about a million dollars to replace and one roof replacement costs about a million dollars. So, you can see that that for 300 facilities, the $6.3 million dollars doesn't go very far and what we've been finding is that we're

more in a reactive instead of a proactive strategy of doing these maintenance as funding allows and so the hope is with these projects, we can get more in the proactive state.

Um quickly before jumping into another um high-level discussion on health insurance, want to take a second and talk about the schools proposed operating budget and what's included in the city managers as schools is roughly, you know, almost half or 40-something percent of the total operating budget.

So, the timeline of the schools operating budget is that the superintendent estimated needs or the CEON comes out in February.

The school board then deliberates that, they have a hearing on it and then they're actually looking to either make amendments to that or adopt that as is today or tonight. Um but we don't have that information, so what's included in the proposed budget is the information from the CEON.

So, similar to the city, the schools in their operational expenditures have allocated resources to address some of their baseline operational needs and increases, grant matches, supplies, maintenance needs. Uh the schools like the city are seeing the same increased costs in health insurance as we have a shared um plan offering the same compensa- or the same health care offerings to school employees as city

employees. The schools as well are looking to increase their contribution um employer contribution year over year about 15%.

In terms of compensation, school the superintendent estimated needs includes an average of 5.2% um compensation adjustment increases for teachers or individuals on the unified pay scale.

For the non-teaching staff or non-instructional, about 4.2% on average and based on preliminary conversations, even though it wasn't specifically outlined in the superintendent estimated needs, there has been discussion um of exploring increases in the employee contributions um to the health care premiums as well.

Uh this was part of the direction in the consideration policy discussion the City Council deemed that they would like to have further discussions on in trying to find a way to ensure that both city employees and school employees maintain parity in terms of health insurance premiums.

In terms of overall positions, the schools have included a proposed net reduction of 52.75 FTEs. Uh this is largely attributable to the termination or the ending of grant funding and the grant period associated with those. So, if you go in and look at the schools operating budget, um last year they received a grant for some security positions and then the grant funding for those

ended. And then if you go look up in the schools equivalent of their operating fund, you could find that those uh security positions have now been funded within their operational needs.

So, there's a lot of shuffling going on um in terms of the personnel.

In looking at overall revenues for the schools, baseline revenue growth for schools is estimated to be $33.9 million dollars. This is a combination of revenue that the city provides them through the school funding formula combined with the contributions that they're receiving from the state. Year over year, schools are estimated to receive based on the governor's proposed budget, about 18 or 19 million dollars

in additional funding.

The amount yet to be determined is the final number that will be be provided by the state. Um again, the number represents what is in the proposed budget. Right now, we're in this limbo period in the General Assembly where we have crossover, but if you look at both the House bill and the Senate bill, both of them do have additional funding programmed or specifically allocated out for Virginia Beach. Where it will end

up, I don't know, but the range amount is somewhere between 8 to 23 million dollars.

So, looking back at health insurance, um it's not unique to the city or Virginia Beach City Schools that health insurance costs are going up. Uh base working with Mercer, the city and schools health insurance consultant, the projected growth of health insurance is anticipated to be about 8% in the near term, potentially growing to 10% in the future years.

Um which is certainly higher than the level of inflation that we've been seeing.

Uh in previous years, we've not had to increase or request that employees provide additional increase in their employee premiums, um, but they've actually remained flat since 2019.

The fund's been in a good position. The city's a self-funded insurance plan, um, meaning that what we don't execute at the within a year falls to fund balance. And we've been maintaining a healthy fund balance. One of the things we're seeing over the last couple of years based on health cost increases, is there's actually been a gradual draw down on that fund balance.

So, to ensure the overall health of the fund and long-term sustainability of the fund within the proposed budget is a, um, proposal to for increased employer contribution amount of 15% and employee contribution increase of 10%.

So, last time we made this adjustment, there's a lot of questions from the workforce in terms of what does this translate to because 10% seems more than the compensation level that we're getting of 3%. So, here's a quick table trying to work through some of the math.

And we'll be sure to work with HR, um, in getting the information properly communicated to answer the questions of the workforce.

Um, so, in this hypothetical scenario situation, an employee receives a 3 and 1/2% general increase, uh, and elects not to change their health selection, uh, with the premiums going up 10%. So, in current year FY26, the employee makes $60,000.

Um, 3 and 1/2% increase in FY27, the employee would now make $2,100 more, $6,200, um $1.

$62,100, sorry. Um, that translates to an average increase per pay period of about $81 roughly.

So, the 10% increase from FY26 to FY27, um, over the course of the year translates to about $126 more that the employee would be paying for health insurance. Or that translates to about $5.27, um, per pay period that the health insurance, um, is withheld. So, it would certainly, uh, result in a overall net increase and not erode, um, but so much of the compensation increase.

Um, trying to provide a, uh a somewhat more granular look at the, um, departments and some of the additions and modifications and changes to department operating budgets. I've tried creating these slides that group these.

So, this one here is a public safety slide talking about several public safety initiatives in the departments.

Um, just so happens that Monica [clears throat] Croskey was, um, uh, sharing with City Council and presenting City Council the award that their city received for the resident satisfaction survey.

This is actually something that we use, um, pretty often in the budget development and and having conversations in terms of programs, services that might need additional resources to try to identify why some of the resident satisfaction scores might not be keeping line with what we think they ought to be or should be. And so, it can be a good indication sometimes of where perhaps some strategic investments should be

made in terms of resource allocation.

Um, some notable public safety, uh, redirects or initiatives underway in the proposed budget. Within the police department, the proposed budget includes a reclassification of six vacant police officer positions to establish those positions as conservators of the peace.

So, this will allow police officers, um, to be relieved of the duty of providing individuals perhaps with mental health issues or, um, have needs that require require a little extra hand-holding and attention, um, to these individuals, allowing the police officer to return to, um, work in the beat or the patrol operations and duties. So, out next to that it says six FTEs and you'll notice reclass. That's

an indication that those didn't necessarily come as net plus-ups to the city, but they were a redirect. And in this case, they were redirected from within police department's existing resource allocations.

The parks and rec parks and recreation department, um, I know it's unique that they're here on this public safety. That's typically talking about police, fire, and EMS.

However, um, the proposed budget includes an additional, um, plus-up to the parks and rec department, redirecting vacancies from elsewhere for the purpose of establishing the park ranger program.

You can see, um, even though up towards the top, that the Virginia Beach residents have a feeling of, um, good feeling and sense of safety in city parks and leads the Atlantic region national average, um, but there's certainly been some discussions about some security needs and perhaps enhanced security needs within the parks and some of the areas of the city. And so, standing up this

program within parks and rec, um, is an initiative underway and began to take, um, root within the FY27 proposed operating budget. So, those three FTEs will be establishment of a park ranger manager, um, and perhaps two deputies to get a sense and right-size what the overall operational need of that is. Potentially with additional requests in future years to expand the program, but to get it up

and going now, the thought is these three FTEs should be sufficient.

Looking at the fire department, um, these are uh, larger investments and typically discussed in the CIP, but, uh, they're fitting to the quality of fire services here. So, the SCUBA, or excuse me, the SCBA, uh, self-contained breathing apparatus is what that acronym stands for.

Uh, so, this this the mask and the respirator system that fire department uses to keep carcinogens and clean oxygen, um, and really a necessity and a, a requirement to do the job. Uh, whenever it comes time to replace those, it's, uh, hefty investment where you need to do a comprehensive replacement schedule of those. So, $10 million is being allocated in the CIP for the replacement of those to begin year one.

Additional adjustment being provided for fire apparatus. City Council might recall last year there was an identified backlog in maintenance needs of fire apparatus. And we've been seeing inflationary increase in the cost of the rigs. So, unfortunately, the $2 million a year program funding that has been the historical amount isn't keeping up with the cost of replacing them anymore. So,

we're seeing a sizable need to increase the that year one funding, um, plus an additional or plus it up by an additional $9 million in year one for a total of 11. I think $2 million program funding for fire apparatus.

EMS or emergency medical services receiving additional 12 FTEs fully supported by the EMS compassion and billing fund. 10 of those are paramedics, uh, with two of those being support positions related to the management of the fleet, um, as they look to potentially go towards a standardization of the fleet and they, um, get the proper number of ambulances to run the amount of service calls that

the city of Virginia Beach needs.

They're having a need to have location placement of those and overall manage- management of the fleet.

Um, ECCS, emergency communication citizen services. There's a redirect or reclassification of four FTEs from within their operations to to enhance services at the watch desk.

Um, and then this one's an interesting utilization of vacancy savings for an investment in AI.

Um, so, ECCS has a requirement to where they do audit logs to ensure that calls are being handled properly and that call takers are hitting all the key critical questions that they need to.

So, through utilization of this tool, they think that there's a possibility of reducing manpower hours, equivalent I think of 1,800 hours annually is dedicated to this purpose, to a matter of hours, um, and then be able to have detailed, um, training manuals and guidance for staff based on their audit call takes.

So, that's pretty pretty exciting.

And then public works is kind of a, uh, unique one to be on this public safety slide.

So, the proposed budget has the establishment of a special events team within the Department of Public Works.

So, it's a six FTE team, um, with three additional FTEs being redirected from elsewhere in the operating budget, um, and they're new to public works. But then public works also redirected three vacancies of their own to establish this team. And the notion here is that this team, based on the number of events, special events the city's seeing and the increase in those and the needs of those, this team will

actually allow for those events to occur in more safe, um, operational standard.

Another area the markets markets out there. Too many surveys.

Another area of the Ameri- Another area of the resident satisfaction survey is, um, looking at parks and rec, library, and human services.

Um, these typically score well with the residents. Within, especially with parks and rec, um, there's a high demand and expectations of what parks should look like in the city. And you can see residents are fairly satisfied with that. In fact, it's pleasant to know that that's one of the top three indicators that, um, this survey company was looking at to determine that Virginia Beach, um,

qualified for this award. Uh, what we're seeing is as parks come online, there's additional maintenance needs. Good example, um, the Bow Creek, um, park. When that came online, there's a need for additional mowing, maintenance of the vegetation, the aquatic vegetation. As parks come online with the splash pads and playgrounds, there's a need for staff to go out there and operate and routinely provide the

maintenance for those.

So, public or parks rec was able to address these needs through a redirection of 12 and 1/2 vacancies elsewhere within their existing operations.

Looking at libraries, uh one of the things in having conversation with libraries is the overall increased cost of books and materials that we're seeing. So, we have not provided an adjustment up to libraries department for the last several years in terms of their annual subscription cost to the books and circulation material of the libraries.

So, additional resources are added to that to ensure that there's not a reduction in the amount of um books that are in overall circulation within the library system.

Also noteworthy is that the libraries are seeing a significant cost increase with the um digital licensing of books and materials.

If you recall several years back, Virginia Beach libraries removed um the fees and and the barriers allowing for anybody, whether you're a Virginia Beach resident or outside of the city, to obtain obtain a library card with which you could check out the online digital material. So, in a concentrated effort um to mitigate those cost increases as well as ensuring that residents have good access to that material,

the libraries is proposing establishing a non-resident charge for utility utilization of some of those online digital material.

And then human services, worth noting here, um City Council might recall during the 5-year forecast time frame there was a lot of uncertainty with state and federal funding.

Uh one of the things that has remained consistent even though we're not seeing a level of significant federal reduction at this point in time, one of the thing that has remained consistent is human services is still anticipating a significant workload increase related to some of the required changes in the administration of some of the programs.

Good example of that is the family support specialist, which there's now going to be a requirement for more job auditing or monitoring and reviewing and ensuring that individuals are in fact eligible to receive Medicaid benefits.

For the benefit program assistants, City Council might recall there was conversation about the possibility of um a reduction occurring at a future point in time should the state not reduce its overall error rate. Even though it's not um something that the City of Virginia Beach can be held solely responsible for, Virginia Beach can do its part in trying to help and ensure the overall

state reported error rate is um actually reduced. So, these positions are anticipated to do that um within human services help that by converting contract manpower dollars to these FTEs.

Another area uh of of some investment within the proposed operating budget is within the area of development services and code enforcement. Within the planning department, allocation of resources to begin working on updating the city's zoning ordinance, which hasn't which has not been updated, my understanding, since 1988.

Within the housing department, investment in some technology to begin exploring the utilization of a pilot project or pilot program to where cameras could perhaps be used um to allow for a more accurate, timely um code enforcement inspection of areas of the city or perhaps um allowing the housing department to at least explore some complaints um remotely as opposed to um spending the time

um having to drive over to the residents to check it out. Uh also worth noting is the um a realignment of resources. So, based on conversations with housing department, it was determined that some typically what would be considered core local government operational costs related to code enforcement were being charged and allocated to some community um block grants. So, the operating

budget proposes a realignment of this, separating that, bringing those positions back and cleaning up um and helping establish clear parameters of federal programs versus local programs.

Some other areas worth noting, um regional grants. City Council might recall during the last reconciliation process, direction was given to request that the community organization grant committee, COG, uh review regional grant contributions and provide City Council with a recommendation um at a future point in time on whether the organizations' method parameters were met, qualifications, and were good

investments of the dollars.

Um so, where we're at at this point in time in that review process is the COG committee has met, they have begun their evaluation, and they're very close to making that recommendation.

So, since the recommendation was not um ready for City Council's digestion digestion, where we're at in the process is the funds for regional grants have been established in a a reserve, um and we will be waiting City Council's policy discussion and direction before allocating out from that reserve in terms of whether City Council wants to invest in the manner in which the COG's recommendation is or if City Council

would like to invest otherwise.

Quickly worth noting also are investments within the um in beach events. Allocation from the TIP fund is proposed to be utilized to reinvest in the holiday light programming. Looking to move the holiday light event from the boardwalk to the aquarium. So, this investment will be purchase of dish additional lights as well as the transition of that and communication of that event being moved. So, the concept

behind this is this will reduce the wear and tear and stress being placed on the concrete at the boardwalk, hopefully extending the life of that before adding to additional costly maintenance needs of the um that the vehicles place on the boardwalk itself.

As always, um within the operating budget, we have reflected the requests that were not funded, even though we had an opportunity to make some strategic investments, it never fails, there's always more requests and more needs than what resources will allow us to get to. So, the total amount of requests that were not funded list is about $22.1 million, and the additional FTEs that weren't funded was 123 FTEs.

Quickly looking at the CIP, here's a pie chart visual of the CIP.

You can see the visual here from the pie chart that the largest portion of the CIP or capital improvement program is related to stormwater and flood protection, that certainly has not changed.

Uh the next largest portion of the CIP or sections of the CIP are related to roadways at 18%, and schools at 18%.

A one-page slide with some talking points regarding the CIP. Just as a reminder, it's a 6-year CIP, however, only the first year of the CIP are appropriated funds. So, the proposed CIP includes $409.8 million to be appropriated as part of year one of the CIP.

Notable, 10 new projects were added to the CIP.

Five newly reflected projects that are dollars fully funded.

And happy to report for the first time in 3 years, there's no new projects that have been added to the delayed or project to be deferred list.

And also happy to report that projects that were previously reported as fully funded in the CIP have remained funded in the proposed FY27-32 CIP.

Public Works does a fantastic job and as well as as well as the other CIP section managers in trying to secure state and federal funding. So, over the course of the CIP, there's an additional $35.8 million that was increased or programmed out.

And also mindful of the overall debt metrics that the city has and the bond future bond needs of the city, the proposed CIP preserves about $156 million of future charter bond capacity.

Talking about some sections of the CIP, uh the Parks and Rec CIP section has a lot of um things going on in it. This CIP section not only maintains the existing Parks and Rec facilities, maintains citywide trails, as well as park and amenities, pickleball courts, tennis courts, and overall park replacement modernization needs.

So, something exciting to report following up from the the retreat where City Council was presented with the recreational modernization plan, the proposed budget does include an additional $42 million to to fully fund the construction needs of the Great Neck Rec Center with in construction anticipated to begin sometime between FY27-28.

So, the design for the Princess Anne and Bayside, which are the next two oldest um after the Great Neck Recreation Center, is also programmed about $4.5 million within the CIP.

Something that's probably more so exciting to me than others is seeing a full circle occur.

Back in the 1980s, whenever bond referendums were going out uh for the construction of these facilities, that's when the tax rate was increased accordingly to pay for the debt service.

With a long-term financing plan being that whenever the debt's paid off, the dedication will stay in place, ultimately acting as a bill payer for the later modernization recapital and recapitalization needs of those facilities. So, it's pretty exciting to see that going full circle.

Additional investment, um, per uh direction from City Council as a part of the last reconciliation process, was to explore restroom facilities at the Lynnhaven um at the Lynnhaven Marina. So, the proposed budget includes about $250,000 for that to establish those um permanent restroom facilities there, um, which is a a smaller number than I believe was last being communicated and explored as a part of this request.

In terms of economic development, the CIP section includes some notable, um, investments.

One being additional funding to the resort parking project of about $25 million. As there's been and continues to be a um increased demand for parking needs within the resort area.

The Dome Site maintenance project, so the economic development, um, project funded the construction of it, but there is going to be a need to maintain the new facility. There's a sustainable plan in place in which the development authority receives an amount of the ticketed revenue to which they are to use for long-term recapitalization and maintenance needs of the facility. However, until that

point in time and where that builds up and accumulates sufficient funds, the purpose of this project is to provide some initial seed money should the need arise before the VBDA has has the means to be able to do so. And that's reflected in the building section of the CIP.

The Pembroke Square um public parking, so City Council as a part of the redevelopment agreement of Pembroke, um, a part of the overall agreement financing plan of that is for a SSD to be established. The proposed budget includes recommendation in the ordinance to begin establishing that and we will intend on running the public hearing as necessary to establish that SSD boundary to not only provide funding for a

portion of the bonds associated with the project, but also for long-term maintenance and operations of the facility.

Worth noting is at the direction of City Council to revisit and revise the Atlantic Avenue Street Improvement Project. Years ago, a couple years ago, the estimated project cost of that ballooned up um higher than what was currently programmed in the CIP at that point in time.

At the direction of City Council, it's been revised down to explore what a more cost-effective, um, execution of that project looks like. And the proposed budget does have that fully funded revises the project cost down to about $35 million.

And then last thing to touch on [clears throat] here in terms of economic development, and certainly not a new topic of conversation, but it's certainly um an issue where significant resources are being allocated towards it, um, within the proposed budget. So, the Town Center Garage maintenance project, uh, there's been an identified need for elevator replacements within the Town Center garages.

Typically, these would be supported and provided through the Town Center SSD.

However, as City Council knows, the SSD has not been on sustainable path. And so, in lieu of raising taxes in the SSD rate over the last couple of years, City Council's been taking incremental steps of freeing up capacity with the Town Center TIF fund to support these maintenance needs. The most recent step City Council did was actually modifying the Town Center TIF ordinance to allow

for such maintenance needs as is being described here with the um elevator replacement in the garages.

Total program amount in the CIP [clears throat] is about $7.3 million.

Roadways, quickly, uh, it's always a topic of conversation.

Um, even though there's a lot to talk about, this will be one of the sections in which I'm sure City Council would like to see a briefing on talking about the roadway sections. Just couple of the projects worth noting that are now reflected as fully funding fully funded is the Lookout Road sidewalk project and the Woodstock Road sidewalk project. The full funding on those construction of the sidewalks is made

available through revenue associated with the speed enforcement cameras.

And then also worth highlighting is the Holland Road Phase 1 project now being fully funded with the additional $11.9 million added.

I made note earlier about the infrastructure needs within the city.

So, in [clears throat] the building section, there's several proposed adjustments to the various CIP projects.

A notable one within the within the courthouse reinvestment project, $20.2 million is being programmed and added year one. So, the intent of this is the utilization of the major project fund as the bill payer within the existing project that was previously approved by City Council, but the need in the near term is for elevator replacement as well as some ADA accessible courtrooms.

The goal and the intent would be building out these additional courtroom spaces that could ultimately be used as swing space down the road as overall modernization efforts are occurring within the courthouse.

Another project worth highlighting that was mentioned at the retreat is a new project called the Aquarium modernization project.

Proposed for funding in year one of that project is $3 million.

So, there's no out-year funding programmed on that project. The scope of the project is to get a sense of a schematic dot design and conceptual design to have begin having that conversation with City Council as to what options they might like to see, what their needs are for those options, and get realistic cost price cost estimates to those.

To then, at a later point in time, um, at the direction of City Council, begin or future appropriation of City Council, uh, begin working towards additional design documents such as construction design.

A rule of thumb could be, uh, is to move towards construction design of a project, probably looking closer to 10 to 15% of the overall construction cost. So, if a project's $100 million, uh, the design for that, construction design of that, could be roughly 10 plus million dollars.

I made note of some of the added investments as being recommended in the proposed budget for standalone projects such as the library, human services, municipal campus, and also worth identifying here is the, um, Princess Anne High School renovation or uh replacement project being proposed by schools.

As presented in the SEON, it's is reflected as fully funded at $330 million over the course of the six-year CIP.

Similar to the operating budget, the CIP uh document includes a request of the not funded list as well. This is a larger amount, um, with a total of 47 projects that were not fully funded or not funded, and the total balance on those projects being 470, excuse me, $547 million.

Uh, it's worth noting this does not include the balance to complete on some of the other projects, but just the amounts that were requested as part of the budget process.

One of the things we strive for each year as part of the budget development and city manager's, um, presented budget to City Council is, uh, we strive for budget sustainability. So, we look to develop a budget that has limited expansion of services resulting in ongoing costs, right? So, you, um, allocate resources for a half-year initiative, but the following year there's a need to annualize that cost.

So, it's not really, if it's a million dollars and it's only funded starting in January, well, it's 500,000, but then as part of that following year's budget development, you've got to come up with that other $500,000.

So, we're mindful of that in the utilization of one-time funding. We're very strategic in that. Good example of one-time funding is fund balance, interest income. There's not a guarantee that those are going to be there year after year, so we try to avoid using those for things that have ongoing costs or stand-up programs. You wouldn't want to use that for pay raises, for example.

Uh, the tax relief credit, I noted earlier, um, it is a sustainable reduction, not impacting the current services.

I made note of this earlier, it's largely attributable to the VRS reduction as well as the anticipated growth in the revenue.

So, it is a sustainable option. It's not every year that we can present an operating budget that affords the opportunity to make tax rate reduction as well as investments in other areas, but this is one of those anomalies.

The budget is balanced on the utilization of of savings, about $10 million.

Capacity has been reserved for departments to be able to utilize vacancy savings within their operating budgets to meet unmet needs and or continue to deliver services. So, good example of that could be human services.

They have vacancies, they're not able to provide the services, but they can utilize the vacancy savings for for contractual services to ensure that delivery of those services continues.

Another thing we typically talk about is utilization of vacancy savings as a bill payer and the fund balance utilization in the CIP.

Here's a slide trying to give a sense of utilization and that flexibility afforded departments in the annual operations management of their department budget.

So, in FY 25 the salary contracted manpower and overtime amount is reflected there. So, for example, the salary and benefits the budget amount for the general fund was $531 million.

The actual utilization by departments was 508 creating a vacancy savings of $22.3 million.

So, the other thing that departments were able to utilize those vacancy savings for were the execution or the need and allocate those towards contracted manpower and overtime. So, you can see the contracted manpower and overtime for the general fund exceeded operating budgeted allocations about $6 million bringing the vacancy savings for the general fund down to about $14.9 million.

If you look at this over time, this is actually a shrinking number in terms of the annual vacancy savings that's being realized by the general fund and this is attributable to the city doing a better job and actually filling the vacancies.

Whereas during the pandemic, I think at point in time we were close to a thousand vacancies and I think based on the last HR report we were down to significantly a lower amount than that.

Quickly going over revenues.

Um City Council might recall part of the PISC recommendation was to explore programs and services provided by the city that receive a sizable general tax subsidy of operation of those programs.

So, as a part of the overall operating budget process, we were able to take into account some of those recommendations.

Some of the departments listed here were able to increase their department specific revenue reducing their need for general fund tax subsidy.

Um the number mentioned up there in the blue is all the departments listed there increased their department specific revenue by about $6.2 million year year resulting in a lower requirement of general fund tax dollars to support their operating budget. Not all of these did occur through tax or fee increases. Some of them did occur just through the organic growth of the revenue themselves.

Over on the right hand side of the green, these are some notable adjustments that occurred to operating budgets baseline expenditures.

Um good example here is economic development reduced their operating budget by a little over $275,000, I believe, in terms of trying to find efficiencies, tighten the belt to accommodate and acknowledge the the need to be more efficient.

This table here provides a highlight of various fee fee proposals that are included in the operating budget to be amended or adjusted. A full comprehensive list of this is included in the executive summary document. Parks and Rec has various fees that they're proposing to make adjustments to, some within the Parks and Rec Center for programs and membership fees, some within their general fund operation for

utilization of park services and even the out of school time program, which again was one of those programs that was identified by PISC as to explore consideration of adjusting those programmatic fees to reduce general fund support.

Within the library department, I made note of the non-resident digital access fee that varies between $10 to $35 depending on the app.

Within the aquarium, the implementation of motor motorized wheelchair rental of $30 to $40.

The waste management can replacement, I'm mindful of noting these here in the waste management enterprise fund. So, this is not the monthly collection fee, but these are for services provided by the waste management enterprise fund.

So, the current cost or current replacement fee for a black can within waste management is $75 and replacement of a blue can there's currently no charge for. So, the proposed adjustment is for replacement fee to go up by $25 to $100, which will replace both the black and the blue can for resident need.

Waste management yard debris debris trailer, current fee for that is about $40 per is $40 per day or $75 per weekend.

And the proposed fee adjustment for that is to increase to $50 per day or $150 per weekend. So, those familiar with this program, this is where public works will bring out and deliver canister sizable canister to your residence in your driveway for this fee and then come back the following day or at the end of the weekend and haul off the yard debris.

Worth noting is the waste or excuse me, the water and sewer program fee adjustments. So, previously adopted by City Council was a five-year rate adjustment schedule for various water and sewer fees. Just note this is year four of that five-year plan phase increase.

One of the things we're always mindful of in developing the operating budget is the tax burden that we're having that we're placing on residents.

So, one of the things that we include as a part of the executive summary is try to create a profile of the tax burden that the typical Virginia Beach household is is being the burden being placed on them.

So, for example, we try to create this profile. We have the median assessed value. We have the median car price. One of the things we use is the American Community Survey and Census data to try to get a sense of consumer spending within Virginia Beach to do our projection of the meals tax burden, admission tax, and the other fees. So, overall, you can see that year to year we're anticipating this

the impact on the average resident to be about $158 or the household to be about $158.

And then the thing we're always mindful of is how we're scoring when when we ask the residents of Virginia Beach the value that they feel they receive for their tax dollars. And you can see that we're quite a bit above the Atlantic and the national average.

This is the slide that we typically provide Virginia City Council and and the residents to get a sense of how Virginia Beach stacks up in terms of tax rate major tax rate comparisons across the South Hampton Roads area as well as some of the user fees, solid waste collection fees, etc. You can see Virginia Beach is typically the lowest, if not the lowest then second or near the bottom of being the lowest in

majority of the categories.

Um annual tax relief programs, City Council has certainly provided a significant portion of tax relief to the residents over the many years.

Reflected here are two in bold to be added to the list if if approved by City Council.

The elderly and disabled tax relief program is noted as we made modifications to those income thresholds ensuring people don't get pushed out of the lose eligibility or become ineligible for enrollment within the program. And then the 10% or excuse me, 10.1% local tax relief credit being proposed in terms of personal property.

This visual takes a little bit of time to work through, so I'm going to try to go through it quickly. I've provided City Council in the past. And so, what I'll try to do is just work quickly the first row left to right. So, back in FY 2021, the total real estate tax rate was 101.75 pennies.

3.48 were dedicated to Parks and Rec.

0.9 to the ARP, 0.47 to the outdoor initiative.

Point or excuse me, 2.5 to stormwater operation. With the remaining amount being allocated to support general fund operations with the 94.4 cents.

Over the years, what this is capturing, if you look at the far right column are the real estate tax rate reductions that have occurred.

Um the notable amount in FY 22-23, the 4.1 cents that wasn't a reduction in terms of the real estate tax rate, but that's when City Council opted in lieu of raising the real estate tax rate to support the bond referendum, the city was going to absorb that. And so, what this visual here shows is the absorbing that on that 4.1 was placed over in the flood protection fund, but that was redirected from the general fund

allocation of the real estate tax rate.

And then as you go down, you'll see that overall the general fund portion of the real estate tax rate has gone down by about 8.85 cents since FY2021. So this is certainly a credit City Council in terms of their commitment and dedication of reducing real estate tax rate and providing relief to the residents.

One of the discussion points that came about out of the retreat was direction for staff to explore capacity within dedications for consideration of future to be determined identified needs.

More specifically at the retreat, I think this topic of conversation came about whenever there was discussion of the ITA.

Not necessarily whether it's to be developed for commercial or recreational activities, but there will likely be a need either way for infrastructure needs. So one of the takeaways from the retreat City Council was to begin having this conversation and keep indication and conversation about in terms of the dedication that could have capacity for potential redirection. So just following

up two of the dedications that were noted at the retreat were the open space as well as the agricultural reserve program.

Just as a quick reminder, the purpose of the open space is for the preservation of land for recreational amenities.

The existing obligations of the fund, there's a debt service payment that's anticipated end in FY27.

And program staff within the dedication administering the program is about 6.08 FTEs.

The current dedication is 0.17% of the meals tax rate which is generating about $3.25 million a year and the existing fund balance is $12.5 million which does not include the existing funds available balance in the CIP project. So the direction on this one, it's a policy discussion and decision by City Council in terms of future obligations.

It's coming to a point in time where there's not a legal obligation or requirement and so this is really a policy discussion of City Council as to how they would like to move forward.

The ARP agricultural reserve program is a different little bit different in that yes, there is capacity within the ARP fund.

So the purpose of this is to promote and encourage preservation of farmland.

The existing fund balance within the program is about $26.6 million.

The real estate tax dedication to it 0.6 cents generating about $5.1 million a year.

But there are obligations to be mindful of in looking at this dedication.

Interest payments will be required for the participants actively enrolled in the program all the way through FY4950.

There's a commitment policy commitment to ensure that $990,000 is transferred from the ARP to the stormwater for maintenance purposes, ditch cleaning in the southern part of the city until FY45.

And currently programmed in that dedication is about 1.6 FTEs in terms of staff.

So for context as it is now, this modeling and looking at it, we assume 300 acres a year.

That's an average that is assumed, but there's no policy governing that, right?

So based on the existing enrollment in the program, the fund as it is is sustainable right now to allow the enrollment of up to 300 acres a year all the way through FY50.

Should City Council want to explore redirecting some of the funds through and make a policy shift, an option for consideration could be to place a limit on the number of acres that could be enrolled each year.

That would certainly reduce the potential risk of additional funds being needed through this dedication and then it could be a standalone item that City Council takes up as a part of the request. If there is more than 150 acres, would City Council like to appropriate additional funds or find another way to address that and enroll those acres into the year into the program.

If that were to be the case and say it was 150 acres, the dedication could be scaled back to 0.3 cents and allow sufficient funds to be in place through the program all the way through the year I think 2045 or 2050 based on those parameters. So no recommendations being made as a part of the proposed budget, but just trying to follow up and and acknowledge and and be responsive to City Council's request

to have have these continued conversation as emergent needs arise in the future or discussion of infrastructure needs arise.

Uh this slide here is got three bullet points on it.

I made note earlier of the regional grants in the amount that's been allocated to a reserve. So what we would like to do as a part of this budget process in the coming weeks is reserve time for City Council to have a discussion and await policy discussion or policy decision and direction on how to best move forward in the allocation of that those resources for the regional grants.

Another recommended uh another recommendation included in the proposed budget is language that's been included in the revenue sharing formula.

So following up on the retreat at the direction of City Council to explore consideration of trying to achieve parity between city and school employees in terms of pre health insurance premiums, proposed language has been included in the revenue sharing formula.

So similar to how City Council in the existing formula has a requirement that should City the school board like to receive additional funds or need additional funds above and beyond what's allocated through the funding formula, they would submit a resolution or request to City Council.

The language as is now drafted is of similar mindset in that if school board would like to do that, then they would send a resolution over to City Council informing of them of that as well as how the resources of which they would like to accomplish it and the sustainability of the proposed change. Again, it's a proposal for consideration and what we would like to do is try to reserve some

time or reserve some time for City Council to have conversation thoughtful conversation on that and provide staff direction.

And then the last one here is the arts and culture dedication. There was a growth in that revenue year over year related to increase in the baseline amusement tax projection. So the amount that's dedicated to cultural affairs operating budget has grown. The amount in excess of the current programmed needs as previously approved by City Council is about $425,000.

So that has been set aside in a budget of reserve and certainly something we would also like to seek City Council's direction and guidance on as to how to best utilize those and allocate those reserves out prior to as part of reconciliation.

The last slide here is another takeaway that we had from City Council's direction at the retreat in terms of presentation format. So around the table at the retreat, City Council had the takeaway that they didn't have a desire to receive death by PowerPoint in presentations and have every department present to City Council. So there was a hybrid concept discussed and so what we have

here are the parameters of a proposal for City Council's consideration as to the format of what the forthcoming presentations by departments and sections will look like.

So the [clears throat] model here as presented is that written executive summaries as opposed to PowerPoints would be provided to City Council the week before the topic of discussion.

Each workshop would be themed to the best extent possible, right? So slated right now for week one budget workshops would be space for City Council to have round table discussion on public safety departments, what they see in the packets and the pre-read material or the executive summaries.

The public safety departments will have representatives here that if requested by City Council can come up, answer questions, have discussions and conversations. We would also like to use that opportunity at the end to have a discussion on the regional grants proposal as we should have the recommendations by COG at that point.

Week two, have a high level discussion of compensation and benefits.

Perhaps budget and management services and HR would be tag team that and then have more focused conversation round table discussion by City Council and Department of Housing, Human Services, um, and schools, uh, which well, the schools, um, we would like for to request that they have the traditional presentation format as, um, there's a lot of information in schools that should City Council like to

do a deep dive on or have a question, it would be be better for schools to be able to answer that and provide that information, um, as they they have a better sense of that as opposed to me relaying questions and then providing them back to Council.

Uh, week three, infrastructure, uh, related to the CIP infrastructure, um, and then the revenue sharing formula I mentioned on the previous slide, we would be waiting policy discussion, um, by City and direction by City Council as the best best proceed for that and potentially amending that policy.

And then week four would be the Economic Development CIP, CVB, Parks, Recreation, Cultural Affairs. Again, the conversation would be around executive summaries being provided to Council with Council having a round table discussion.

Staff will be here to be able to answer questions should City Council request it, but the concept is not to necessarily give a formal presentation by any one of the departments.

So um last slide, operating budget timeline.

So, we have several Council workshops scheduled ahead of us, two public hearings scheduled for City Council to, um, hear from the public on the operating budget, the reconciliation workshop to begin on May 5th or to occur on May 5th with the ultimate budget adoption vote occurring on May 12th ahead of the May 15th state required deadline.

So, I know that was a lot of mouthful and, uh, but I'm I'm available to take questions or direction from Council.

Okay, uh, we got Worth, Rosemary, Stacy.

Thanks, Mayor and Mr. Chalet. Thank you very much and your staff for all the work.

I've got five items. I'll go through them quickly.

Um, and the first one's really quick.

The percentage increase in the overall budget as opposed to last year, like CPI is approximately 3%. This is a little over that.

Yes, sir. 3.4 Uh, 3.27%.

Yes, sir. That's Um, could you go to page six?

[snorts] But the $6 million increase in debt service, Mhm. uh, couple weeks ago we were presented with a bond referendum oversight uh, update and we're spending about $50 million now. Is that a approximate estimate on the bond referendum storm program? Is that about where you we were spending maybe 30 and now we're spending 50 million? Is that about right? In terms of out the door

real execution? We spent a lot of time engineering and planning and now we're doing engineering, planning, and construction. So, the price is we're about the fifth year out of the 10 years. With with the mega bundle contract underway, yes, and we anticipate that to ramp up even more so in in the near term. So, it's fair to say some of that fund increase of $6 million with debt service is related to

that. No. No, sir. The, uh, the flood protection program is managed and the debt associated with that is managed within an entirely separate, um, Okay. special, I debt fund, um, and so the dedication goes there and supports that and that pays the debt service. This debt service here is truly attributable to general fund, roadways, um, facilities, things of that nature that are general government. And that's

about what we usually average every year.

Historically, yes, sir. Um, we have been in a situation where we haven't been routinely issuing bonds, um, but if you go back over time, this is closer to what we were more in line and accustomed to seeing in terms of yearly issuances.

Thank you. Page 10. Just a quick question about about teacher salaries, uh, with the Is it a fair statement to say that the 5.2% that's our portion is the state uh, going to add on to that? So, just seeing the budget briefing is higher than 5.2%.

I think that's the entirety, um, as reported by the state, so that includes the local contribution, um, the schools will be making as well as when I was looking at the state budget, I believe they have a planned 2% allocation, but that would be inclusive [clears throat] of the state funding. Okay. Thank you. Just the last last question, page 32.

I spoke about this at the retreat, um, and it's just gnaws on me or eats on me, no pun intended, the restaurant and meals tax.

Um, it's 6% here. Yes, it's the same.

You've heard me say this before, I'm going to say it again because when you add in the state 6% that's a 12% tax on each and every meal, also purchased in grocery stores. And so, I just think the 12% continues to be higher than what we should be taxing on one particular item. And I get it, it's some of it's uh, the half cent from last year is for special projects and it's nice to see that

fund balance growing. I just I know folks here I'm not um, preaching not preaching to the choir here, um, but I just got to state it that I just feel like the meals tax as compared to other right uh, metro regions and cities across the country, especially the northeast, New York, San Francisco, it's higher than there. So, I just make that plea and I'll be quiet.

Yeah, but the other city those cities you mentioned also have significantly higher tax rates.

Yeah, I agree.

Yeah.

Okay Rosemary.

Kevin, again, you have done an absolutely masterful job of taking Anybody has seen our document so like this thick of the budget and I know you had to talk for a while, you probably need a really good glass of water.

I Yes, I'm I spilled a little bit of it, but I I saved a little bit.

But it say he had and and come making it very concise and really pretty easy to understand considering how complicated it is.

You you just do it incredibly well.

Thank you. Uh, I did want to just also say that I think on this tax relief for the personal property that it's the Council's intent and y'all [clears throat] tell me if I'm wrong, but I don't think so. Uh, we want to do this to make this credit for at least 2 years while we have the VRS the savings that we make sure that everybody [clears throat] knows that this tax credit is not just

going to be for this next budget, but also for the budget afterwards.

[snorts] Y- Yes, ma'am. Um, the language that's in the ordinance is establishing the 10.1% tax credit. I made note it is sustainable as as, you know, the environment is right now through the the reduced VRS contribution.

As of right now, it's not foreseen as being something that will be problematic in the next year or the following year, um, it but things certainly change. We would seek City Council's direction, um, at the right time to remove that if ever there was a desire by City Council. So, City Council will it will stay in place until City Council gives us that direction, um, or consideration to to explore something else.

Thank you. Yes, ma'am.

Okay uh let me see. Uh, Stacy, uh, Josh, and Hutch, and Cash, Jennifer, you know, everybody.

Michael.

Aubrey.

I didn't raise my hand.

And and and folks, you know, if we can try to be succinct.

Thank you very much for that presentation. It was well presented.

So, let me make a few notes.

One, I think that, um, and correct me if my math is wrong cuz I'm trying to do it in my head, but uh, the overall budget increase of 3.2% is in line with what our inflation rate is.

Uh, it's less than what we're uh, looking to give to the average employee in the city of 3.5%.

That's not including the teachers at 5.2 and the uh, 4.2 for the non-instructional education.

[snorts] So, I I feel that that's all good.

I I, you know, given that, I think that and also given the ongoing challenges that the items that we're hit with that we don't control, the increase in the insurance and the health insurance and so so the, uh, increase in the some of the other items that we can't control at all that are much greater than this 3.2%. I I think you've done a very good job in putting together a budget that reflects, uh, reality.

At the retreat, uh, I when we talked about the number one priority and uh, it was brought up that tax relief for uh, our citizens was the number one item. At the retreat, I brought up that I believe that the tax relief should come in the form of real estate rate. I was advocating for a 2 cent reduction in the rate and uh, there was a didn't get much consensus on that.

So, I don't know that anybody's lost any sleep over the last couple months on that. But, I do want to commend the council, commend you on this on the personal property tax on average will yield a higher savings than the 2-cent real estate tax reduction. So, I do want to commend everybody for sticking to that. And while I'm not willing to acquiesce totally, you know, I I can live with that.

Um And also, I want to commend you on taking to heart and implementing some of the suggestions that were brought forward by the process improvement steering committee. They did a yeoman's job. They worked hard. They really took that seriously and brought forward some really good suggestions. And I'm glad that they were implemented and shown in this. And overall, I think that it's a

budget that certainly I can live with.

And I I'm I'm I can defend this budget to anyone.

I think it's just a fantastic job.

Thank you. Okay. And uh folks, we got to be more succinct. Josh Josh Cash.

Jennifer. Okay.

Uh first off, thanks. And second is uh just cuz it was at the top of my list, the the property tax versus the versus versus the uh real estate, we're helping 180,000 citizens. I think that's it's just good work, you know, instead of 113. Both good ideas, but this way we get it 2 years is uh we're all in agreement on. I think it's I think it's very positive.

Infrastructure, very important for down here. We talked about this before. They need an infusion. We got 60-year-old buildings. I went through that. I won't do it again. But, it's good that we're we're making that happen. Um the schools uh we give them 46.2 whatever. 46.2 million. Yep. And then they get money from where else? The General Assembly, the state. So, two three two pots or three?

Three. They probably got some private funding coming in as well from grants.

So, I'm just saying is is there is So, when we get hit about what we're doing for the schools, they do have more than one funding source and they're large, right? Yeah.

Okay.

Not that I don't love helping and doing all we can, but we got to we got a lot of stuff to pay for, as the vice mayor said.

Um Regional grants and all that. I look forward to that discussion. I'll have more to say then. But, with the COG and everything else and what we're appropriating, I'm going to want to ask about that. Um the dedications, I've already I've already said there's a couple things there. I don't understand why we keep waiting. Let's just take the number or have the discussion to take it down to

the acreage that you say is what's needed. And then we could use that for other for other funds in this in this time.

Um And then the the last thing I want to say is on the on the on the I call it the portfolios with the category way we're doing the budgets. I I thought I had said that what I once thought was was needed is if if a couple of them or y'all choose however you want to do it to have a presentation. I don't mean a I don't mean an hour. I'm talking about a couple

of slides, something to generate so that we see particularly what their key programs or their issues or something like that for a couple of them. Not saying all of them.

I would trust for y'all to work that out. But, um that would be that would be important to me. And then lastly is uh the public safety one. Uh uh specifically from like the police chief about LIDA and what are the how that's going and what he sees there. And then from the fire chief, I just got word that Norfolk has said they are going to a fourth shift. So, we are

going to have to talk about it. We can either be reactive or we can be proactive. And if the fire chief's going to be presenting, why not let him have a few minutes to talk about it so that we all get on the same page cuz I've been hearing from lots of us that there's different thoughts on it. Have him do a few a few minute presentation and let it uh let it go from there.

Would be what I would ask.

Okay. Okay. And once again, we're going to have plenty of ample time over the next couple weeks to be talking about this stuff. So, if you can Yes, sir. I promise to be succinct. Um I want to say thank you, Kevin, and and your staff. Loved what I saw on infrastructure reinvestment. Um I'm going to get an earful [clears throat] from my wife on the task recommendations um with the after-school fees uh for kids

and the yard waste containers. But, happy to go explain that at home and [snorts] those are justified. Uh way to go on the park ranger program. I'm really happy to see that being kicked off. And I wanted to just say a personal thank you because I know there there have been several of us around the table for the last 3 years have been asking, as long as we're talking about tax

relief, to provide tax relief to as many people and to those people that need it the most, including our renters, our single parents, our young people trying to find housing um and workforce. And um the personal property tax will hit more people. Um the real estate tax relief hits Sure, that's a lion's share of what the what the you know, how we fund our city government. Yes. Um but, these are

also out-of-state real estate real estate property owners. These are out-of-state companies.

it's the same.

So, so I just I want to let you know that I'm really proud of that work. Um so, thank you very much. And Okay. Cash and Town. Uh just want to say thank you for a wonderful presentation.

Grateful for the tax relief. Um the CIP, this is a statement on the CIP for road roadways.

Um making sure that uh Centerville Turnpike phase [snorts] two has been fully funded. Even though it's not on the document, I just wanted to make the public well aware of that. Thank you.

Thank you, Jennifer.

Um reiterating what's been said and also trying to get my mind around how the presentations are going to go. My concern with listening to this is how the public will know what's in the documents. Like, are we just receiving the executive summaries? We read it, have a conversation, and then how is that going to work? Mr. Mr. Mayor, I heard a couple council members even in the 101s talk about the fact that they

still want new department heads to maybe tee off the conversation with some of the key program changes and some of their key challenges. So, I'll just incorporate that and change as we do the presentations. So, is that okay? Yeah, that would be good.

Madam Very [clears throat] very quickly, thank you so much that we were able to get some clarity for going through this. But, especially to mention about the roadways with Freeman.

Also, listening to your tip instead of the SSD, so people will understand that is not going up. Mhm. It is coming through from the town center.

And just one quick question, the one to do with Princess Anne, is that the final cost for They're cut pretty The [clears throat] schools are currently going through an RFP process. So, this is the budgeted amount. They'll know more about the final cost as they go through the procurement process. But, right now, they're fully funded in the 330 million dollars. And hopefully, the budget stays

with hopefully, the bids come in with that budget. Okay. Finally, thank you to Okay.

Okay. At this point, what do do I have your permission that we can skip council comments and things for another time?

Okay. Chair will entertain a motion to recess into a closed session exemptions of open meeting section by 2.23711A Code of Virginia amended for [clears throat] the following purposes.

Um discussion If you're not if you're not talking about appointments, it's discussion.

I [snorts] I we'll talk basically that. Yeah, that's it. Okay.

I'll tell you what, at this point, let's just go ahead and adjourn. Okay?

Okay. Thank you all for coming. Thank you.