Radford officials flag insurance spike, staffing risks as they shape FY‑2026 budget

Radford City officials presented a proposed fiscal year 2026 budget totaling $77,262,257 at a May 5 work session and flagged a steep rise in employee health insurance and staffing shortages as the biggest near‑term risks.

The proposed budget covers the general fund, electric fund, water and wastewater, transit, streets, solid waste and an internal service fund. City staff said the general fund budget for 2026 is $33,122,947 with a projected reserve increase of $239,178; the advertised package of possible tax adjustments could add roughly $721,000 if council approves all items. City Manager Craig (presenter) told the council the FY‑2026 budget is balanced as written but that the city still faces a multiyear structural shortfall tied to declining revenue estimates and rising costs.

Why it matters: Department heads said the combination of higher benefits costs and frozen positions threatens service delivery. Several said losing trained staff would be expensive and slow to recover — particularly in electric, police, fire and utility crews — and undermines the city’s capacity to maintain aging infrastructure.

City finance and insurance overview City staff reported that FY‑2026 all‑funds revenue and expense totals are $77.3 million. Craig said 2025 revenues have come in lower than budgeted; the presentation projects 2025 general fund revenues at about $29.7 million against $36.0 million budgeted, and a near‑term shortfall that staff has covered in part with one‑time transfers. He explained the city had previously advertised tax rate ceilings (including a possible 3¢ real estate increase to 82¢) and other options for council consideration.

On employee health insurance, the city said an initial carrier quote showed a 29% spike; after negotiations the increase has been reduced to 14%, which still raises city costs by roughly $638,000. Craig said the administration proposes shifting two‑thirds of that increase to employees and one‑third to the city — about $425,000 borne by employees and about $213,000 by the city — which would raise employee monthly premiums by roughly $100–$300 depending on plan and family status. Craig characterized the insurance change as “a gut punch” that meaningfully complicates the budget.

Staffing and service risks Department directors repeatedly told council that morale is low and that recruiting and retention would worsen if benefits and pay do not improve. Tim (Electric Department director) said his department is down to 19 employees after the foundry closed and reported two retirements and one resignation pending; Tim warned that losing more linemen would reduce service capacity and raised the cost of replacing trained staff. "Linemen don't grow on trees," Tim said, adding that losing experienced employees would push the city to rely on contractors at higher cost.

The police chief reported the department currently has 34 sworn officers and noted recruiting challenges: fewer applicants and competition from neighboring employers. The chief said a single academy trainee represents a roughly $19,000 training investment and that losing multi‑year officers carries higher replacement costs. He said the department responds to increased mental‑health and violent‑crime calls, sometimes with only three officers on patrol, and cautioned that additional departures could force operational changes.

Fire and EMS leadership said the combined cost to outfit and precept a new firefighter/medic can approach $10,000 per employee and that a cluster of retirements is possible in the next several years.

Utilities and infrastructure Water and wastewater: Staff reported improvements in the water/wastewater fund driven by proposed user rate increases. The draft FY‑2026 water and wastewater revenue figure is $6,594,000 (reflecting a $4 monthly increase in both water and sewer); projected expenditures of roughly $5.92 million would allow a projected reserve around $672,000. Water operations leaders warned that grants tied to affordability thresholds favor jurisdictions with higher rate structures; one staff member said the city would need a much higher household‑rate ratio to qualify for some 100% grant programs. City engineers and operators described multiple deferred capital needs (tanks, tube settlers, raw‑water pump wet‑well) and said some replacement items could cost hundreds of thousands of dollars.

Electric fund: The electric fund budget was presented as essentially flat for FY‑2026 with no planned retail rate changes in the draft. Staff said wholesale power costs (Appalachian Power and market purchases) remain a key risk and recommended that council review wholesale cost exposure within 30–90 days. City leaders reminded the council that the electric fund transfers roughly $3.9 million annually to the general fund and that selling the system would eliminate that contribution and likely require a steep tax increase.

Transit and solid waste Transit Director Melissa (Radford transit) described route changes planned for May 12 that will move the system to "city service" on certain routes, reduce one regional route and combine two local routes. Melissa said those changes plus expected DRPT (Department of Rail and Public Transportation) and FTA (Federal Transit Administration) grant adjustments will reduce the city's transit operating share from roughly $287,000 to an estimated $255,000 for FY‑2026, with a one‑time partial saving of roughly $27,000 in the current year and an estimated $32,000 ongoing in FY‑2026. She also said an additional grant request could secure another $45,000 pending DRPT approval, typically decided in May–June.

Solid waste: The FY‑2026 draft includes a $3 monthly increase in residential solid‑waste fees (from $22 to $25) and a 5% dumpster fee increase; staff said tipping‑fee increases at New River Resource Authority will require additional budget coverage.

Treasurer operations and software migration Janet (City Treasurer) briefed council on collections and systems. She said collections were strong for real estate and personal property (collection rates near 98–99% for recent tax years), but that the office is short‑staffed and operating several manual processes. She and staff discussed migrating to Munis (the city’s financial/tax software) to consolidate tax and utility billing; Janet and council agreed the transition should be planned for a low‑impact window (ideally early summer after tax tickets are issued) but flagged Munis support and timing constraints and said the migration will require additional IT resources and vendor on‑site support.

Library, parks and recreation, grants Elizabeth (Library director) said the library proposed reducing part‑time wages and can return roughly $85,000–$100,000 by trimming part‑time scheduling while trying to preserve core services. She warned that some state and federal aid depends on hours and service levels and that staff is checking how reductions could affect state aid formulas.

Parks and recreation and the newly hired recreation director said opportunities exist to increase earned revenue (sponsorships, small‑scale events such as light‑fest illuminations, signage/sponsorship at fields) and to pursue external grant writing; the director suggested a contracted grant‑search service that covers multiple departments as one option to capture external funding quickly.

Discussion vs. direction vs. decision The meeting produced detailed discussion and no final tax‑rate decisions. Council and staff clarified that the advertised tax ceilings (real estate, personal property, meals/hotel, cigarette) set maximums that council may choose to adopt, and staff said the advertised FY‑2026 ordinances can be adjusted before final adoption. On cash‑flow, Craig clarified that a revenue anticipation note (RAN) is a cash‑flow tool that would be added to the budget as both revenue and expense if issued; staff said the proposed FY‑2026 budget is balanced without issuing a RAN but that a RAN might still be needed for July/August cash flow.

Directives and next steps Council set a public hearing and reading of the budget for Monday, May 14 (work session noted that May 14 is the public hearing/reading) and discussed scheduling an additional follow‑up meeting if more time is needed. Staff proposed a contingency meeting on June 17 at 6:00 p.m. if council needs an extra session after the public hearing and the manager asked councilors to provide guidance on which advertised tax options (the 10¢/13¢ scenario and other adjustments) they are willing to adopt.

Votes at a glance - Motion to convene a closed meeting to discuss personnel pursuant to Virginia Code §2.2‑3711(A)(1). Outcome: approved by voice vote ("Aye"). No roll‑call tally was recorded in the minutes.

Ending Council and staff said they will continue work sessions, collect additional information (delinquency/collections detail, grant eligibility checks, and updated insurance options) and bring a refined set of budget choices back to council before final adoption. Council scheduled the advertised public hearing on May 14 and agreed to reserve a June 17 meeting slot in case further deliberation is needed.