James City County supervisors review FY26 budget, signal $1 million school surplus transfer

James City County supervisors on April 21 reviewed the proposed fiscal year 2026 budget, receiving a presentation from budget staff that outlined a $389.5 million total budget across all funds and a $262.7 million general fund, and discussed options to close a remaining school funding gap.

The budget manager, Cheryl Holland, told the board the FY26 general fund represents a $7.3 million (2.9 percent) increase over FY25 and excludes $11.4 million in requests that could not be funded. The county recommends keeping the real-estate tax rate at $0.83 per $100 of assessed value and proposes a 3 percent pay increase on July 1, 2025, with a possible additional 1 percent on Jan. 1, 2026 contingent on budget performance.

Why it matters: the proposed spending plan allocates the county’s largest shares to public safety and schools. Supervisors pressed staff on recurring versus one-time solutions for the schools’ funding shortfall and discussed timing and legal limits for raising local revenue sources such as the meals tax.

County staff said the proposed budget increases the county contribution to Williamsburg-James City County Schools by $2.8 million (2.9 percent) and fully funds the schools’ capital improvement program (CIP) projects within the county’s five‑year plan. Staff presented a range of options for additional local support, from departmental reductions to one-time uses of school surplus or county reserves, and noted constraints on revenue options (for example, James City County is at the statutory maximum for the local lodging tax and lacks local authority to impose an admissions tax without state action).

Budget highlights and options discussed - Total proposed budget (all funds): $389,500,000 (staff figure given). General fund: $262,700,000. - Real-estate tax: recommendation to hold at $0.83 per $100 of assessed value. - Personnel: 3% proposed July 1, 2025; a contingent 1% on Jan. 1, 2026 dependent on budget performance; several new FTEs proposed but pared back from initial requests. - Schools: recommended local increase to operations of $2,800,000; staff and the interim superintendent described an additional need in the range of $800,000–$2,000,000 depending on anticipated state aid. - Meals tax: staff advised the county is currently at 4%; the legal maximum for counties is 6%. Staff estimated a 1 percentage-point increase could generate roughly $2,000,000 for a partial (six-month) year and about $4,000,000 annually when fully phased in. Staff also explained legal timing constraints tied to state law and a moratorium that limit when a locality may adopt changes.

Board direction and next steps Supervisors and staff moved toward a practical compromise: to use $1,000,000 of the school division’s projected FY25 year-end surplus as a one-time transfer to help close the gap for FY26, while planning to identify a recurring revenue source (for example, a future meals tax increase or other revenue) to backfill that one-time transfer in FY27 if needed. Supervisors emphasized the difference between one-time funding versus ongoing salary commitments and asked staff to be prepared to revisit the budget after the state’s final budget is adopted (staff expected final state action in early May). Staff said the formal budget adoption is scheduled for May 13 but cautioned the board can amend or supplement the appropriation later if needed.

Quotes and debate Cheryl Holland, budget manager: “The FY26 proposed budget is $262.7 million for the general fund, which is approximately $7.3 million or 2.9% above FY25.”

County finance staff and supervisors repeatedly stressed caution about using one-time reserves for ongoing personnel costs and urged planning for a recurring revenue source to sustain raises into future years. Several supervisors noted trend surpluses in the school division in recent years and debated whether some of that recurring carryover could be budgeted differently by the schools themselves.

What remains undecided The board did not adopt any tax rate change or new recurring revenue source at the meeting. Several revenue options remain under consideration (meal tax increase timing, reallocation of CIP in the short term, or use of fund balance), and staff will report back with revised numbers after the state budget is finalized and before the scheduled May 13 adoption.

Ending Staff will monitor the General Assembly action and return to the board with refined numbers; the supervisors signaled agreement to explore the $1 million school surplus transfer and to consider longer-term revenue options for FY27.