Portsmouth manager unveils $338 million FY 2026 proposed budget; proposes modest tax and fee changes and larger school funding

City Manager Steven Carter presented Portsmouth’s proposed fiscal year 2026 general operating budget and capital improvement program at the City Council work session on March 24, proposing total revenues of $338 million and several modest tax and fee changes to fund investments in public safety, infrastructure, technology and schools.

Carter said the proposed budget reflects priorities of public safety, infrastructure, technology improvements and process improvements and includes a $6 million increase in support for Portsmouth Public Schools, bringing total school funding to $81 million — a 7.6% increase over the prior year. "This plan reflects our commitment to responsible governance and strategic investment in our community's future," Carter said in the presentation video.

Key budget figures Carter provided: total proposed revenues $338,000,000 (a 3.4% increase from last year); projected local revenues $244,000,000 (a 3.9% increase); real property tax revenue forecast $136,000,000; personal property taxes $38,000,000; other local taxes $46,000,000; and utility taxes $13,000,000. On the expenditure side, personnel costs total about $121,000,000, school funding $81,000,000, contractual services $30,000,000 and internal services $22,000,000.

To fund the investments, Carter said the real-property tax rate remains at $1.30 but the city is proposing to reduce the prior 7¢ discount to a 6¢ discount, which the presentation described as a modest 1¢ increase in the effective per‑$100 assessed value rate, yielding an effective rate of $1.24. Carter also proposed a 5% increase in water and sewer rates, a $2 per ERU increase in stormwater fees, and adjustments to EMS fees. The budget would also reinstate summer-raise program fees with scholarships available.

Carter announced major capital and facilities initiatives: funding for a new public-safety facility to house police and emergency services; a new city hall expected to be completed and occupied by 2028; demolition of the current civic center in January 2026 to support downtown redevelopment; upgrades to sewer pump stations; and an expanded multi-year street paving program. Carter said investments in technology include a new permitting system, a one-account billing portal and redesigns of public and internal websites.

Carter described workforce and process changes, including a pay and classification plan that he said will increase total pay by 5% for FY26, and the establishment of change teams tasked with producing process improvements. He tied school funding increases and some operating investments to anticipated casino revenue, saying the combined increases (a $12 million increase last year and $6 million this year) total $18 million, which he described as the anticipated casino revenue.

Carter invited public participation in the budget process and announced public hearing dates and adoption timing: public hearings will be held during regular council meetings on April 8 and April 22, both at 7 p.m., and budget ordinances will be presented for adoption on May 13. He told council members staff will reach out for individual briefings.

No ordinance was adopted at the March 24 work session. After the presentation, the council voted unanimously to enter closed session under Virginia law for legal consultation regarding recent shootings and later unanimously certified that the closed session had not exceeded the stated scope.

The manager’s presentation provided the council the numbers and policy choices it will consider in the coming weeks during formal budget hearings.