Lancaster County administrator presents FY 2026 draft budget with $410,844 shortfall and proposals to hold tax rates

County Administrator Don Perna on Tuesday presented Lancaster County's draft fiscal 2026 budget, saying the plan holds the real-estate tax rate steady and projects the county will end the year with a 6.12% fund balance — roughly $410,844 short of a 7% reserve policy the board set in prior years.

Perna summarized the budget in the board's meeting room at the Lancaster County Administration Building, telling supervisors: "This budget is built assuming no increase in the tax rates." He also gave a unit value for rate changes: "One penny on the tax rate is $382,261." He said the county's shortfall is "a little bit more than a penny," and that the county will need either revenue increases or spending reductions to reach the 7% target.

Why it matters: the draft frames the county’s operating plans for next year and highlights near-term choices for supervisors — whether to raise taxes, cut expenses, or accept a fund-balance level below the board’s self-imposed threshold. The proposal also includes pay increases, rising insurance costs and several large capital requests that could affect borrowing decisions.

Major budget figures and assumptions

- Fund balance: projected at 6.12% for FY 2026; the board's policy target is 7%. - Shortfall to the board policy: $410,844 (Perna: "You have 410,844 short"). - Real-estate tax: budget built assuming no rate increase; Perna used a 55-cent rate as the baseline for the draft. - Value of a penny: Perna said one penny on the real-estate tax would generate $382,261. - Personal property tax rate: reported in presentation as "2.04" (as stated by staff in the meeting). - Cost-of-living/raises: 3% across-the-board increase for full-time county employees to match the school system; EMS hourly staff requested 5% and that request is included. - Health insurance: overall premium renewal increased about 10%, driven by changes in the state procurement award; Perna said the budget assumes 85 employees will participate in county health insurance (down from a 95 participant assumption used previously) to offset the premium rise.

Personnel, benefits and insurance

Perna told the board the FY 2026 budget includes a 3% raise for county full-time employees and a 5% increase for EMS personnel because they are primarily hourly staff and the department is operating with permanent vacancies. On benefits, Perna said the county's health insurance renewal produced an approximately 10% increase after the state’s new award eliminated a subsidy previously included for organizations with fewer than 100 employees.

To dampen the budget impact, Perna lowered the assumed number of employees covered by county health insurance from 95 to 85, noting historical participation averages around 78. "By reducing the number of positions that we budget for, I've accounted for the increase that's shown," he said.

Revenue changes and uncertainties

Perna walked supervisors through revenue-line estimates, including a modest decrease in property tax based on Board of Equalization reductions to the tax base and an expected increase in personal-property revenue based on the Commissioner of the Revenue's records. He also included state estimates for sales-and-use tax that arrived by email the week before the meeting.

He cautioned that some state and federal funding lines can change and that several larger potential revenue sources are not yet realized for FY 2026. In particular, Perna discussed two planned solar projects: the 31-megawatt Waller Solar project (estimated to produce roughly $1.5 million in the year it goes online and $20 million over 30 years) and a separate Dominion proposal totaling about 50 megawatts. He said neither solar project is expected to produce revenue in FY 2026.

Public safety, EMS, volunteer fire/rescue funding and equipment

Public-safety and emergency-service requests account for a large portion of the net increase in the draft. Highlights Perna flagged:

- EMS/paid rescue: an hourly pay increase (5%) at the request of EMS leadership; the county has operated with two vacant full-time EMS positions for years and needs competitive hourly rates to retain staff. - Volunteer fire departments: the three volunteer departments requested a 10% increase; Perna said he included that request in the draft and described the funding as "money well spent." - Rescue-squad contribution: an increase of $57,000 in the county contribution to two volunteer rescue squads; Perna said that line had not been raised for many years. - Radio system: recurring network costs for the new public-safety radio system increased. Perna said the county had a temporary state subsidy for the AT&T fiber network during the first two years after switching to next-generation 911; that temporary support ends, and the FY 2026 budget reflects roughly four months of paying the full recurring network cost. The recurring network cost was described as just under $3,900 per month, and Perna said the near-term budget shows the delta for the initial months of the fiscal year.

Capital projects, schools and proposed borrowing

Perna reviewed capital-improvement items including the school project and a set of park and facility projects. Key points:

- New high school: the budget shows a $35,025,000 figure for the new school project; Perna said the board previously approved an additional $15 million and indicated the county will likely pursue a Virginia Public School Authority bond in the fall to cover that increase. Davenport & Company is scheduled to present financing options on March 27. - Non-school capital needs: Perna listed approximately $9,971,000 of non-school capital requests, chiefly parks and related contracts (Carter's Cove, Taylors Creek) that may require a lease-revenue bond to finance. - Combined sheriff/EMS administrative building: a conceptual estimate prepared by engineering consultants (Guernsey Tingle) for a combined sheriff's office and EMS administrative building was presented at $13,136,848. Perna and board members discussed alternatives, including renovating or repurposing vacant space at the current high school; Perna said staff should explore renovation cost estimates before committing to new construction.

Other department requests and notes

Perna summarized other requests and special items: the registrar/electoral board relocation request (an original $113,000 relocation line was removed from the draft after recent air-quality testing and follow-up remediation planning); a $31,000 increase in contracted services for the Commissioner of Revenue’s new software and cloud hosting; the library, Boys & Girls Club and other nonprofits' funding requests (most level-funded or modest increases); and social-services and Comprehensive Services Act estimates driven by state reimbursement rules.

Economic development, EDA and broadband

Perna reiterated that the county previously transferred $60,000 from the "poorhouse tract" fund for EDA small-business grant work and said the fund balance in that account remains about $330,000. He said the Economic Development Authority (EDA) is rethinking grant criteria, exploring microloan programs and may seek funding for a new economic-development website. The Broadband Authority request is level-funded; Perna said the authority's earlier lease and equipment arrangements are shifting and that some recurring broadband-related costs will move to the emergency-services budget when equipment is removed from the leased tower.

Next steps and staff directions

Perna emphasized the draft is a "working document." He identified immediate follow-ups: staff will return with clarifying materials and presenters (Brett Dawson and school staff for capital items, Matt from EMS and the sheriff for rescue and public-safety details, the Commissioner of the Revenue and treasurer for revenue-line questions). Perna said Davenport & Company will review financing options on March 27, and the planning commission will review the five-year capital-improvement plan at a public hearing next week.

Formal action

At the close of the meeting the board moved to adjourn. The motion was made from the floor and the board voted in favor.

Ending

Perna closed by noting the board's next meeting and the number of presenters scheduled: "I've got 15 presenters scheduled. I schedule them in 10 minute blocks. I've told them to keep their comments to 5 minutes, to give you all time to ask questions," and he said supporting documentation had been uploaded to the board packet for supervisors to review ahead of follow-up hearings.