Interim city manager warns Radford faces multi‑year budget gap; council readies options

Interim City Manager Craig Meadows told Radford City Council on Monday that the city has run an ongoing structural imbalance in its annual budgets and faces a multi‑year challenge to restore reserves and balance operations.

Meadows said the imbalance “has been concerning to the elected officials and also to the citizenry for at least the last 5 years,” and that the shortfalls aggregate to about $4,000,000 per year during recent budget cycles. He told the council that the city relied on American Rescue Plan (ARPA) funds and two years of revenue anticipation notes (RANs) of $4,000,000 each to maintain positive cash flow.

The warning capped a data‑forward presentation that walked the council through audited revenue and expense figures and flagged stress in both the general fund and the city’s enterprise funds. Meadows said total governmental revenues in fiscal 2024 were about $33,500,000 while total governmental expenses were about $40,400,000, producing a $6.9 million operating shortfall before transfers. A transfer from the electric fund of $4,000,000 reduced but did not eliminate the gap; Meadows said the net decrease in financial position for 2024 was about $2,900,000.

Why it matters: Meadows told the council the city’s unassigned fund balance (the portion of the general fund available for emergencies) has fallen below the city’s adopted policy target and that the audited unrestricted net positions were negative at year‑end 2024. “The governmental activities … at the end of 2024, you have a negative 10,900,000.0,” he said. He added that business‑type activities (electric, water, sewer, sanitation) moved from multi‑million positive positions earlier in the decade to a negative position last year: “That had been … 4 to 5,000,000 to the good in 2021, 2022. It dropped … and in this past year, it's a negative $3,000,000.”

Meadows highlighted several drivers and constraints: lower-than-expected revenues versus budgeted figures across multiple years; enrollment declines at the nearby university that reduced utility and service demand; rising wholesale power charges and pass‑throughs from AEP; and the temporary use of ARPA and RAN funds to cover recurring gaps. He emphasized that cash on hand does not equal unrestricted funds, noting some cash balances are reserved or assigned for specific purposes.

Council members and residents asked for concrete next steps. Meadows said staff will return with more detailed fiscal‑year‑to‑date numbers and that the auditors (Robinson, Farmer & Cox) will present the FY24 audit at the council’s next regular meeting. He urged a mixed approach to fix the gap: “you can't put it all on the revenue side … it's gonna have to be a mix of increased revenue and reductions in spending.”

Meadows also presented regional comparisons of tax and utility rates; Radford’s real estate tax rate and water/sewer/electric rates are lower than many neighboring localities, which he said limits near‑term revenue levers if the council wishes to avoid sharp increases. “We just cannot afford to be a bargain anymore,” he told the council, saying the city must either raise revenues, reduce services or consider outsourcing some functions.

Resident Dr. Christian Harshberger urged the council to communicate value to residents while pursuing fiscal fixes: “We have a lot to sell in our publicity campaign,” he said, listing service reliability and public safety as strengths the city should emphasize as it seeks support for changes.

Other items discussed: FEMA reimbursement prospects for hurricane Helene cleanup costs (staff said they are tracking expenses and expect FEMA eligibility but could not specify timing); outstanding accounts payable including AEP bills that have spiked in recent months (Meadows said AEP charges have run about $1.5 million many months and were near $2 million in December); and city‑owned property and capital projects where timing or scope could be adjusted.

No formal policy decisions or votes were taken at the work session. Meadows asked the council to identify priority services and to be prepared for detailed budget packets and monthly measurable reports. He said staff will provide: (1) FY‑to‑date collections and receivables detail (real estate and personal property collections), (2) a list of capital projects and grant‑funded projects with timing and options to pause elements, (3) audited findings from recent years, and (4) a clearer accounting of enterprise fund revenue drivers and AEP true‑up impacts. The council scheduled the audit presentation for the next regular meeting and agreed to return to budget workshops in the coming weeks.