City presents quarterly financial report as council and staff weigh using $22 million surplus cautiously

Charlottesville officials presented the city’s second quarterly financial report through Dec. 31 and urged a conservative approach to using last year’s $22 million surplus.

Chrissy Hamill (title not specified in transcript) reported that as of Dec. 31 the city had collected about 45–46% of its fiscal‑year revenue and that assessments rose: residential values increased about 8% and commercial values about 6.48%, producing an overall assessment increase of about 7.74%. Hamill said the revenue picture “looks very different” than in recent years and that a small revenue surplus of about $2.4 million (1.13% of the budget) is projected at midyear, compared with a larger surplus at the same point in the prior year.

Hamill told council that traditionally high COVID‑recovery increases in lodging, meals and sales taxes are moderating: “We do not anticipate, you know, revenue surpluses like we've seen,” she said, adding that expenditures were tracking close to budget and the city is monitoring vacancy savings.

Kevin Roddy, of PFM (the city’s financial advisor), gave economic context and described national and regional uncertainties that could affect local budgets. Roddy warned that federal political actions — including a potential government shutdown, debt‑ceiling negotiations, and proposed changes to the tax treatment of municipal bonds — could increase borrowing costs or interrupt federal funding streams. He cited a possible elimination of tax‑exempt interest for municipal bonds as a particular risk for local governments.

City Manager (name not specified) and councilors said they interpreted the briefing as a cautionary signal. The manager said staff were finalizing the proposed FY26 budget and were conducting “internal homework” to identify federal resources and contingencies should federal funding be interrupted. “I’m not rushing to bring any planned use of the surplus yet,” the City Manager said.

Council did not take immediate action on the surplus at the meeting. Staff said they will continue to refine the FY26 proposal and brief council at the March 4 budget presentation with further recommendations for allocations, contingency plans and possible program adjustments if federal funds change.