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Rockingham County staff outline $7.1M budget gap, propose 3¢ tax-rate projection and compensation study funding
Summary
County finance and management staff briefed commissioners on the FY2026 budget forecast, projecting a 3¢ tax-rate increase scenario, a roughly $7.1 million gap between revenues and expenditures, and proposals for a compensation study and implementation funds.
County Manager Lance Metzler and Finance Director Mandy McGee told the Rockingham County Board of Commissioners at their planning retreat that staff projects a budget shortfall for fiscal 2026 and are preparing a package that includes a projected 3¢ tax-rate increase as one scenario.
McGee said the county's adopted budget baseline for FY25 is $125,708,769 and that the forecast includes a cost-of-living adjustment effective July 1, 2025, a 3% average merit pool and an estimated CPI-driven rise in operating costs. "The tax rate increase estimated at 3¢ rate is projected in this forecast," McGee told commissioners.
Why it matters: Metzler and McGee said the gap between projected expenditures and revenues is roughly $7.1 million under current assumptions. Commissioners were urged to give policy direction while staff works to narrow the gap before formal budget adoption.
The forecast packages several specific items: a $75,000 compensation study and $800,000 to implement recommended pay adjustments; an assumed 3.1% increase on operating lines based on the December 2024 Consumer Price Index; and conservative growth assumptions for property, motor-vehicle and public-utility values. McGee said Article 46 local-option sales tax will continue to fund RCC-related debt service and that certain restricted sales-tax distributions reduce county flexibility.
McGee and Metzler also flagged revenue-side uncertainty. They said monthly sales-tax collections have returned toward pre-COVID levels and hold-harmless Medicaid distributions the county received during the pandemic are expected to decline. McGee said staff is monitoring investment earnings and ARPA fund drawdowns, which will lower investable balances.
Metzler sought to reassure commissioners that staff would try to reduce the projected tax-rate increase before the formal budget request: "Feel comfortable that we're going to do the best we can to bring you guys a solid, budget." Several commissioners urged staff to avoid any increase if possible.
Process notes: McGee said the time line calls for additional departmental review and that insurance premium estimates remain pending; those rates could affect final numbers when carriers provide quotes later in February or March. Commissioners asked for continued monthly updates and more detailed line-item work as the budget moves from a high-level forecast toward departmental requests and the capital-improvement plan.
Ending: Metzler and McGee asked commissioners for direction on priorities; commissioners signaled a preference for conservative departmental spending and for staff to seek options that minimize or eliminate a tax-rate increase in the adopted budget.
