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Audit committee reviews FY25‑26 budget changes: veterans exemption, water-rate rise, capital plan
Summary
Finance staff briefed the audit committee on changes to the FY25‑26 budget, highlighting increased costs from disabled‑veterans tax relief, a 15% water‑rate increase, adjustments to school funding and a $7.2 million capital program funded with existing revenues and fund balance.
County finance staff presented a summary of changes to the fiscal‑year 2025‑26 budget and answered committee questions about revenue adjustments, expenditure changes and the capital plan.
Staff said a large recent driver was a shortfall in the machinery‑and‑tools tax (one large taxpayer removed equipment), which reduced revenue by about $350,000. At the same time the county increased its estimate for exemptions tied to disabled veterans and the elderly by roughly $500,000 in the current process; staff reported the combination created roughly an $850,000 swing in the budget.
Staff told the committee the program that provides exemptions to disabled veterans has driven a larger-than‑expected increase in local relief claims. The committee discussed the PACT Act (federal) and a constitutional amendment in Virginia that created or expanded the local tax exemption; members said the county will need to discuss the disproportionate local impact with state officials or pursue relief avenues because the exemption is producing unanticipated pressure on the county’s tax base.
On revenue offsets, staff said the board adopted a roughly 15% increase in water rates, raising the unit charge to $15.15 per 1,000 gallons and generating an estimated $445,000. Staff also identified inspection‑fee increases (about $70,000) and other offsets. The county’s FY26 capital budget totals roughly $7.2 million and the school capital share includes bus purchases ($763,000), a band‑room project ($1.4 million funded by proffers of about $800,000) and design work for a replacement bus garage. The capital program is funded with existing revenues, fund balance and proffers; staff said the plan does not require new debt issuance.
Staff summarized that, after adjustments, the operating budget bottom line changed by a relatively small amount from earlier drafts but the changes reflected substantial reallocation among items. Committee members asked for additional detail on deposit timing, reserves and next large financing needs, such as a potential later debt issuance to finance the bus garage following design work.
