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Portsmouth officials flag widening budget gap as expenditures outpace revenue
Summary
City officials presented an unaudited FY2025 outlook showing $313 million in revenues against a $316 million budget and warned that expenditures have grown faster than revenues over recent years; staff will share core assumptions and provide follow‑up analysis ahead of the council retreat.
At a Tuesday work session, the city’s budget team presented an unaudited overview of Portsmouth’s general fund and a multi‑year forecast that shows expenditures growing faster than revenues and emerging fiscal pressure.
Trey Burke, who opened the fiscal portion of the presentation, said year‑to‑date revenues totaled about $313,000,000 against a $316,000,000 budget — within roughly 1 percent of projections — and credited stronger‑than‑expected state categorical aid, driven largely by VDOT receipts. He advised that slides and forecasts were for discussion only and are likely to change as audited numbers are finalized.
CFO Jeanette Fernandez told council that, based on historic data through 2025, expenditures rose about 11 percent between 2021 and 2025 while revenues grew roughly 6 percent, creating a trend the city will need to address. Fernandez identified the largest expense categories as the Portsmouth Public Schools contribution at about $76,000,000 and public safety at about $72,000,000 and listed common upward drivers such as debt service, pensions and personnel costs.
Council members asked for the core assumptions behind the out‑year projections — including any timing assumptions about the Holiday Inn site and how the forecast treats one‑time revenue items — and requested modeling to identify which economic development strategies would yield the largest net revenue gains relative to service costs.
Direct quotes: "All the information provided in the upcoming slides are not audited and are going to change over the coming months," Trey Burke said, urging caution about out‑year projections. "Expenditures grew by about 11% [between 2021 and 2025], revenues grew by 6%," Jeanette Fernandez said, summarizing the trend driving an increasingly negative shaded deficit in the presentation visuals.
What comes next: Staff committed to sharing the forecasting assumptions the council used in the slides and to working with economic development and outside experts to model potential revenue strategies for the retreat. After the budget discussion, the city manager summarized several agenda items to be considered later in the meeting, including four public hearings and budget appropriation ordinances for various grants and settlements.
