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CFO warns of tighter FY27: rising debt service, modest revenue growth and pressure on pay plans
Summary
City CFO Donna Witt told council the FY27 outlook assumes flat operating budgets and flagged $2.3M of additional debt‑service pressure, a $900K step for public‑safety pay progression and uncertainty around VRS rates; staff urged prioritization of revenues or one‑time funding for some initiatives.
Donna Witt, Lynchburg’s chief financial officer, presented an update on FY26 revenues and an early look at FY27 budget pressures on Jan. 13, saying the city faces limited new revenue growth and a set of built‑in expenditure increases that will require choices in the upcoming budget season.
Witt said real‑estate and personal‑property tax collections through December were tracking close to the adopted budget, while consumption and lodging tax revenues showed monthly volatility tied to large events; October produced a spike that improved collections, but November preliminary figures returned to baseline. She warned that the city’s line‑of‑credit expires in June 2026 and that permanent financing (bond issuance) planning is underway with financial advisors to manage interest‑rate timing.
On anticipated FY27 expenditure pressures, Witt identified roughly $2.3 million in additional debt service related to existing borrowing and planned projects, plus an estimated $400,000 for a new fire‑station lease and a $900,000 next step in a public‑safety pay progression. A 2% cost‑of‑living adjustment for general employees would cost about $1.2 million. Witt also flagged uncertainty around the Virginia Retirement System employer contribution rate and that the city’s anticipated revenue growth is modest, limiting room for new recurring initiatives.
Witt asked council to expect requests for detailed operating impacts for new facilities (amphitheater, pool, library) and for staff to return with analyses of potential revenue options and financing scenarios. Council members asked for additional breakdowns — including debt‑service amortizations, a look at consultant spending, and clarifications on school funding estimates — to inform budget decisions in coming weeks.
No formal decisions were made at the work session; Witt’s presentation framed the FY27 budget as a constrained planning problem that will require council prioritization of recurring versus one‑time spending.
