Spotsylvania County presents challenging FY27 budget, proposes real estate tax increase to cover $20 million shortfall

County Administrator Ed presented the Spotsylvania County Board of Supervisors with a $452.2 million recommended budget for fiscal year 2027 on Feb. 17, calling it “one of the most challenging” budgets he has prepared.

Ed told the board the proposal increases the general fund by $35.6 million and is guided by three priorities: taking care of employees, maintaining existing service levels and investing in infrastructure. The plan includes $3.5 million to open and staff Fire Station 12 and funding to support 33.78 new public safety FTEs, full-year funding for 20 firefighters hired in FY26 and a 2.7% cost-of-living adjustment and merit increases for nonpublic-safety employees.

The administrator said health insurance costs are driving significant pressure: active employee health premiums are expected to rise by $1.7 million (about a 16.4% increase) and retiree health insurance by $400,000 (about 13%). He also flagged growing obligations from the disabled veterans tax relief program, projecting those costs to rise roughly 30% and estimating the combined FY27 impact at about $17.9 million. “To try to cover a $20,000,000 loss in revenue without raising additional revenue is impossible,” he said.

To address the gap, the recommended budget assumes $23.3 million in new revenue from a proposed increase in the real estate tax rate. Under staff calculations, the recommended rate of $0.7766 per $100 of assessed value would raise the typical homeowner (median assessed value $401,800) about $352 annually, or about $29 per month. Ed said the board must advertise a tax rate by Feb. 24; the advertised rate can be adopted at a lower level but not higher.

The budget also proposes a $191.8 million capital improvement program — $39.3 million paid with cash and $152.5 million financed through bonds — and a $1.1 million transfer to the transportation fund tied to VA clinic-area projects. Local support for the school division increases by $14.1 million, including step increases and merit adjustments intended to narrow pay parity gaps.

Ed noted some large economic development projects (data centers and a resort) were not included because revenue projections were not yet realized. He said FY28 should be less challenging if projected revenues from those developments materialize.

Board members pressed staff for details on specific items, including the distribution of penny-by-penny allocations, data center equipment tax rates and the timeline for lobbying the state on unfunded mandates like veterans’ tax relief. Supervisor questions prompted staff to commit to providing additional breakdowns and to return with CIP details at a March 10 session.

What happens next: the board will need to set an advertised tax rate at its Feb. 24 meeting and continue budget deliberations and public hearings; the school board will present its approved budget on Feb. 19.