Roanoke council hears FY26 revenue forecast projecting $402.3 million and a 6.1% increase

Roanoke City Council on Feb. 3 received an initial revenue forecast for fiscal year 2026 that projects general fund receipts of $402.3 million, a 6.1% increase over the adopted FY25 budget, city budget staff said.

"The initial total projection for the FY 26 stands at 402,300,000.0 as of today," said Tanya Catron, senior budget analyst in the management and budget division. Catron said staff used the same tax rates as FY25 and adopted a conservative stance while relying on five-year trend analysis and current-year collections through December 2024.

Catron said $6.7 million of the projected growth would be added to the amount the city provides to Roanoke City Public Schools under the city's funding policy, bringing the schools transfer to about $113.6 million. "This formula provides the schools 40% of the city's local taxes," Catron said.

City staff identified local tax sources as the largest contributor to the general fund (about 69.8% of projected revenue). The six most significant local tax resources—real estate, personal property, retail sales, food and beverage, business license and consumer utility taxes—constitute roughly 93.5% of local taxes, Catron said. Real estate taxes alone represent about 47.2% of local tax revenue.

Catron reported annual real estate assessments are projected to increase roughly 8.23% for FY26, which she said would produce an estimated $14.1 million increase in real estate tax revenue. Staff projected a modest 2% increase in personal property tax revenue and noted other increases in interest earnings and certain intergovernmental reimbursements, including amounts for DSS and CSA programs.

Officials cautioned the projections are preliminary and subject to revision. Catron said staff expects to refine estimates as January 2025 data and additional files (for example, personal property valuation data) become available and noted that state-level actions or Federal Reserve policy shifts could affect outcomes.

Council members asked staff to follow up with additional detail. Mr. Hagen asked for analysis showing the impact of a change in the personal property tax rate; Catron said she did not have that on hand but would provide it. Mr. Nash asked whether revenues from vaping products are captured by the cigarette tax; Catron said she would investigate and return with an answer. Mr. Vollison requested clarification on the "motor vehicle license" (decal) line item and how it differs from personal property tax; staff confirmed they would provide that breakdown.

The budget development team said it will continue briefing council through the spring as staff finalizes the recommended budget for presentation in March and adoption in May.