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Budget officials warn property‑tax uncertainty and a base budget shortfall as FY27 deadlines approach
Summary
Budget staff told council that property‑tax growth has weakened due to appeals and exemptions, producing a base budget shortfall that will require choices; staff signaled a likely need to consider a tax increase and outlined CIP pay‑go priorities including fire station work, sidewalk/traffic projects and $16M in FY27 pay‑go programming.
Sadia Satar (Budget and Management Services) closed the work session with a high‑level budget outlook and CIP update, warning council that the city faces revenue pressure from slowed property‑tax growth driven by commercial appeals, brownfield exemptions and other tax‑base changes.
Satar said property‑tax assumptions have been revised downward as the city receives updated county data. That weakening of the tax base — combined with rising operating costs and a large list of supplemental capital and operating requests from departments — produced a base budget shortfall staff are addressing as they prepare the manager’s proposed FY27 budget.
Key points: Satar said the city has established a steady‑state debt affordability of roughly $203 million for general obligation bonds, presented pay‑go programming for FY27 that includes approximately $16 million in general pay‑go projects (affordable housing, street resurfacing, parks maintenance and other one‑time projects) and previewed limited obligation bond projects now in advanced planning (fire training center, combined Fire Station 23/Northwest Police Station, Southeast Remote Operations Center). Transportation pay‑go includes $26.6 million planned over five years for bridge maintenance, sidewalks and traffic intersection improvements.
Satar and councilors discussed the timing and scale of budget decisions; staff reiterated the calendar (manager’s proposed budget on May 19, first public hearing June 2, adoption in June) and said staff will continue to monitor state activity (including proposals being considered at the General Assembly) that could affect the tax base. Council asked about the potential impact of a levy limit or other state‑level changes; staff said they are monitoring legislative activity but did not have guaranteed outcomes before budget adoption.
Quote (Satar): "We find ourselves in a base budget shortfall and there remains little doubt that we will need to raise property taxes to solve this base budget gap." (Sadia Satar, Budget and Management Services)
Next steps: Finance will return April 21 with bond updates and Budget and Management Services will present the city manager’s proposed FY27 operating budget and final five‑year CIP to council on May 19. Staff asked council for guidance as they craft a balanced budget to present in May.
