Is city budget fit or fat-

Seth Rosen / Charlottesville Daily Progress
Published: March 8, 2008

First in a three-part series.

The creation of the first city-staffed ambulance service last year, at a cost of $880,000, arguably divided Charlottesville residents more than any other new government program in recent years.

Supporters insisted it was critical to improving safety in the community, while many detractors said it was an unnecessary use of money that could be returned to homeowners burdened by hefty increases in real-estate tax bills.

In many ways the clash acted as a microcosm of the greater debate that has raged in City Hall in recent years: whether the Charlottesville government should prioritize increasing services or reducing taxes. And as the new budget season kicks off Saturday with a public forum, that battle is again set to take center stage.

Over the past five years the city budget has ballooned from $98.9 million to $134.7 million, a 36 percent jump. A portion of that increase is due to forces out of city officials' control. The government has to pay more to cover rising retirement and health care costs.

And expenses for state mandates, such as foster-care coverage, and for local agreements, such as those governing the jail and Ivy landfill, are on the rise.

But much of the jump in expenditures stems from bolstered services and new programs. In the past five years the city has pumped millions more into schools, affordable housing initiatives, infrastructure improvements and the bus system.

"I think there is a value and desire in the community for high-quality services, but there is a price for that," said Gary O'Connell, the city manager.

Those expanded programs have been paid in large part by the spike in real-estate taxes. As housing assessments skyrocketed over the past five years - and the average homeowner's tax bill jumped by 58 percent - city coffers have become flush with cash.

Awash in that excess tax money, critics charge, city leaders have spent profligately on a host of programs and services instead of returning more to homeowners.

The city government "has gotten very greedy and pigged out on the trough of rising real-estate assessments, so budgets have not necessarily been rationally constructed," said Barbara Haskins, who ran unsuccessfully for council last fall as an independent.

"There are a lot of people of modest means in Charlottesville, and I think that the council's spending decisions have hurt them," she added.

Bill Sampson is one of those people of modest means.

The retiree's real-estate tax bill has risen from $2,308 in 2003 to $3,623 last year. The jump in taxes has forced the former insurance underwriter and his wife, living on a fixed income, to cut back in other areas. They'd like to finish their basement but don't have enough money.

The difficulty paying the tax bill has even caused Sampson to consider moving to Albemarle County, which has a lower real-estate rate - 68 cents per $100 of assessed value versus 95 cents in Charlottesville.

"I'm in danger of being taxed out of my home, while the city seems to have no limit when it comes to spending," he said.

City officials have taken steps to ease the tax burden on homeowners. The real-estate rate has been trimmed by 14 cents in the past five years. While some cities in Virginia have higher rates - such as Lynchburg ($1.05), Roanoke ($1.19) and Richmond ($1.23) - others have lower ones, such as Virginia Beach (89 cents), Alexandria (83 cents) and Waynesboro (70 cents).

The city has used targeted tax grants to help its neediest residents, adding more money to a grant program for the elderly and starting a new one for low-income homeowners. The amount of grants awarded has risen from $394,000 to $1.3 million over the past five years.

"That has been a priority for us," Councilor David Brown said. "We have crafted programs for people who are truly in danger of losing their homes."

However, middle-class homeowners say they are in need of further tax relief. Sampson is too young to take advantage of Charlottesville's elderly tax grant and has too much income to qualify for the other grant.

"I'm not quite poor enough for [the tax grants] but not rich enough to stand the increases," Sampson said. "And a lot of people are caught in the same position."

For the fiscal 2009 budget, which takes effect July 1, the city manager is recommending no change in the tax rate and no additional money for the tax grants. The average residential assessment has gone up 4.2 percent, a far cry from the 16 percent jump the previous year.

The proposed budget for the upcoming year is $141 million - a 4.7 percent increase.

Nearly a quarter of the total growth in Charlottesville's budget in the past five years is attributable to one sector: schools.

The city contribution to the school system has spiked by 30 percent in that time, even though enrollment has dipped by 296 students, or 7 percent. City spending per pupil has risen from $6,903 to $9,641.

In each of those years the city has fully funded the school system's request.

"In terms of the council's priorities in the community, education has always been at the top," O'Connell said.

The current and previous councils have emphasized several new areas of the budget, and backed up their rhetoric with money.

None has received more attention than affordable housing. Annual city spending on such initiatives has grown nearly six-fold from 2004 to date - $400,000 to $2.38 million. For next fiscal year, however, the city manager has proposed decreasing that by about $700,000.

"It was a good step forward and showed that council is paying attention to the needs of the community and desires of citizens," Mayor Dave Norris said. "But obviously the concern is what will happen this coming year."

The transit system has been another recipient of increased funding. The city has added new routes and limited Sunday service. Including money for transit service for the handicapped, city spending on transit has increased from $1.48 million five years ago to $2.37 million.

The city is also now spending significantly more each year to pay off bonds issued for big-ticket capital projects. The debt service per year has grown from $5.7 million to $7.7 million in the past five years, to pay for a bevy of projects, including costly renovations for Charlottesville High School, Court Square, the Juvenile and Domestic Relations Court and park facilities, among others.

While those new programs and investments are political decisions, the city's hands are tied in other areas.

Expenses for a slew of state mandates and local obligations are on the rise. The city has had no control over the increased costs for the emergency dispatch center ($1.1 million to $1.7 million), city-county jail ($2.7 million to $3.7 million), remediation work on the Ivy landfill ($350,000 to $1.6 million) and foster-care operations ($1.4 million to $2.2 million).

Personnel and benefit expenses have served as another major driver in the budget's growth over the past five years. While health care costs rose from $1.6 million in fiscal 2004 to $2.9 million, retirement costs shot up $2.8 million to $7 million.

Prioritize first

John Pfaltz, an activist who unsuccessfully ran for the council as a Republican in 2000, argues that one of the easiest ways to trim government expenditures is to slim down the size of the government.

"The city staff is bloated," Pfaltz said. "That's where the big expenditures are and this is where you can save money."

City officials counter that the number of staff positions paid for by general fund dollars has held steady over the past five years at about 507.

"We don't need to have more staff, but it's not bloated," Councilor Satyendra Huja said.

While city residents are seeing additional services compared with five years ago, the number of residents living in the city has barely changed. According to the Weldon Cooper Center for Public Service at UVa, the population has grown 2.9 percent since 2000 to 41,274.

A 36 percent rise in the budget over the past five years despite little increase in the population does not make sense, said former Councilor Rob Schilling.

What city officials have done each of those years, he said, is collect tax revenue and then figure out how to spend it. Instead, city officials should decide on priorities first, take in as much revenue as needed and then return the rest, he added.

"The fact that the city has been cruising along on a comfortable cushion of rising assessments has done a great disservice to the community," he said.

"The city refuses to sit down and prioritize what is important, and instead gives a little bit here and a little bit there to keep everyone happy."

Not surprisingly, city councilors and officials strongly disagree.

"I think it would be hard for people to argue there's a whole lot of fat and waste in our budget," Norris said. "Certainly people will argue against certain allocations, but we are a pretty well-managed city."

• View General Fund Budget items.
• View Non General Fund Budget items.