A $407 million government budget begins to make up for alleged past financial mismanagement in Roanoke, city council members said.
As part of the budget, tax paid by restaurants serving food and drinks will increase one percentage point, becoming 6.5% on July 1. Amid some frustration Monday, the city council voted to sunset that tax hike so it ends after June 2027. Meanwhile, property owners will pay higher real estate taxes.
Challenges were faced and choices made in the monthslong process of preparing this budget, City Manager Valmarie Turner said previously. She started as manager in January, following the resignation of Bob Cowell in June.
Councilman Peter Volosin mentioned the change in administrative leadership. He said the council began getting a sense something was wrong when interim manager Lydia Patton arrived.
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“During the transition time between city managers, the council was informed of past mismanagement of the budget process,” Volosin said. “Unfortunately, a lack of transparency by the previous administration led me to believe that we were doing well with no issues.”
But that was not the case, Volosin said. He said, “previous leaders used vacancy savings to cover funding gaps, did not budget overtime for public safety, and deferred maintenance on roughly $25 million of items.”
“While these issues affirm the council’s decision to change leadership, it also means we must make up for the previous lack of appropriate budgeting,” Volosin said, commending staff who “made sure we could build a transparent budget that will begin to get our city back on track.”
In his office after the meeting, Mayor Joe Cobb said he does not fully agree that prior budget practices were mismanaged. It’s more a matter of how essentials like building and fleet maintenance were prioritized.
“There has likely been some overspending in different departments, but that’s something that we pay close attention to, the city manager does, and monitors that,” Cobb said. “The city manager and director of finance, they are working really hard to make those corrections and help us move forward responsibly.”
Department heads reviewed expenses with the city manager and found a collective $3.5 million in savings for the upcoming year, Cobb said.
On meals tax, any increase been widely opposed by restaurant owners. Motioning to sunset the tax increase so it expires in 2027, Vice Mayor Terry McGuire mentioned Volosin’s comments.
“We do have major capital needs that we need to address, and I believe that we have some trust to rebuild with our residents,” McGuire said. “As difficult as this conversation is to talk about tax raises, I think it’s probably healthy for us to do that every so often.”
The amendment to sunset the meals tax in 2027 was eventually approved by a 4-2 vote, with Cobb and Councilman Phazhon Nash opposed. Councilwoman Vivian Sanchez-Jones was absent Monday, representing the city in Saint-Lô, France, for a World War II anniversary event.
“I’m feeling a bit frustrated that we’re discussing a sunset clause today. It would have been more helpful to me to have discussed this earlier in the process,” Cobb said. “Although I hear the value and merit in it, I’m very concerned that we’re limiting ourselves by introducing this amendment.”
Cobb said it will take five or six years to cover the city’s $25 million deferred maintenance backlog, so he questioned the timing of a two-year sunset. The meals tax increase, with the sunset included, passed by a 5-1 council vote, opposed only by Councilman Nick Hagen.
Hagen, the city council’s lone Republican, also was the only vote against keeping the real estate tax rate at $1.22 per $100 of assessed value. Because city property values increased 7.5% in the annual reassessment (excluding new construction), not lowering the rate means city property owners are paying an effective real estate tax increase.
“I have some concerns that the assessed values have increased by about 8%, and we are not doing anything to lower this,” Hagen said.
Property taxes, a large portion of which comes from real estate, are projected to net the city $181 million, a bulk of its revenue. Compare that to $94.5 million coming to Roanoke from state and federal sources.
Schools remain the single largest recipient of city funds, despite the council’s decision to hold flat school funding at about $107 million, the same amount it received for this year.
The future of the city’s long-held funding formula which gave 40% of most local taxes to the school system is in question by both council members and city staff. The funding agreement, initiated in 2011, was effectively paused this year, and will be reassessed in the year to come, said city manager Turner.
“We are going to be having some conversations with the schools relative to the school funding policy, but it’s something that we’re going to have to work on together,” Turner said. “In these times, we have to be extremely flexible on both sides.”
Public safety, at nearly $100 million, is another large city government expense: $39 million for police, $31.3 million for fire, $29.3 million for sheriff and jail.
A budget subgroup that includes social services, youth programs, health department and mental health, among other categories, totals $59 million.
Parks and recreation accounts for 2% of the city budget, $8.7 million.
One remaining budget item for the city council will be scheduled for its regular scheduled meeting May 19. That’s the pay plan for officers, employees, council-appointed officers and constitutional officers, which failed to advance on a 4-2 vote in Sanchez-Jones’ absence.
Volosin and McGuire voted against the pay plan. Volosin said no comment.
Reached by text, McGuire said he is concerned about “some of the levels of increases.” It’s a matter that will be discussed more next week.
Altogether, Cobb said the budget is similar to a budget for a household, albeit a very large one.
“We have a household budget, and we have to make those decisions. Some things we have to reduce. Some things we have to just put over here, we can’t do. And some things pop up as emergencies,” Cobb said. “It’s no different than a household of 100,000 people.”
Luke Weir (540) 566-8917