Money on their minds: Virginia Beach City Council advised to enter budget season with ‘eyes wide open’

Willie J. Allen Jr./Orlando Sentinel

Any cushion that Virginia Beach felt during the pandemic thanks to federal stimulus funds, increases in property values and reduced payroll costs from open positions is no longer at play as the City Council heads into a challenging budget season.

That message resonated on the first day of the council’s winter retreat held Tuesday at the convention center where the 11-member body started to weigh several big-ticket items.

City Manager Patrick Duhaney said he wants the City Council to enter the budget season with “eyes wide open.”

No new stimulus funds are expected, and all that was received has been allocated. Additional revenues will be needed to maintain current services, including increases in public utility and waste management fees, Duhaney said.

One solution may be to borrow more money to cover the increase in costs, said Mayor Bobby Dyer, who asked the city manager to hold a public hearing on that option next month.

“We’ve got some tough decisions to make,” Councilwoman Barbara Henley said.

Her reaction came after hearing Kevin Chatellier, director of Budget and Management Services, describe the pandemic’s unexpected positive impact on the city’s finances over the last three fiscal years and what’s changed.

Inflation is driving up the cost of new capital improvement projects, Chatellier said. New city employee compensation increases along with raising the minimum wage to $15 an hour is expected to cost the city an additional $40 million a year. And city departments will be requesting millions more to operate effectively. For example, the commonwealth’s attorney’s office is asking for more full-time employees to review the footage of body cameras worn by police.

During the pandemic, federal stimulus money boosted the economy and city revenues overperformed, Chatellier said. The city was able to delay utility fee increases and reduced the real estate tax rate. And while voters approved a $567 million stormwater bond referendum, the city avoided raising the real estate tax rate because property values, and, in turn, assessment fees, rose significantly last year.

It will be a different ballgame going forward, Chatellier said.

He outlined the cost of three new proposed multimillion-dollar projects: modernizing some of the recreation centers, relocating the law enforcement training academy and expanding the aquarium.

After the presentation, Councilman Worth Remick said taking on more debt to move the city forward may be necessary.

“It’s time for us to reboot, reinvest,” he said.

Stacy Parker, 757-222-5125, stacy.parker@pilotonline.com