Let's call tonight's uh town council work session of uh March 23rd, 2026, and our first item for discussion tonight is fiscal year two thousand twenty-five proposed budget final markup session.

Hello.

Good evening, madam mayor, members of council.

Um, as the mayor mentioned, we are here tonight for the fiscal year twenty twenty-seven proposed budget, and this is the final mark final markup session.

This first slide just recaps where we've been so far in the budget process.

We were here in front of you last summer to talk about the first tranche of data center computer equipment tax revenue.

We then really began our budget discussions in October of 2025.

That included the strategic staffing plan as well as presentations from departments, which then continued into November.

Then in January, the uh CIP was presented to the planning commission.

We presented the proposed budget in February and began work sessions.

You also adopted the personal property tax rates for tax year 26 in February, and then in March so far, you've had your second work session as well as your budget public hearing.

We're here tonight for the third work session, and then budget adoption and tax rates will be tomorrow.

To get into the details of what you've done so far, so in February 24th, again, you adopted those personal property tax rates.

You maintained the same rates as tax year 2025, which meant no impact to the proposed budget.

On March 9th at the second budget work session, then you made several changes to the expenditure side.

Um, of that, a million dollars of the budget was funded with prior year data center computer equipment tax revenue, net changes of thirteen thousand supported through unassigned fund balance, and about a hundred and forty-six thousand dollars in expenditure changes that impacted uh the tax rate recurring local tax funding.

Those actions ended the March 9th work session at a tax rate of 17.85 cents per 100 dollars of assessed value.

Digging into that a little bit deeper, um, that net change in the use of prior year data center computer equipment taxes is comprised primarily of a million dollars uh for the milling and paving program, as well as about just under $20,000 for various board and commission unfunded requests.

Again, total changes just above a million dollars.

That includes the addition of $25,000 for the ADA compliance evaluation.

Council did remove $200,000 for the bike lane network master plan and then added $94,000 apiece for the one-time costs associated with the police lieutenant as well as the co-responder also in police.

In terms of the impacts to your tax revenues, council did recognize the $700,000 in health insurance savings.

Again, that was that lower than anticipated premium increase.

We had anticipated 25%, and it came in at $12.7.

Landfill fees of $60,000, which were not anticipated in the proposed budget.

As mentioned on the previous slide, council did add recurring funding for a police lieutenant as well as a police co-responder.

And then based on the actions on the last work session, $450,000 of recurring funding for the milling and paving program.

Again, the net impact of that was $146,000.

Remaining discussion topics, not an all-inclusive list, but things that we had on our radar include the remaining unfunded requests from boards and commissions, as well as any general fund enhancements.

All the enhancements are in the proposed budget at this point, but council could remove them if they so chose.

The increase scenarios, primarily being public safety, but there is still the remaining million dollars for milling and paving, the cost of living adjustment, digital kiosk, which was presented last time by economic development, and then wayfinding signage.

The slide just illustrates the remaining unfunded requests for boards and commissions.

There are two components to the performing arts commission that requested further discussion, as well as the $175,000 for the RTC's request for the residential traffic management plan rewrite.

General fund key enhancements, again, all of these are included in the fiscal year 27 proposed budget.

Council action is only needed if you would like to remove them.

They're all funded with unassigned fund balance, so the removal of any of these will not impact your tax rate.

Includes $175,000 for the subdivision and land development regulations update, $150,000 for a development fee study for community development, $150,000 for Lasseter Way improvements, $450,000 for the downtown floodplain improvements.

That includes a study and an area plan, $250,000 for the preliminary engineering study for Tavistock Dam, and then $60,000 for the Virginia 250th celebration.

Again, increased scenarios, the proposed budget really was the status quo on both fronts.

Increased scenario one provided additional funding for pavement management to address some deferred manage deferred maintenance.

It provided for gradual increases over time.

Increased scenario two provided funding for some public safety enhancements that we deemed critical to the operations of the town.

It also included some funding for some council directives, including the public employee homeownership grant program, as well as collective bargaining.

Again, pavement increased scenario one for pavement management provides for the status quo is about $34 million total investment over a 10-year period.

That would is anticipated to yield a pavement condition index at the end of the period of $61 to $63.

The VDOT standard is $60 to receive the highway maintenance monies.

The option C, which was an additional almost $1.5 million on an annual basis, was recommended with a one-cent tax increase based on straw polls on March 9th.

Council has opted to do $1 million from data center revenue and then $450,000 from recurring local tax funding.

Compared to the status quo of $34 million, this scenario provides a cumulative investment of $48.8 million.

Option D would provide another million dollars of revenue on an annual basis and would increase that 10-year cumulative investment to just shy of $60 million with a pavement condition index of $78 by the end of the 10-year period.

In terms of public safety, as we've discussed, the proposed budget provides for the status quo.

Since there is no agreement currently in place with the bargaining unit, the proposed budget maintains the 2% COLA and the up to 4% merit for police officers in the other sworn positions.

Increased scenario one, however, does provide some additional funding for that agreement estimated at $200,000.

Council has so far via straw polls added the watch commander and the co-responder, as I mentioned before.

We did discuss the wellness program at the last meeting and discussed continuing to pursue grants for that program.

The slide summarizes the remaining items from those increased scenarios.

So again, increased scenario one providing for pavement management, a million dollars.

Given the council's action so far, we would continue to recommend that that million dollars be recurring local tax funding to ensure that that funding remains.

Increased scenario two, the remaining items include again that public employee homeownership grant program, uh, police collective bargaining for 200,000, an assistant town attorney for labor relations, and four patrol officers.

Um, in that scenario, all of those would be funded.