Newport News $1.14B budget to provide salary increase to city staff; no tax rate increases proposed

NEWPORT NEWS — City Manager Alan Archer proposed a $1.14 billion operating budget for the upcoming fiscal year which keeps real estate and personal property tax rates the same while also funding a 3% increase in city salaries.

Archer and Budget Director Lisa Cipriano presented the city’s proposed operating budget for the upcoming fiscal year to the City Council during a work session Tuesday night. The plan raises spending by 3.4% above than the current fiscal year’s revised operating budget of $1.1 billion.

Archer says the budget reflects the city’s commitment to responsible financial management while supporting the workforce, investing in the school division and public safety initiatives, and supporting innovation.

Archer and Cipriano noted that despite uncertain economic conditions, no tax rate increases have been proposed.

“We’re a city that lives within the revenues that we generate,” Cipriano told the Daily Press. “We we don’t build a budget saying ‘What do we want to spend?’ and then make the revenues fit it. We look at what our revenue stream is, and then fit the expenditures to that conservative and manageable revenue stream. So, of course, we’re still seeing supply chain issues, we’re still seeing the effect of inflation. And we’re still planning for a future recession.”

Archer’s proposal would give most full-time employees a 3% salary increase at a cost of $5.2 million. Archer noted the city is undertaking efforts to attract and retain employees — especially first responders. He said the city is currently conducting a compensation study which will provide an analysis of the city’s placement in the local, state and regional employment markets. The study will provide recommendations on salary structure placement for city positions.

“You’re either providing something comparable, or something similar, or else you find yourself, over time, at risk of individuals opting out of your locality just to go to another jurisdiction because they can make a little bit more money,” he said.

Among new spending priorities, the proposed budget would hire six new positions across multiple departments at a cost of $500,000, increase funding for vehicle replacements ($300,000), and support initiatives like the Summer Youth Employment Program ($700,000) and Midnight Basketball program for youth ($200,000). The summer youth program allows youth aged 16-24 to develop job skills and explore potential career paths, while the Midnight Basketball program is designed to provide positive engagement for young people and allow them to get out of the house in a safe environment.

The budget will also fund 12 new paramedic positions added late in the current fiscal year for $900,000. The positions are meant to enhance medical care and free up firefighters to focus more on fire calls.

Roughly $293.7 million of the budget is dedicated to salary and fringe benefits for city employees, while $123.1 million would be the city’s contribution to school operations. About $38.2 million of the general fund would go toward city debt service, while $7.2 million would go toward school debt service. An additional $22.7 million would go to contractual services, and $134.2 million would go toward all other operating costs.

Other components of the operating budget include the school fund, the waterworks fund, and the solid waste fund. There are no rate increases planned for waterworks or solid waste this year.

While the city’s real estate tax rate is slated to remain the same, $1.18 per $100 of assessed value, the city expects an increase in assessment values to result in an additional $2.5 million in revenue. Each penny in the tax rate generates about $2.18 million in revenue.

The personal property rate is expected to remain $4.50 per $100 of assessed value for vehicles. While vehicle values spiked in 2022, with an average increase of 33% that year, Archer notes that they have not only stabilized but are continuing to drop.

Cipriano said the city is seeing a growth in the number of vehicles, but the assessed value of automobiles and trucks is anticipated to be down about 15% from last year.

Mayor Phillip Jones thanked city staff for their work in developing the budget.

The city plans to hold public hearings on the budget on April 9 at City Hall and April 11 at the Denbigh Community Center, with the council adopting the budget in May.

The city’s capital improvement plan — a document that plans capital expenditures over the next five years — is adopted separately. No public hearing is scheduled for the proposed fiscal year 2025-2029 CIP.

The plan — a guiding document that doesn’t always reflect when projects will actually start — calls for $1 billion to be spent on capital projects over the next five years, with $218.7 million to be spent in fiscal 2025. According to Cipriano, only $20.6 million of the city’s proposed operating budget would go towards expenditures outlined in the capital improvement plan. The rest of the money would come from bonds, grants, reserves and self-supporting funds.

Josh Janney,