NEWS: City Faces More Debt, Increased Water Rates, Higher School Costs
City Manager’s preliminary budget leaves real estate tax rate unchanged amid slumping assessments
The Williamsburg City Council met last week to discuss preliminary plans for the City’s Fiscal Year 2026 budget. The meeting was held in the new Fire Station and was also attended by City staff, outside advisors, and regional representatives (watch the meeting here). Though real estate assessments are flattening according to the data presented to the City Council, City Manager Andrew Trivette does not anticipate needing to raise the real estate tax rate from the current $0.62 per $100 assessed value.
The FY26 preliminary budget introduced by the City Manager totals a little more than $110M, which would amount to a 16% increase over the City’s adopted FY25 budget. The largest increase in costs comes from the City Manager’s request for more than $39M for capital projects, an increase of $12M (44%) year over year, though even this figure leaves out several projects that City leadership had previously considered.
Difficult decisions on the horizon
Trivette stated in his presentation that the City is in a stable financial position, though several undecided factors still loom, including increases in employee health insurance costs and higher school-related costs. For example, a slide concerning the property tax rate read: “The six funds of the City’s budget are balanced without raising property tax rates. However, we do not yet have organizational health insurance rates or known school operating and capital costs.” Yet, the slide laid out 5 areas of pressing concern for the City:
Reserve Balance - “The General Fund Unassigned Balance is currently above policy level. The CIP fund balance is not structurally balanced and cannot sustain new expenditures associated with WJCC, depleting its reserve in FY26.”
Budget Stabilization - “School Stabilization has not been funded. General Fund Stabilization has not been funded. Only a portion of the Debt Service Reserve Goal set by the City Council has been funded. None of the HUD reserve has been funded.”
Assessed Value - “Much slower growth in assessed values provides minimal new revenue to meet the growing demands for contractual obligations and some capital needs. Still, it does not meet the increasing expense of services, debt service reserve needs, or the CIP structural balance.”
Economic Conditions - “Concerns regarding economic impacts from interest rates, slowing housing market, and inflation continue to impact business development. Lodging revenues are waning.
Fiscal Health - “The fiscal health of the City is stable, but there is still great concern regarding unsupported rising cost of services and materials in the general fund, as well as the CIP structural balance considering slower revenue growth due to economic conditions, workforce challenges, increases in school operating and CIP budgets, health insurance costs, and continued service costs escalation.”
Increased debt for proposed CIP
Though the City doesn’t expect to raise real estate tax rates, it does expect to further increase its debt load. According to a presentation by the City’s financial advisors from Davenport Public Finance, proposed capital projects will push the net debt funding requirement to $61.2M. Williamsburg previously borrowed $34.7M total in FY23 and FY24 in order to finance the new police stations as well as other projects. Another $26.5M is still needed to build a new library among other projects, such as a renovated facility for Public Works, 2 new fire trucks and ambulance plus police take home vehicles.
Data concerning the City’s Capital Improvement Plan stabilization fund also was presented. The projected balance on the fund has been declining for several years and the presentation by the City Manager states: “Based on the adopted FY25 budgeted expenses in the CIP, the stabilization fund would be exhausted in FY27.”
One project still on the table is a children’s splash park near Colonial Williamsburg. The City’s financial advisors refer to a “goal of completing the Project by July 2026,” in order to be ready for celebrations of the 250th anniversary of the Country’s independence. According to the Davenport presentation, the City needs to borrow $6.5M to build the park on the accelerated schedule. The proposed site for the park is land currently owned by Colonial Williamsburg, according to the City information about the project and property records. The information presented at the City’s budget retreat by their financial advisor claims, “The cost of the Project is ultimately expected to be paid back by grants, development, and excess fund balance (if necessary),” but provides no further details.
Water rate increase & infrastructure upgrades
According to the City Manager’s presentation, the City is going to need to invest significant amounts of money to improve multiple aspects of its public utility system. For example, the presentation listed three projects that total $27.6M over the next 10 years, the bulk of which will also need to be financed according to the City’s financial advisors. The proposed utility infrastructure projects include:
$9.25M for water treatment plant renewal
$12.58M for water distribution renewal (two phases)
$5.82M for sewer system renewal
The City Manager proposed increasing the cost of municipal water in order to offset some of the necessary costs. According to his presentation, within the next ten years, a “mid range user” could see their monthly bill go from $22.06 to $30.33, an annual increase of almost $100. The typical “commercial” user could see their monthly bill jump from $347.64 to $478.01, an increase of over $1500 per year.
During discussion of these needs, there was no mention of a $18 million payment to Newport News Water Works due June 30th, as noted in the Williamsburg Independent by contributor Bob Wilson. Missing or choosing not to make the payment could mean losing the City’s 1 million gallons/day backup supply. The City hasn’t announced what they intend to do yet.
School costs remain unsettled
The issues of future schools costs has not been settled, which presents a challenge for the City in terms of budgeting. As previously discussed in the Williamsburg Independent, the WJCC School Board is poised to ask for significantly more funding from James City County and Williamsburg. As a new school contract is still under negotiation, it’s unclear what additional costs the City may have to incur in order to reach their previously stated goals of closing achievement gaps for Williamsburg students.
Live performance venue put on hold
The Historic Triangle Recreation Facilities Authority (HTRFA) — the multi-government body building the Sports and Entertainment Center near the Colonial Williamsburg visitor center site — was also discussed at the meeting. The biggest revelation is that plans for a $35M live performance venue, also planned for land owned by Colonial Williamsburg, have been put on hold due to current budget concerns.
Other factors driving budget increase
Additions to the budget include a 3% cost of living increase for staff as well as 5% step increases for the Fire department. Outside funding requests, such as the regional jail and local transit system, increased by $742K. City departments receiving increases in their budget include:
General Government Administration +10%
Public Safety +7.3%
Public Works +5.7%
Parks and Recreation +2.6%
Despite increases in the request for the General Fund, some of the City’s wishlist items appear to have been cut or paused for now. For example:
The budget reserve was not funded with the recommended $590K reserve.
An additional 21.5 FTE, including 6 in the police department and 5 in the fire department, were not included in his preliminary budget.
$170K in outside agency requests were left unfunded.
The City Manager’s request for $2.3M for the Public Assistance Fund represents a 39% funding decrease from the FY25 adopted budget.
(Update 2-20-25: Added a dropped word to indicate the City is discussing borrowing the funds needed for the children’s splash park. Corrected spelling error)
(Editor’s note": An AI tool called Google NotebookLM analyzed 15 sources, including one meeting video and several thousand pages to help fact check this report, though the tool was not relied upon exclusively.)
George Arbogust, Editor of the Williamsburg Independent. Send comments, tips and ideas to contact@williamsburgindependent.com.