22 hours Ago By Natalie Anderson
CHESAPEAKE — Council members informally agreed Tuesday to fund additional public safety needs in the upcoming fiscal budget without raising the real estate tax rate. But as they finalize the proposed $1.65 billion operating budget , council members are now weighing steeper increases for water and sewer rates in order to keep up with increased utility costs and necessary maintenance.
___ City Council for weeks has been weighing options to cover staffing and equipment needs for the police and fire departments in the fiscal 2026 budget, including a 2-cent increase on the city’s real estate tax rate of $1.01 per $100 of assessed value. Last week, several residents spoke out against the proposed tax hike .
At a Tuesday work session, council members directed City Manager Chris Price to move forward with a plan that avoids a tax increase by using a combination of funding options. Council members agreed to generate about $5 million annually by redirecting an 8-cent mosquito control dedication to a new public safety dedication, funding utility projects only in the designated utility enterprise fund without general fund support, and using $500,000 that can be taken from the budget’s bottom line. That combination of funding options will allow the city to cover a second set of firefighting gear, police technology enhancements and additional staffing for Animal Services and fire rescue, medic and tanker trucks.
It also leaves about $200,000 for council members to fund another priority. Among the options: a summer work program for youth, supplemental funding for victims witness protection program, real-time crime center additions, a sportsplex study, a Campostella redevelopment project, the Great Bridge Battlefield and Waterways Museum and future public safety needs. That plan, however, doesn’t cover the needed replacement of fire stations 4, 14 and the police 5th precinct, which come in at an additional $3.
8 million. Council member Amanda Newins on Tuesday voiced concern, as costs of labor and materials increase. One of Price’s suggestions to fund the fire and police needs was a 1-cent real estate tax rate increase, the $500,000 from the budget, and $600,000 from cuts to programs and services.
Council member Debbie Ritter asked about looking into a potential cell phone tax, noting surrounding cities charge one. ___ Earlier in the work session, council members were briefed on a utilities analysis and the need to consider higher water and sewer rate increases than the annual increases already established. City Council adopted an annual rate increase for water and sewer of 2.
9% beginning in fiscal 2023. The proposed operating budget estimates $89.6 million in revenue for the Public Utilities Fund.
But the utility fund faces an estimated $61 million in annual capital needs, with debt financing making up two-thirds of funding. The analysis suggested at the current rates, the reserve fund balance would be completely drained by fiscal 2035 . Debt service coverage is projected to fall below target by fiscal 2029 and in default territory by fiscal 2035.
Stantec Consulting’s Andy Burnham, who presented the analysis, said construction costs have stabilized but show a slight increasing trend, with general construction up 33% and industrial construction up 40%. Some utility costs, such as chemicals, are up 87%; salaries/benefits are up 41%; and operating costs are up 25%. Burnham said since 2018, the water and sewer consumer price index has risen twice as fast as the city’s rates.
He outlined two options, with one involving a higher rate increase in the upcoming budget, and one postponing the higher rate increase to fiscal 2027. If council chose to use $20.9 million in Tax Increment Financing (TIF) to fund the Avalon area water and sewer renewal project, rates wouldn’t need to increase until fiscal 2027 to 3.
9%, then to 4.9% in fiscal 2028. Without using TIF money, council would need to raise the rates to 4.
9% beginning in fiscal 2026. Both options maintain reserve balances at minimum target through fiscal 2035, though the latter fares better for debt service coverage. Under the first option, an average single-family bill using 5,000 gallons of water a month is projected to cost $148 in fiscal 2027, and increase to $190 in fiscal 2032.
Under the second option that doesn’t use TIF funds, the same single-family total bill would be $150 starting in fiscal 2027, increasing to $193 in fiscal 2032. City Council is expected to finalize its funding plan and make final amendments to the proposed budget next week. Natalie Anderson, 757-732-1133, natalie.
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