Raising the meals tax and keeping school funding at last year’s levels are among the recommended highlights of Roanoke’s proposed $400-million-plus budget.

“This is a very tight budget year,” City Manager Valmarie Turner told City Council members Monday. “Very tough choices will need to be made.” 

Turner began flashing warning signs last month that the city needed to tighten its belt and should adjust its school funding formula, which earmarks 40 percent of budgeted dollars to the district. The city is planning to hold two public meetings next month about the proposed budget. City Council will adopt the final version in May.

Turner proposed that Council raise the city’s meals tax from 5.5 percent to 6.5 percent to address a to-do list of building repairs, such as for heating and air conditioning, electrical systems, elevators and roofs. Restaurants collect the prepared food and beverage tax when people go out to eat and drink.

“Some city buildings have elevators that are outdated and no longer meet modern standards,” she said. “The roofs of many city buildings are at the end of their lifespan and require immediate attention.” 

Turner said Council could also consider upping the meals tax further, to 7 percent, which would bring in about $2 million. She said that would go to plug a $4.6 million gap in priorities that won’t be funded this year, including for technology services, overtime pay and temporary wages, mostly for workers at the new Washington Park pool slated to open this summer. 

“Challenges and choices,” Turner echoed throughout her presentation. 

City officials say the recommended meals tax hike is not included in the official proposed budget, which is estimated at $404 million. 

“The budget would go just shy of $410 million if the full 1.5% is approved,” Carol Corbin, a city spokesperson said in an email. “Council was presented with both options of 1% for deferred maintenance and [0.5]% for general operations, but those were not built in.”

Turner’s budget does propose freezing the level of support to the school district at last year’s contribution, about $107 million. Under the current funding formula, the schools would have been entitled to an additional $6.7 million.

“This recommendation of level funding recognizes the financial position of Roanoke City Public Schools,” she said. “With the financial assistance the city has provided to Roanoke City Public Schools, they have successfully been able to improve this performance, compared to the prior establishment of the formal policy.” 

Turner pointed out the district has an estimated $22.8 million in unassigned general funds, which is projected to increase to $26.1 million by the end of the fiscal year in June. 

That pool of money “provides flexibility for schools to cover operational costs as a bridge,” Turner said.

A spokesperson for the school district, which is on spring break, said they continue to support full funding. 

Kathleen Jackson, the district’s chief financial officer, said in a March 6 memo that the school division has built up its reserves with one-time funding that began after the Great Recession.

“The schools’ reserves are important for ensuring the school division can move forward with basic operations in spite of funding that may not come until the second half of the year (some state funding) or require spending up-front and then reimbursements be requested after the fact (federal funding, capital debt-funded projects),” she wrote.  “The schools have always worked to be prepared to cover any challenges or unexpected downturns without going to the city to ask for more funding to cover the shortfall.”

Meanwhile, Turner said her proposed budget has cut $3.5 million from last year’s base and still does not include $4.6 million in wage and technology needs.

“It was tough,” Turner said, noting that departments pared down their funding asks. “We went through the budget methodically and we went about cutting those things that we want, and some of those things that we need, but we prioritized.” 

City officials have characterized Roanoke’s budgetary woes as years in the making, with moderate growth in tax revenue not keeping pace with the costs required to pay staff and repair buildings.

“Stabilizing the budget is not a one-time task,” Turner said. “Over the next five years we will continue to monitor and adjust the budget to create a more sustainable framework for the city.”

Mayor Joe Cobb said in an interview Tuesday that the city’s budget team did a careful job analyzing the city’s needs. He said one adjustment is to not rely on end-of-year surplus revenue to fund ongoing compensation increases.

“This is a realistic budget that provides sustainable level funding for the schools, not a reduction in their funding,” he said.

City Council chambers on Monday were uncharacteristically filled with residents. Among the attendees were former mayor Sherman Lea and former councilwoman Trish White-Boyd.

“I think this is the largest crowd I've seen in eight years for a budget presentation,” Cobb said.