OPINION: Fredericksburg Budget Is 'Small-C' Conservative
Fredericksburg faces distinctive challenges in the year ahead, and has budgeted with an eye toward those worries, writes at-large Council member Will Mackintosh.
By Will Mackintosh
GUEST WRITER
In our Council meeting a couple weeks ago, I called our Fiscal Year 2026 budget “conservative.” I know that’s not a word people usually associate with me. More precisely, I described it as “a conservative budget in the old school, kind of small-C sense of the word conservative.”
When I say this budget is “conservative" in the old-school sense of the term, I mean that it is sober and clear-eyed about the risks ahead in the next year, and it seeks to mitigate those risks as much as possible. It is a budget that seeks to balance the real needs of the city and all its residents as best as we possibly can while being cautious about what the future holds over the next year. It is small-C conservative because it is realistic about our needs in the city while also being realistic about the choppy waters ahead.
What are those choppy waters? I think of the risks as coming in two main buckets.
First, there are the risks that come from uncertainty about what our friends on the Potomac (to borrow a phrase from Deputy City Manager Mark Whitley) are going to do. Both the city’s budget and the schools’ budget rely on Federal funding to some extent … particularly the schools. Head Start, school nutrition, Title I, and special education all rely heavily on Federal funds, as do FXBGo, our victim/witness assistance program, social services, and many of our housing initiatives. Altogether our collective exposure to Federal uncertainty is more than $15 million, out of a budget of $136.8 million.
Second, there are the risks that come from economic instability. Less than half of our tax revenue comes from property taxes and personal property taxes, which is unusual for a Virginia locality. Most localities are more reliant on property taxes than we are, but we are lucky to have strong economic engines downtown and in Central Park that generate a lot of sales, meals, lodging, and other business taxes. In normal times, that’s a huge advantage that we have here in the city … we rely less on our property owners because our business sector is so robust.
But in a time of economic uncertainty like this one, that reliance can be a problem. Sales, meals, and lodging taxes can fall much faster than property taxes in an economic downturn. That means the economic chaos produced by Federal layoffs, contract cancellations, and unpredictable tariffs have the potential to do significant damage to our local tax base.
So as a Council we have approached this problem with a small-C conservative mindset. We have taken a number of steps to build a budget that will be as resilient as possible in the face of this uncertainty.
First, we took steps to “keep our powder dry” by drawing less out of our reserve Revenue Stabilization Fund than the City Manager had originally proposed. We added one penny onto the proposed property tax rate in order to keep more money in reserves in case things get bad over the course of this budget year. The City Manager proposed a $0.03 increase, we advertised a $0.06 increase, but have currently settled on a $0.04 increase. We wanted to have enough reserve funds that we could help mitigate the disastrous impact of unexpected midyear federal cuts on our schoolchildren, or of tanking meals tax revenue on our ability to pay our first responders fairly. This reserve holdback will not be enough to fill the gap left by a complete collapse in Federal funding or tax revenue, but it will hopefully allow us to blunt some of the worst damage if it comes to that. If the economic situation turns out better than we fear, then we will be able to minimize future tax increases with that reserve fund.
Second, we are planning to hold back about $6 million in appropriation authority. In other words, we are planning to adopt a budget of approximately $136 million, but we are only planning to appropriate approximately $130 million of that. The $6 million that we are holding back will compel our City departments and some of our partners to plan now for bad potential fiscal outcomes. Council is planning is to reassess our financial position mid-fiscal year (December 2025 or January 2026) and if it seems that federal funds and local revenues are holding up, then we will appropriate the remaining $6 million so that everything will operate according to our official budget. By December, we will have at least 1st-quarter economic data, and potentially more data about some of those revenue streams, to base that decision on.
Third, we are slowing down hiring. The City Manager’s budget recommends hiring only 4 new general fund-supported positions, and we are going to wait until halfway through the fiscal year (January 2026) to hire all but one of them. Furthermore, the City Manager will implement a hiring slowdown for replacement hires. We are not instituting a hiring freeze, because there are critical positions that will need to be filled if they become open. But we are adopting a hiring slowdown for both new positions and replacements until we have a better sense of the impact of the turmoil in DC on our budget.
I want to end by saying that I think that in many ways, the fiscal health of the City is strong. Fredericksburg has a long tradition of small-C conservative budgeting, which is reflected in the health of our financial reserves, our excellent bond rating, and our overall stability. That tradition of caution, stability, and fiscal strength will get us through this potential crisis. But there may be hard choices coming down the pike, depending on what our friends on the Potomac do over the next months and years. I will continue to communicate with you frequently and clearly (and probably with too many words!) as we work our way through it.
Will Mackintosh is an At-large member of the Fredericksburg City Council.
Updated May 3 at 8:18 a.m.
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What is striking about this OpEd is what it has not addressed—the vision for Fredericksburg and how this budget is building that future. What are the city’s priorities? How do these expenditures meet them? Instead, as stated by the writer, the city builds a budget looking out no more than a year. As a result, the city must now address previously deferred expenditures. Short-sighted spending prioritizes immediate needs over long-term goals. And finally, deferring and even changing goals for the sake of revenue to cover for the lack of planning. There are many examples of cities that have overcome challenges, financial or otherwise, through long-term planning and keeping focused on that plan. Why can’t Fredericksburg?