Danville’s proposed budget for the upcoming fiscal year anticipates another increase in revenue from the Caesars Virginia casino resort, as well as revenue increases from adjusted utility rates.
The city expects to receive about $37.7 million from gaming tax revenue from Caesars Virginia during the next fiscal year, according to City Manager Ken Larking’s proposed budget, which he presented at a media briefing Tuesday.
This is a $2.7 million increase over the gaming tax revenue projection for the current fiscal year, the first full year that the casino resort was operational. Next year’s revenue will continue to be used for a variety of initiatives, including public education, public safety, economic opportunities, housing and infrastructure.
Danville also plans for a “modest adjustment” to utility rates, suggested by a biennial rate study that was approved by the city’s utility commission. The study recommended a monthly increase of about $10 per customer “to ensure reliable service,” Larking’s presentation said.
Both of these revenue streams will contribute to the total proposed budget for next fiscal year, which is $395.2 million, an increase of about $15 million over Larking’s $380 million recommendation for the current year, with no increase to the real estate tax rate.
Larking presented the budget to the Danville City Council at its regular meeting Tuesday evening. The council has until the end of June to make changes and adopt the budget. Several public hearings will be held between now and then.
Casino revenues expected to increase
Money from gaming tax revenue will be spent according to recommendations from the Investing in Danville Committee, which was established to guide the city on how to spend these funds. The committee was created before a temporary casino opened in 2023. The full casino resort opened in December 2024.
During Caesars Virginia’s first fully operational year, Danville used gaming tax revenue for a wide variety of projects across the city. The city’s website has more details on how this revenue is being spent.
Danville plans to continue and expand upon these initiatives with casino revenue in the upcoming fiscal year.
Larking budgeted for $37.7 million in gaming tax revenue for the next fiscal year, which runs from July to June. That’s a $2.7 million increase over the budgeted $35 million for the current fiscal year.
About $31.9 million of the expected $37.7 million is allocated to pay for initiatives identified by the Investing in Danville Committee. The remainder is the local supplement that Caesars agreed to pay the city as part of its development contract. The minimum local supplement that Caesars must pay Danville every year is $5 million.
“Even if they don’t open their doors, they’re required to pay us $5 million a year, and we’re using that to support operations,” he said. “That does result in relief to the tax burden for the community. If we didn’t do that, then we would either have to reduce services or increase taxes to continue operations at the same level that people are expecting.
Larking recommended that the remaining revenue from the casino be allocated as follows:
- About $10.3 million for economic opportunity, including tourism, historic district improvements, small business support, and support for the Industrial Development Authority and Regional Industrial Facilities Authority.
- About $6.8 million for public education, mostly related to personnel, including contracted substitute pay, professional development, behavioural specialists, bus aides, social workers, bonuses and summer internships.
- Almost $4.2 million for public safety, including youth violence prevention, police equipment, emergency communications, and upgrades to courthouse technology and the city jail.
- $4.1 million for housing, including blight remediation, home energy efficiency, housing grants and neighborhood planning.
- About $2.8 million for quality-of-life efforts, including parks improvements and maintenance, museum upgrades, tree plantings and an arts program.
- Almost $2.4 million for infrastructure, including neighborhood resurfacing, streetscapes and airport projects.
- Almost $1.1 million for community health efforts, including recreation programming, the riverwalk trail and social services workers.
- Almost $1 million for financial stability, including transparency, accountability and oversight efforts, a strategic plan, grant administration and the establishment of a capital reserve fund.
Utility rate increase would add about $10 per month to bills
Larking recommended allocating about $202 million for the utility fund in the upcoming fiscal year. That’s about an $11 million increase over the current year.
About $6.2 million in revenue is expected from adjustments to utility rates for customers, amounting to an average of $10 to $11 per month across all utilities — water, wastewater, electric and gas — though actual amounts will vary depending on usage.
This increase was recommended by a biennial rate study, which the city routinely conducts every other year. The adjustments suggested by the rate study, if there are any, are usually modest, Larking said.
“What some communities do with utilities is they tend to wait and not want to increase, not make adjustments every two years like us,” he said. “They might wait five or 10 years before making an adjustment, and then they’re faced with a huge adjustment, because unfortunately, they neglected their system.”
More regular and minor adjustments are crucial to prevent larger, sudden increases, Larking said.
“By doing that increase every two years, we avoid that shock, that increase that would be necessary no matter what, because frankly, the cost of doing business for everything goes up over time,” he said. “This makes sure that adequate funding is available to run and maintain our system.”
Even with the increase, Danville’s average monthly utility rates are still lower than those of peer cities, Larking said.
Danville is the only municipality in Virginia that operates all four essential utility services: electricity, natural gas, water and wastewater. It has been in the utility business since 1876 and serves Danville, most Pittsylvania County households and also portions of Henry and Halifax counties.
Larking said he often hears residents wonder if their rates will go up when the city attracts a larger customer, like Caesars Virginia or Tyson Foods, for example.
The answer is no, he said.
“The rates are based on what it costs to maintain the system,” he said. “Our system is fixed. We have a boundary that we have to stay within. If we add more customers within that boundary, then it’s just more customers helping to absorb the overall cost of maintaining the system. In fact, if you add customers, it brings the cost down for everybody else.”
A 1-mile water line costs the same to build and maintain whether it has two customers or 1,000 customers, Larking said.
“If you have two customers on it, they don’t use much water, and it’s going to take a long time to repay that cost of the water line,” he said. “But if you have 1,000 customers on that, then it’s going to take a lot less [time], and it’s still got to be there.”
Without strong utility infrastructure in place, a community can’t hope to attract business, he said.
“We should be proud of the fact that we have this,” Larking said.
Danville Utilities will also allocate $200,000 from its budget to the Neighbors Helping Neighbors assistance program, through which ratepayers can round up their bill to provide assistance to other customers. Danville Utilities will also invest $500,000 in an energy-efficiency program for qualifying homeowners. These same amounts were allocated for these uses during the current fiscal year.
Drop in sales tax revenue expected
The recommended general fund for the upcoming fiscal year is almost $190 million, which is about $326,000 less than the current year.
This fund includes the $2.7 million increase in expected gaming tax revenue over last year, as well as the $5 million in guaranteed revenue from Caesars Virginia.
The general fund also includes a $1.6 million expected increase in real estate tax revenue and a $600,000 expected increase in meal tax revenue. Larking expects a decrease of about $1 million in sales tax revenues and a decrease of about $348,000 in interest earnings.
He attributed the anticipated decrease in sales tax revenue to fewer large construction projects in the upcoming fiscal year than in recent fiscal years.
“We don’t think it’s because the economy is slowing down in Danville,” Larking said. “We just think that these were high-impact, high-cost projects that aren’t happening at the moment.”
Caesars Virginia was an $850 million project, and there were also multiple school renovation projects happening in the city last fiscal year.
“We had more people in the city that were buying things related to those construction projects,” he said. “They all had to pay sales tax for all the building materials and things they needed to do those projects. … That really boosted our sales tax revenue.”
Schools funding to rise
Larking’s recommended budget allocates almost $35.4 million for Danville Public Schools, an increase of $2.9 million over the current year.
These funds will pay for the local share of the 2% salary increase for Standards of Quality funded positions, which are required by the state; about a 7% increase in health insurance premiums; and compensation for positions like bus aides, bus drivers, cafeteria staff and information technology positions.