Radford residents will pay more in numerous ways for the third straight year as the city digs out of a deep financial hole.
Radford is in “fiscal distress,” and it qualifies for state expertise to help guide it through its troubles, the Virginia Auditor of Public Accounts notified the city in March. In December, Cardinal News reported that Radford would be only the third city in such straits since the APA first began monitoring in 2017.
With that realization, the city council voted 4-1 Tuesday night to raise the real estate tax rate by 2 cents, from 82 cents per $100 of assessed value to 84 cents. Councilwoman Jessie Foster, who said she was in favor of a 3-cent increase, voted no. The council then voted 5-0 to raise the water rate by $3 per 1,000 gallons, and the budget also includes a 5% increase in the electric rate.
The council must take a second vote to finalize the budget at an April 28 meeting, set for 6 p.m. at the city municipal building.
The real estate and water increases approved Tuesday are lower than what the city advertised prior to that meeting: a 5-cent real estate tax increase and a $5.87 water rate increase per 1,000 gallons.
But, with the 2-cent real estate rate increase, the city council has raised that rate by 20 cents over the past three years.
Councilman Seth Gillespie said that’s why he favored a more moderate approach this year.
“It has to be mitigated over time,” he said. “I would love to say that there will be no future real estate tax increases, but I don’t think that’s feasible either.”
The council’s votes came after a lightly attended public hearing on the budget matters.
Five residents spoke — all concerned about the city’s finances.
Beth Barber said electric bill increases are impacting the vulnerable.
“We’re currently facing a strong cost of living crisis,” she said. “Believe it or not, families in the city are already making impossible choices between groceries, medicine and keeping the lights on.”
The city should look at additional cuts to the budget before asking citizens to again pay more, such as reducing library or recreation center hours, said Doug Kanipe.
“I think we’ve got to keep digging and not just say this is as lean as we can be,” he said.
The city has made numerous cuts since its budget predicament started, including job freezes, said City Manager Todd Meredith, who was hired last summer.
The $81.7 million budget for 2026-27 would be the first in years to be balanced from expected revenues. The city, for some time, used transfers from water and electricity funds to balance its general fund budget. It has no reserves to speak of.
That’s why Foster favored the 3-cent real estate tax rate increase, because it would set a higher amount of money aside so the city can start to address infrastructure needs and have a rainy day fund.
“We need to build reserves,” she said.
Council members have said city revenue estimates were overly inflated for years, when they actually didn’t cover expenses.
Other issues that got the city in trouble include its usage of an unusual $4 million loan to pay its bills. The city is still paying off that loan as it remains behind on millions of dollars of back payments on wholesale electricity from American Electric Power.
At the same time, the city lost businesses — including the former foundry on the New River — and Pulaski County sued Radford, attempting to end a longstanding revenue-sharing agreement in Fairlawn. The suit remains in litigation. Mayor David Horton said Radford gets about $200,000 from that agreement annually — a number that’s increasing by the year because of development in Fairlawn.
Exacerbating the city’s crisis: About half of its properties are tax-exempt, which includes land owned by Radford University.
“It’s been something every few weeks,” Horton said in an interview prior to Tuesday’s meeting, adding that “we’ve had holes in our boat, but we didn’t sink.”
Horton said there is some good to sprinkle in with the bad, including the opening of the Highlander Hotel and a Food City, a site that should spur additional development, he said.
Horton’s mayoral seat is on the ballot this year, along with Gillespie’s and Foster’s council seats. Gillespie recently announced he’ll run for mayor.
Horton said he will make an announcement on his plans sometime in the next few weeks. Foster said she has not made a decision yet.
The council race will likely happen as the APA’s designation lingers. Should Gov. Abigail Spanberger and legislative committees approve an assistance plan for Radford, the APA recommends the state provide consulting services, according to its March notification letter.
The APA did not respond to questions sent in a Tuesday email, including when a decision on an assistance plan is expected.