Martinsville residents can expect a combination of city government spending cuts, a real estate tax increase, a trash collection fee increase and an electrical service rate hike if the fiscal 2026-27 draft budget is approved.
The city council will review the budget and proposed tax increase Tuesday, aiming to schedule May 26 public hearings on them.
According to City Manager Robert Fincher’s planned budget presentation, this “is one of the most challenging financial plans this city has faced in recent years,” reflecting “not only rising costs and ongoing service demands, but also the difficult transition” created by the expiration of federal American Relief Plan Act funds allocated during the COVID pandemic.
According to Fincher, who became city manager in March after serving as a city police officer and police chief, the budget process was complicated by last year’s revenue being overestimated by $1 million, while spending was underestimated by $4 million.
Further, Fincher says, city revenue consistently drags behind rising costs. Since 2020, expenses have grown annually by 4.46% while annual tax increases have been 3.7%.
Fincher proposes a nearly $122 million budget, about $5.5 million less than the original current-year budget.
According to the presentation, spending cuts include:
- A city employee hiring freeze, affecting nine vacant positions and any future vacancies, but not affecting public safety agencies. However, administration intends to offer city workers a cost-of-living pay adjustment to match state workers’ raise. A state budget has yet to be passed. The House of Delegates has presented a 2% cost-of-living pay hike for public school employees and state workers, while the Senate presented a 3% raise.
- Reducing local school funding to the previous year’s level. The proposed schools budget is $33 million, an increase of about $1.22 million compared to the current-year budget, but that amount includes state-supported pay raises.
- Cutting departmental spending on items such as office supplies, travel and training, eliminating duplication of software costs, then asking each department to come up with additional cuts of 4%.
- Asking employees to absorb part of the cost of a 20% group health insurance rate increase.
- Eliminating funding to some non-city agencies and making 4% cuts to others.
Even with nearly $3 million in spending cuts, city government will still be $2 million short of meeting its needs, according to Fincher. He proposes raising the real estate tax from 75 cents to 84 cents per $100 of value to help close the gap.
Fincher notes that among Virginia cities, Martinsville’s real estate tax rate is and will remain below the average of $1.03. Currently, the only lower city rate is Williamsburg’s, at 62 cents.
If the tax is raised to 84 cents, the tax bill on a property worth $100,000 would increase by $90. The bill on a property worth $200,000 would increase by $180.
Fincher proposes no other tax rates, but residents and businesses could face utility rate hikes. The budget includes a $5 increase in each tier of garbage collection rates to restore that operation to paying for itself. Without a rate hike, he says, trash collection would lose the city more than $175,000 in the coming fiscal year. A household monthly bill for weekly trash pickups would increase from $20.60 to $25.60.
The city runs its own electric department, getting power from a combination of a local dam and purchasing from American Municipal Power Inc. Because of rising operational costs, Fincher proposes raising the power cost adjustment by 6%. A home using 1,000 kilowatt-hours per month would see the monthly bill rise from $176.38 to $186.78.
Tuesday’s meeting will begin with a closed meeting at 6 p.m. The regular session will begin at 7 p.m. The council will meet at the municipal building, 55 W. Church St. Meeting documents are available online.
