Heather Bell
RADFORD – Budget talks continue in the City of Radford, as depleted reserve funds and diminished revenues have combined with higher costs to create a significant economic situation.
Members of the Radford City Council and Interim City Manager Craig Meadows have all said increased tax and utility rates, as well as a decrease in some city programs and delays in projects are inevitable this budget cycle. The members of council heard a presentation by the city’s auditor, Corbin Stone of Robinson, Farmer and Cox, on Feb. 24.
Stone explained several factors have led to the city’s current economic woes. The cost of wholesale electric, which the city purchases from AEP and then sells to its customers, increased by 11 percent in fiscal year 2022-23 and then increased an additional 15 percent in fiscal year 2023-24. It had increased by 3.4 percent in fiscal year 2021-22. While some of that increased cost is passed along to customers, not all of it is, leading to a significant decrease in profits made from electric sales. Radford has historically balanced its budget by transferring millions of dollars from the electric reserve fund to the general fund to balance the city’s budget. This past year, that electric reserve fund went into the negative by $433,000, thus leaving no funds to transfer for the foreseeable future.
“The cost of electric to the city has gone up substantially in the past two years,” said Stone.
Further, the last time revenues to the water and sewer utility exceeded the cost of running those utilities was in 2018.
Stone said the “precipitous drop” in the number of in-person students at Radford University has also affected the bottom line.
“Obviously that drop is affecting the local economy,” said Stone.
Sales tax revenues have decreased, and meals tax revenue increased by only 2.4 percent, which Stone said is a significantly smaller increase than those seen in surrounding localities. Inflation and the overall increase in goods and services used by the city are also affecting the bottom line.
“Expenses are going up faster than revenues,” said Stone.
“A lot of localities are in a similar boat,” he continued. “But due to the lack of city reserves, the reaction time you have is short. You have to move quick.”
During the regular city council meeting, which directly followed the audit report, council members and Meadows said the city’s course must be righted with the city’s new fiscal year budget, which will begin July 1.
“We need to make sure we project the revenues for FY 26 accurately and fine tune those as closely as we can,” said Meadows. “This is going to be a tough budget. We need to do what we need to with revenue [with tax and rate increases], and if that’s too bitter a pill, we’ve got to talk about what programs and projects we can defer or delay.”
“We have a challenge ahead for sure,” said Council Member Kellie Artrip. “It’s not going to get changed in one budget season, but we are all very aggressively committed to turning this around as quickly and efficiently as we can. It’s not going to be painless, but I do think it’s possible.”
Council member Jessie Foster agreed.
“Obviously we’re going to have to raise revenues. There’s no way around that,” she said. “But we will also look to see that we are being good stewards of the revenue we are bringing in. Some programs might need to be temporarily suspended.”
“The sense of urgency is felt by all of us,” added Vice Mayor Seth Gillespie. “We have to stabilize and stop the bleeding. There’s gonna be some rate increases, but we can’t put a huge, huge burden strictly on our citizens’ shoulders, so we need to look at pausing services that maybe we can come back to later.”
Mayor David Horton said some of the imbalance was dealt with last spring with rate increases, which is not reflected in the audit. He also said he feels it will take two-to-three budget cycles to rectify the situation.
Council member Guy Wohlford participated in the meeting via computer due to illness.
The budget process continued Monday, Mar. 3 with a council work session. Upcoming dates include a budget work session on Monday, Mar. 10 at 6 p.m., city staff’s budget presentation to council on Monday, Mar. 17 at 5:30 p.m., work sessions on Monday, Mar. 24 and Monday, Mar. 31 at 6 p.m., a budget public hearing and first reading (vote) on the budget and tax ordinances on Monday, April 7 at 6 p.m., a budget work session on Monday, April 14 at 6 p.m., and the second reading (vote) on the budget and tax ordinances on Monday, April 21 at 6 p.m.
