It might sound like semantics, but nebulous economic forecasts are already coloring how Fredericksburg officials are approaching the budget process for the upcoming fiscal year.
“What is a recession versus a depression?” Councilor Jason Graham (Ward 1) mused during Tuesday’s work session on the budget. “I don’t know if it’s appropriate for us to plan for a localized depression. It could be a nationwide recession, but for this area in particular, it could be a depression.”
“Because of the federal workers,” interjected Councilor Jon Gerlach (Ward 2).
That calculus, and more specifically — a possible drop in revenue from the sales and meals tax of up to 10 percent — led city councilors to agree in principle to advertising a 6-cent increase in the real-estate tax rate. Fredericksburg’s current real estate tax rate is 76 cents per $100 of assessed value.
“We all may need to pull back, the city offices, schools, everybody,” Mayor Kerry Devine said. “But I’m comfortable with advertising six [percent].”
Later in the discussion, Gerlach broached one possible remedy: a cash advance of sorts from data centers, which the city council essentially green-lit last month with the approval of a Technology Overlay District in Celebrate Virginia South.
“Is there any universe in which a data center could pre-pay their taxes,” asked Gerlach, “so we could get some revenue coming in sooner rather than later?”
Director of Economic Director and Tourism Josh Summits said he’s heard of such arrangements, referred to as “payment in lieu of taxes,” but doesn’t believe they were considered in Stafford County, where he worked previously.
“It could be a way to sort of front load that a little bit,” said Summits, who noted that negotiations for a water services agreement with Stack Infrastructure will begin next month. “It’s something that’s on our radar, that we’ve been thinking about.”
Tuesday’s work session devoted another 1.5 hours to City Manager Tim Baroody’s proposed FY26 budget, focusing primarily on capital expenditures, or projects.
City residents can expect their water bills to increase by an average of $11.15 compared to FY 2025, based on a consumption of 10,000 gallons per two months.
Under the wastewater capital fund, the budget also calls for deferring the construction of sanitary sewer interceptors from FY27 to FY29. That project has a projected price tag of $28.6 million.
On April 1, city council will hold a joint work session with the Fredericksburg City School Board to discuss the budget. A public hearing on the budget is slated for April 15 at 7:30 p.m.
Later Tuesday evening, city council voted 7-0 to approve an agreement between the city and school division for shared use of the latter’s facilities for recreational programs.
Councilors also voted to nominate Thomas Johnson to serve on the Planning Commission, filling the spot left vacant by Susanna Finn.
