GUEST COMMENTARY: Cooling Property Assessments, Increased Costs Push Williamsburg Budget
City considers raising food & hotel taxes and water rates to close funding gaps
(Editor’s Note: This piece contains guest commentary. The opinions expressed below are the authors and not necessarily those of the Williamsburg Independent.)
The City of Williamsburg recently released its proposed Fiscal Year 2026 budget, which is generally organized into two major components, the Operating Plan and the Capital Improvement Plan (CIP). This article will focus on the proposed Operating Plan and related Fund Budgets for FY26.
The Operating Plan provides for budgeting annual revenue (income) and expenses, which generally fund City staff, services, programs etc. The City’s accounting is organized into multiple funds or pools of money, each of which is designed for a separate purpose. The General Fund is the principal fund for governmental activities and includes most of the City’s expenditures, such as schools and public safety. It is funded principally by our taxes. The two other principal funds are the Utility Fund which consists of annual activities of the water and sewer services, and the Tourism Fund, which collects tourism tax revenues and spends them on projects to promote tourism development projects.
We all love living in the City of Williamsburg and enjoying the quality of life it provides and the convenience of Colonial Williamsburg and the College of William & Mary. Ultimately, it is the City’s responsibility to ensure it responds to those areas of need, prioritizing concerns, and making judicious financial decisions to ensure the availability of our City for future generations. The goal of this budget series is to inform and educate the public, in order to enable better governmental decision-making.
Budget timeline
The budget timeline provides for residents’ comments during City Council Meetings on Monday, April 7th and Thursday April 10th. Approval by the City Council is slated for May 8th. Residents are encouraged to provide input either during the public comment period during the City Council meetings or by emailing City Council members. They can be contacted at council@williamsburgva.gov.
Slowing property assessments, tightening budget
Like our neighboring jurisdictions, the increase in revenues from property taxes of 80% over the past few years has not only raised substantial revenues but also fueled similar increases in expenditures. However, now that the projected annual increase in general property tax revenues in FY2026 is estimated to increase by only 6%, the City finds itself in a budgeting challenge. I think many of us can sympathize with the City’s dilemma now that real estate assessment increases and corresponding tax revenues are leveling off, while expenditures are sticky, and the cost structure levels are resistant to reduction.
Because of these factors and more, it is proving difficult to control General Fund Expenditures for Fiscal Year 2026. In fact, total General Fund expenditures are projected to increase 10.4% over the prior year. Increases include a 14.6% increase in funding for the joint school system, as increased expenditures on services and personnel. These costs continue to increase whether or not revenues increase at the same rate. On top of that, the money the City pays to cover its debt has increased, in part due to borrowing to finance the construction of the new police and fire stations.
Increases in meals tax, hotel tax needed to cover budget shortfalls
The City has chosen to raise some taxes in order to avoid a painful reduction in overall expenditures and personnel layoffs. Seeking to avoid increasing property taxes this year, which is always unpopular — particularly so after real estate bills have ballooned over the past 3 years due to rising assessments — the City proposes to increase the meals tax by 2% to 9%, the hotel tax by 3% to 11%, and initiate a new “admissions” tax of 10% (unclear if this applies only to Colonial Williamsburg or also to William & Mary football and basketball games, Muscarelle Museum, or Phi Beta Kappa Hall).
The additional meals tax means every time someone goes out to dinner, buys a coffee, or grabs a drink next year will be taxed at a total rate including sales tax of 16%. The City expects to get $4.9 million, or an annual increase of 27%, out of these tax increases. While they chose to raise ancillary taxes, the City is also clearly signaling that future increases in the real estate tax rate are in the offering. But the City has kicked that can down the road until next year. Until then, let’s hope that a significant increase in hotel and meals taxes are collected from the visitors coming to 250th Celebrations in the City.
Water bills could rise 30% next year, triple over next 10 years
It’s hard to ignore the fact that the City has largely neglected its infrastructure needs for years. The water filtration plant’s last major upgrade was 28 years ago, and it now operates at a capacity well below its design capacity. The water distribution system loses over 170 million gallons of water a year through leakage and evaporation. As a result, the City is now proposing to spend $27.5 million over the next 10 years to upgrade the water plant, replace and expand the water and sewer distribution systems. To fund these projects, the City would borrow the $27.5 million and repay it by dramatically increasing water rates by 30% next year and triple the current rate at the end of 10 years. Water bills will be separated from the sewer bills and billed monthly instead of quarterly. Unlike neighboring jurisdictions that have a scaled rate to incentivize high users of water to conserve, Williamsburg charges all its customers the same rate.
What’s next?
In the next installment of our FY2026 Budget Review, we’ll look at the Capital Improvement Plan which includes two funds, the Capital Improvement Fund for general governmental spending and the Utility Fund for the City’s water and sewer services. The Capital Improvement Plan recommends continuing major spending including a new $39 million library, $27 million on water and sewer infrastructure, $6.5 million on a new downtown children’s park, and potentially $10 million on the Richmond Rd/Monticello roundabout.
Remember, all residents are encouraged to reach out and email any comment or suggestions to members of our City Council before the end of April. Now is the time to get involved and make sure your voice is heard too!
Read previous posts in the budget series below:
PART 1 - Rising Residential Real Estate Property Assessments & Increased Spending
PART 2 - Troubling Issues Loom over Williamsburg Budget
About the Writer: During a 45-year career, Robert Wilson worked with senior leadership teams to develop and implement innovative strategic and business plans that have fostered growth and profitability. His background includes direct profit and loss responsibility, forging effective multi-functional leadership teams, restoring organizations to sound financial footing, and implementation of best practices initiatives. He has demonstrated a mastery of turnarounds and troubled companies in a variety of business sectors.
Prior to retiring in 2021, Dr. Wilson was Co-COO of a $2 billion operating division of a Fortune 500 Company. He has held the positions of CEO, President, COO, and CFO in several regional and national organizations during his career. Since retiring from corporate life, Mr. Wilson has served as an adjunct instructor in the business school at Christopher Newport University.
Dr. Wilson holds a BBA degree from the College of William & Mary, a MS in Finance degree from the University of Arizona, and a Doctorate in Management from the University of Maryland Global Campus. He is a member of the Beta Gamma Sigma honorary business fraternity. Since 1979, he has held a Certified Public Accounting license in the Commonwealth of Virginia (currently inactive) and is a member of the American Institute of Certified Public Accountants and an original member as a Chartered Global Management Accountant.
Dr. Wilson resides in the City of Williamsburg and may be contacted at wilstar2001@gmail.com.
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