Chandler gives Northampton Board look at projected revenues for next fiscal year

Northampton County Finance Director John Chandler gave Supervisors a preliminary look at projected revenues for fiscal year 2027 at Tuesday night’s Board Work Session.

Chandler told the board the current projection shows local revenues rising about $2.76 million, or 6.48%, while federal revenue is projected to drop by $705,000, an 84% decline largely tied to major one-time grant funding rolling off. Overall, the general fund projection reflects a net increase of about $2.077 million, a 4.37% change from the current year’s adopted budget.

A major focus was how heavily Northampton relies on locally generated revenue. Chandler said roughly 91% of general fund revenue comes from local sources, with about 6% from the state and a small share from federal sources. County residents and landowners are paying the large majority of the costs to operate county government.

Property taxes were identified as the main driver of the FY 2027 projection. Chandler said the model includes a $3.3 million increase tied to the county’s reassessment using the current real estate tax rate of 70.5 cents per $100 of assessed value. That figure is not an equalized rate, but rather reassessment applied at the current rate. He also noted real estate revenue is about half of the general fund, citing roughly $25 million in real estate-related revenue in a general fund approaching $50 million.

Based on the county’s figures, Chandler reported the equalized rate would be roughly 66.32 cents per $100. They estimated that lowering the rate from 70.5 cents to around 67 cents would reduce county revenue by about $1.723 million. A public hearing tied to the reassessment and rate setting will be held later this spring.

Upon questioning by the Board, Consuela Gonzalez, the County’s Commissioner of Revenue, shared a snapshot of average taxable assessment increases by district and town limits. She reported that Capeville District increased 8.83%, Eastville District 11.28%, Franktown District 11.46%, Belle Haven 14.14%, Cape Charles 6.57%, Cheriton 12.67%, Eastville 9.46%, Exmore 7.79%, and Machipongo 4.45%.

Returning to his presentation, Chandler said sales tax performance has improved sharply, flipping from earlier year-to-date declines to a reported 14% increase over the most recent months, and he projected about $2.2 million based on the last 12 months. Cigarette tax revenue continues a multi-year decline.

One of the largest reductions discussed was investment income. Chandler projected a $498,000 drop as interest rates fall. He cited a recent LGIP return of 3.81% compared with 4.47% a year earlier, and said the county is forecasting lower returns by the start of the next fiscal year.

Chandler also presented several financial pressures looking ahead, including capital reserve limits and the remaining funding gap in the school construction plan. Officials said the capital reserve fund ended FY 2025 at about $3.1 million, but after FY 2026 capital funding and carry-forward amendments, only about $858,000 may remain available going into FY 2027 against roughly $2 million in identified capital requests. Chandler also reminded the board that earlier school construction planning set aside about $8 million, but that an additional $7 million still needs to be identified by the county and/or schools near the end of construction, projected around mid-2027.

Finally, Chandler highlighted an increase in Virginia’s Local Composite Index, which they estimated will cost Northampton roughly $1 million more in required school funding for FY 2027. County Administrator Matt Spuck said he is working with Delegate Rob Bloxom and others to explore whether the formula can be improved for rural localities with large farmland values and relatively low student populations.