Richmond Has A Math Problem.

 

And City Hall's own numbers are making it increasingly difficult to ignore.

According to the latest financial analysis presented to City Council, Richmond's revenues have recently been growing approximately 3% to 4% annually.

Its expenditure obligations have been growing approximately 7% to 9%.

That's the story.

3%–4% coming in.

7%–9% going out.

And the projections show where that imbalance can lead.

Even if Richmond keeps its real estate tax rate at the current $1.20 per $100 of assessed value, financial projections show an approximately $17.3 million deficit in FY2028.

Reduce the rate one cent and the projected deficit grows to approximately $21.9 million.

Reduce it four cents and the projected shortfall approaches $35.6 million.

Those numbers should dominate Richmond's fiscal conversation.

Because Richmond's problem isn't primarily one penny on the real estate tax rate.

Richmond's spending is growing much faster than its revenue.

The Numbers Are Flashing Red

Consider Richmond's financial landscape:

3%–4%: recent annual revenue growth.

7%–9%: recent expenditure growth.

$17.3 million: projected FY2028 deficit even at the existing real estate tax rate.

$680 million: identified Richmond Public Schools basic maintenance needs through 2044.

Nearly $130 million: bonds associated with the Diamond District stadium.

$15 million: state funding toward Coliseum demolition.

More than $200 million: estimated cost of the convention hotel being explored, although the amount of potential public participation remains unresolved.

These numbers aren't interchangeable, and they shouldn't simply be added together.

But they absolutely belong in the same conversation.

Because there is only one Richmond economy supporting all of it.

And that economy isn't growing revenue nearly as quickly as City Hall's expenditures are growing.

Richmond Can No Longer Depend on Rising Assessments

For several years, rapidly increasing real estate assessments helped mask the problem.

Richmond's General Fund grew from approximately $780 million in FY2021 to roughly $1.09 billion in FY2025.

That's an increase of approximately $310 million in only four years, or nearly 40%.

Rapidly rising property values helped make that possible.

But Richmond cannot assume double-digit assessment increases will continue indefinitely.

That is precisely why the 3%–4% versus 7%–9% comparison matters so much.

If revenues normalize while expenditures continue racing ahead, something eventually has to give.

Taxes rise.

Services get cut.

Projects get delayed.

Debt increases.

Or spending growth has to slow.

There is another option, however.

Richmond could aggressively grow its economy.

And that's where City Hall's strategy becomes much harder to identify.

Avula Has Identified the Answer. Where Is the Plan?

Mayor Danny Avula recently acknowledged the problem:

“We're entering a very different fiscal environment.”

He also identified economic development as part of the solution:

“If we're not going to raise taxes, which none of us want to do, then we have got to make sure that we are growing, that we are developing, that we're focusing on economic development so that we develop other revenue streams as a city.”

Exactly.

But saying Richmond needs economic development isn't an economic-development strategy.

Where is the aggressive plan?

Richmond certainly has development projects, grants, incentives and economic-development programs.

But projects are not necessarily a strategy.

Where is the comprehensive plan specifically designed to expand Richmond's recurring commercial tax base fast enough to help close a potentially four-to-six percentage-point annual gap between revenue and expenditure growth?

What is Richmond's target for new private investment?

How many new private-sector jobs does City Hall intend to attract?

How much additional commercial assessed value does Richmond need?

How much new recurring tax revenue must economic development produce?

What industries is Richmond aggressively recruiting?

What is the strategy for downtown's vacant office buildings?

What is Richmond doing to lure businesses from outside the region rather than simply moving economic activity around inside the city?

And how does Richmond intend to compete with Henrico and Chesterfield?

Those questions need numerical answers.

A fiscal problem measured in millions of dollars requires an economic-development strategy measured in millions of dollars.

Richmond Needs Growth, Not Just Projects

This distinction matters.

Building something isn't automatically economic development.

Borrowing money isn't economic development.

Moving an existing business from one Richmond neighborhood to another isn't necessarily economic growth.

And shifting future tax revenue toward financing a development project doesn't automatically improve Richmond's overall fiscal position.

The objective should be net new economic activity.

New employers.

New jobs.

New commercial investment.

New visitors.

New residents.

New taxable economic activity.

And, ultimately:

New recurring revenue.

That is what Richmond needs if City Hall wants to provide tax relief while continuing to increase spending.

Council Vice President Katherine Jordan recently highlighted the danger when discussing Richmond's competitiveness:

“The threat is that we're going to lose that tenant, that business, that employee base to the counties.”

That should concern City Hall.

Because Richmond isn't competing against itself.

Henrico and Chesterfield are competing for many of the same businesses, workers, developments and investments.

If Richmond loses that competition, the 3%–4% revenue-growth problem becomes even harder to solve.

The Diamond District Illustrates the Risk

Richmond has already issued nearly $130 million in bonds associated with the Diamond District stadium project.

Mayor Avula previously described the project as “a pretty good bet” while acknowledging that Richmond bears more of the risk.

Maybe the bet pays off spectacularly.

Taxpayers should hope it does.

But hope isn't a fiscal strategy.

What happens if development occurs more slowly than projected?

What happens if tax revenues fall short?

What happens if costs increase?

And how long does Richmond carry the financial exposure while waiting for the surrounding development to generate the anticipated revenue?

When expenditures are already growing faster than revenues, the tolerance for projections being wrong becomes much smaller.

$680 Million in School Maintenance Changes the Equation

Then consider Richmond Public Schools.

An independent facilities assessment identified approximately $680 million in basic maintenance needs through 2044.

Not extravagant additions.

Basic maintenance.

Roofs.

Boilers.

Mechanical systems.

Aging buildings.

Richmond voters are also being asked to consider another penny in sales tax to help finance school construction and renovation.

That creates an unavoidable question of priorities.

If taxpayers are being asked to provide additional revenue for essential public infrastructure, City Hall should be extraordinarily careful about assuming additional financial risk elsewhere.

A broken school boiler doesn't care whether projected development revenue arrives five years late.

Then Comes a $200 Million-Plus Hotel

Richmond is also exploring a convention hotel reportedly costing more than $200 million.

The financing remains unresolved, and Richmond has not committed $200 million in taxpayer money.

But potential public participation has been discussed.

That makes the fiscal questions unavoidable.

How much private money?

How much public money?

How much future tax revenue?

What happens if hotel performance misses projections by 10%, 20% or 30%?

And what is Richmond giving up by directing public resources toward the project?

Those questions should be answered before Richmond assumes the risk.

The Coliseum Deserves the Same Fiscal Test

Richmond has $15 million in state funding available toward Coliseum demolition.

But demolition is still a financial decision.

Before eliminating a publicly owned asset, Richmond should issue a stand-alone competitive solicitation specifically seeking renovation, rehabilitation, adaptive reuse or private operation of the Coliseum.

Let the market answer the question.

If nobody responds, Richmond learns something.

If every proposal requires an enormous public subsidy, Richmond learns something.

But before spending public money to eliminate an asset, find out whether someone is willing to spend private money to preserve and operate it.

That's fiscal prudence.

The Real Choice Is Bigger Than a Penny

Much of City Hall's debate has focused on whether Richmond's real estate tax rate should remain $1.20, fall to $1.19, or eventually fall to $1.16.

That's important to homeowners.

But it doesn't solve the structural problem.

A one-cent tax reduction doesn't cause a 3%–4% versus 7%–9% growth imbalance.

And keeping the tax rate at $1.20 doesn't fix it either.

The projections make that painfully clear:

Richmond could still face a $17.3 million FY2028 deficit without reducing the rate at all.

Eventually the city has only three fundamental choices:

Spend less.

Tax more.

Or grow faster.

If Avula doesn't want to raise taxes, and taxpayers want relief, Richmond needs an aggressive combination of the other two.

Control expenditure growth and dramatically expand the tax base.

Where Is Richmond's Growth Plan?

That should become the central question for the Avula administration.

Not another slogan.

Not another individual development announcement.

Not another incentive package presented as proof of economic progress.

A measurable plan.

If Richmond's fiscal projections extend five years, its economic-development strategy should extend five years too.

Tell taxpayers:

How much new private investment Richmond intends to attract.

How many private-sector jobs it intends to create.

How much commercial assessed value it intends to add.

How much downtown vacancy it intends to eliminate.

How much recurring tax revenue those efforts should generate.

And then report the results publicly every year.

Because without aggressive economic growth, Richmond's choices become increasingly unpleasant.

Richmond's Math Has to Change

Strip away all the individual projects and political arguments and Richmond's problem becomes remarkably simple:

Revenue: 3%–4% growth.

Spending: 7%–9% growth.

That gap is the issue.

The $17.3 million projected FY2028 deficit is the warning.

The $680 million in school maintenance needs is the reality.

The nearly $130 million in Diamond District bonds represents existing risk.

And the $200 million-plus convention hotel represents another major decision potentially approaching City Hall.

Richmond can still build.

Richmond can still invest.

Richmond can still think big.

But it cannot sustainably spend 7%–9% more every year while revenues grow 3%–4% and simply hope development eventually fills the hole.

Control spending.

Aggressively recruit private investment.

Grow the commercial tax base.

Set measurable economic-development targets.

Protect Richmond's borrowing capacity.

And before City Hall assumes another major financial obligation, taxpayers deserve something more concrete than optimism.

Show us the numbers.

Show us the growth.

And show us the plan.

Brian K. Telfair, The Richmond Chronicle