A majority of Roanoke City Council members said Monday they can support a meals tax increase to fortify the municipal budget.

And after accusatory letters between the city manager and school superintendent were sent, they and other city leaders met in private to discuss the ongoing budget issues.

Council members decided not to wait until the scheduled May 12 adoption to make their views known on the meals tax. After City Manager Valmarie Turner asked for some direction Monday, five of six council members said they can support a 1 percent meals tax increase: Mayor Joe Cobb, Vice Mayor Terry McGuire, Phazhon Nash, Evelyn Powers and Peter Volosin. The only Republican council member, Nick Hagen, was already on record against any such increase prior to Monday’s meeting. Councilwoman Vivian Sanchez-Jones was absent from the meeting.

Roanoke’s meals tax rate would go to 6.5 percent, which would put it in the middle of a state peer list that’s been used during the budget discussions – lower than Bristol, Christiansburg, Charlottesville and Richmond, but higher than Botetourt County, Roanoke County and Salem. The meals tax was raised by a half percent to its current rate in 2015.

The council is opting to use the meals tax – instead of raising the real estate or personal property rates - to create revenue during a tight budget year. That’s created questions about school funding as well as issues such as large city deferred maintenance and overtime costs. 

The budget also includes compensation increases for certain city employee groups.

The council has heard a steady voice of opposition to any meals tax increase from numerous restaurant owners and others involved with Roanoke’s food scene. An online change.org petition started by the opposition group had 2,242 signatures as of Tuesday.

McGuire said he’s worked in restaurants and understands the issues the sector faces. But he said he will support a “modest increase” of 1 percent. He urged his colleagues to do everything they can to continue to support small businesses.

“With or without this meals tax increase, I think we are in a really uncertain time economically and it could be more tumultuous,” he said.

The city administration had offered another budget proposal that included a 1.5 percent meals tax increase this year. Nash was the only council member Monday who said he could support that.

The tax increase may include a sunset provision and could be enacted along with a discount program for food businesses that pay their taxes in an expedient manner. 

The council and city administration are also bracing for what could occur in the coming months. For example, the Trump administration’s budget proposal released last week - still to be approved by Congress - would cut federal money for the Roanoke Redevelopment & Housing Authority by 43 percent, authority Director David Bustamante told the council during another meeting Monday. That would come at a time when there are more than 4,000 people on the authority’s waiting list for housing, Bustamante said. 

The 1 percent meals tax increase would generate $4 million, according to city data. That revenue could be reduced somewhat based on a proposal by Mayor Joe Cobb to create a discount for those who pay taxes on time to “give a nod” to the food and beverage community.

The new revenue would be split between paying for the significant amount of overtime primarily by public safety and public works and maintenance and capital needs, according to the city administration’s budget proposal.

The longtime owner of downtown’s Texas Tavern, Matt Bullington, spoke against a meals tax increase at numerous meetings in recent weeks.

He spoke again Monday, asking the council to forgo any such increase, but said if the council decides it must, then he would suggest a half percent increase with a sunset provision.

Bullington said in a recent interview with The Rambler that restaurants are still recovering from the pandemic and inflation costs. Bullington said he was recently paying as much as $1,000 more a week for his egg supply.

Bullington also shared this story: He said years ago the city had a “dealer’s discount” program, such as the one Cobb mentioned, to reward restaurants that pay their taxes on time. But the city did away with it. Bullington said the city treasurer at the time stopped one day to eat at the Texas Tavern. 

Bullington said he asked why the program had been cut.

“Well, we needed more money,” Bullington said the treasurer replied.

While the council shared its views on the meals tax Monday, members did not discuss during their meeting the talks with school officials. 

In recent letters obtained by The Rambler, Turner, the city manager, accused school officials of potential law breaking and “malfeasance in office” over their handling of a multi-million-dollar rainy day fund, allegations that Superintendent Verletta White said amounted to "defamatory language” and “veiled threats.”

The letters prompted a private meeting Friday involving top city and school officials. Cobb said that “it was a good discussion.” 

“RCPS and City leaders met last Friday to collaborate on next steps moving forward and will continue to meet in the weeks ahead to ensure there is clarity of expectations and any new procedures that may be necessary,” said the school division in a Tuesday statement.

The council is set to adopt a budget of over $400 million that would include level local funding for the schools. The school system has agreed to use about $7 million of its reserve funds in its operating budget for 2025-26 based on the city’s decision. But school officials are concerned that the school reserve funding could be cut deeper than that by the council.

An established funding formula between the city and the schools would not be used – with the formula’s status likely to soon be reviewed, according to the council discussions.

Numerous council members have said the questions being asked by city officials about school funding are valid.  They have discussed data that shows while Roanoke’s ability to pay is almost the lowest among most other localities in the region and in a selected peer group, the spending on Roanoke schools exceeds most others, based on the data.

The school system acknowledged the data is accurate but said that a study of raw numbers lacks context.

“Roanoke City Public Schools is a beautifully diverse school division, and with that diversity comes greater needs,” reads the division’s Tuesday statement. “We know that families want their schools to know their students by name, need, and strength, and we pride ourselves on doing just that. Doing so, however, does require additional resources. While most of these divisions listed may be a “peer group” in the sense that they are geographically close, that is where the similarities end. RCPS is larger than every other local school division other than Roanoke County Public Schools. (And this year, the city did have a higher fall membership count than the county.) Roanoke City is an urban school division, while the other neighboring school divisions – except for Lynchburg – are suburban or rural.”

The council handled two appointments to the city school board during the ongoing budget situation. Two incumbents were up for reappointment, Franny Apel and Joyce Watkins, and newcomer Adam Markwood also applied. Council reappointed Apel and Watkins Monday by a 6-0 vote without comment.

 The council is set to adopt the budget and corresponding tax rates next Monday at 2 p.m.