Lynchburg city staff and council members are taking stock of the 2025 fiscal year, following the release of the annual finance audit, an abrupt change in finance committee leadership and the ripple effects of a chaotic budget season still fresh in residents’ minds.
The city received a clean opinion from its outside financial auditor for the 2025 fiscal year — “the highest level assurance that we can give to a set of audited financial statements,” Chris Banta, a partner at Brown Edwards LLC, said when presenting the audit report at a specially called city council meeting Tuesday. The fiscal year under review ran from July 1, 2024, to June 30, 2025.
Days earlier, on Dec. 3, Mayor Larry Taylor removed city council member Marty Misjuns from the council’s finance committee, which he had chaired. Taylor later named council member Stephanie Reed, who was already serving on the committee, as the new chair and appointed council member Chris Faraldi to fill the empty seat.
Meanwhile, city council members and staff are still reeling from tense discussions during this spring’s budget planning period. The 2026 fiscal year budget, which took effect July 1 and will continue through June 30, 2026, was adopted at the eleventh hour after months of debates regarding tax rates and cuts to city services and staff positions.
With that backdrop, the new finance committee met Tuesday to hear city staff members’ last financial reports of 2025.
In her opening remarks, Donna Witt, the city’s chief financial officer, said “overall, we did O.K.” in the 2025 fiscal year. Revenues came in about $2.3 million, or 1%, more than what was planned in the budget.
“If you end up with, out of a $240 million budget, to have a surplus in revenues of $2 million, that’s a little closer than I like to be. That’s what keeps me up at night,” Witt said.
The city ended the year with about $9.5 million in unassigned fund balance that can carry into fiscal year 2027, Witt said, largely thanks to department heads’ smart spending.
“At one point during the fiscal year, when I was seeing our consumption revenues like our meals tax and our lodging tax and our sales tax not grow like we anticipated, I did ask our department heads to kind of watch their spending,” Witt said. They “tightened their belts” in response, she said, bringing total operating expenditures down to about 96% of what was planned in the budget.
The city’s unassigned fund balance for the 2025 fiscal year totals $47.4 million. The figure is best described as a “snapshot on June 30” that doesn’t capture commitments the city had already made for the pot of money, Witt said. The $9.5 million is what’s leftover, she said, after the rest of the money is saved in the city’s rainy day fund, in compliance with city financial policy, and allocated to the fiscal year 2026 budget to cover items such as first-quarter adjustments and the waived trash fee.
Where does the $9.5 million go?
The economic outlook painted by Witt on Tuesday differed from the one presented by Misjuns days before. In a Sunday press conference, he said he wanted to “give the city of Lynchburg the best Christmas present they ever had” and lower real estate tax rates for the current fiscal year. It’s possible, he said, because the city had about $10 million “we didn’t expect to be there” — which is more than the $6.6 million it would take to bring the real estate tax down to an equalized rate.
The current real estate tax rate — 84 cents per $100 of assessed value — was passed with votes from Misjuns, Taylor, Vice Mayor Curt Diemer and council member Jacqueline Timmer on June 30. The 84-cent rate represents a decrease in the tax rate from the 2025 fiscal year but an increase in tax payments for most residents due to uncharacteristically high real estate assessments.
Misjuns, Diemer and Timmer had pushed for an equalized tax in the two months leading up to the vote. The equalized rate, calculated at 76.7 cents, would have balanced out the increased assessment value and kept tax payments about the same for residents between the 2025 and 2026 fiscal years.
The first payment of real estate tax for this fiscal year was collected at the 84-cent rate in November. The next of four total installments is scheduled for January, according to the city’s billings and collections department.
Misjuns said in an interview Wednesday that his goal is to find ways to retroactively change the rate approved on June 30 and adjust future tax payments to reflect the equalized rate for the remainder of the fiscal year.
Witt said in an emailed statement that the $9.5 million available in the unassigned fund balance cannot replace ongoing revenue, like real estate tax revenue. In following accounting principles, the $9.5 million is only available to cover one-time purchases.
At the Sunday press conference, Misjuns posed the questions: “What comes next? Is the new rubber-stamping finance committee going to spend the surplus instead of giving back to the taxpayers?”
He answered himself in a Tuesday statement to his email subscribers, where he wrote that “when government collects more than it anticipated, the money should be returned to the taxpayers — not hoarded by bureaucrats for new spending.”
The city barely collected more tax revenue than it had budgeted for, Deputy City Manager Greg Patrick said at the finance committee meeting. Of the $2.3 million in additional revenue, only about $1.3 million came from taxes, he said.
And only about $350,000 of that sum could be given out as a rebate, Witt added during the conversation. The General Assembly gives localities the opportunity to offer rebates only for real estate taxes and personal property taxes. Real estate tax revenue fell short of the budget goal in the 2025 fiscal year, according to the general fund quarterly report, so there’s no rebate to give. Personal property tax revenue came in about $350,000 more than planned, but would lead to a minimal rebate when divided among Lynchburg’s 80,000 residents, Witt said.
When asked to respond to Witt’s numbers, Misjuns wrote in a statement: “The fact that only $350,000 qualifies for a refund under the administration’s narrow definition does not change the broader responsibility we have to respond to a mistake of this size. The $9.5 million available in unassigned fund balance reflects excess taxation and inaccurate forecasting, and that is why Council should act by lowering the real estate tax rate for FY2026.”
In following accounting procedure, Witt said, the $9.5 million will come back into play during the budgeting process for 2027, which will begin this spring in preparation for the new fiscal year that begins July 1. Action from the city council is needed to use the funds for one-time purchases.
“It’s important that we have that leftover money,” Witt said at the finance committee meeting, to go toward projects like maintaining city buildings that might not otherwise be budgeted for.
New leadership on the finance committee
The 2025 reports came in the midst of a leadership change in the city’s finance committee.
When Taylor removed Misjuns from the committee last week, he cited four reasons for his action, according to an email sent from Clerk of Council Alicia Finney to council members: Misjuns’ continued involvement in personnel matters, abuse of city staff, “bad behavior” and “misstatements regarding financial matters.”
At the Sunday press conference, Misjuns labeled Taylor’s claims as “explained without evidence,” “arbitrary and capricious” and “false.” He added that it’s his job to “make sure that every penny spent is necessary” and “ask questions and hold government accountable.”
In an interview, Taylor said he’d “rather not comment” on why he made the decision to remove Misjuns, then added that “actions speak for themselves.”
The city council’s rules of procedure only mention “chair” once, and state: “The Mayor shall make all appointments to, and select the chairs of, the Council’s two standing committees, Finance and Physical Development. Substitutes or alternates may participate on such committees only if so authorized by the Mayor. Committee members for such committees will serve two-year terms.”
Misjuns said that, because he had not yet served as chair for two years, his removal violates the rules of procedure. He added that he didn’t receive the due process he expected because the removal was so abrupt. Misjuns said he had one phone call with Taylor about the situation before being notified he was no longer the finance committee chair.
Reed, a former mayor and now the new finance committee chair, said, “The mayor has the right to appoint committee members and remove committee members.”
Misjuns said he sees Taylor’s action as a step to “completely dismiss the fiscal conservatives on city council” — a group in which he includes himself, Timmer and Diemer. He cited Taylor’s abrupt removal of Diemer from the finance committee earlier this year.
“Why does this pattern keep surfacing? Vice Mayor Diemer was targeted immediately after he publicly called for identifying waste and mismanagement when he was on [the] finance committee. Now I’m being removed after raising similar concerns,” Misjuns said at the press conference.
Taylor said, “No one is being silenced.”
“I give everybody the opportunity to speak, and sometimes they just speak and speak and speak. And I try to make sure — if you notice, I look from left to right, right to left — that everybody has an equal opportunity to speak,” he said, referring to how he moderates city council meetings from a chair in the middle of the dais.
The finance committee reviews the city’s financial reports on a quarterly basis and “serve[s] as a filter in determining specific budget/financial actions to be considered by City Council,” according to the committee’s guidelines. Financial items that need to be considered by the full council include deliberations of the annual budget and capital improvement program, considerations of using the contingency fund and discussions of new programs or changes in current programs that would affect revenues and expenditures.
Reed said she takes her new title seriously, as “all committee members and chairs of those committees should.”
“Of course, if there’s anything concerning that I see, I will absolutely ask questions of city staff to make sure that things are being done appropriately,” she said in an interview.
As chair, she said she hopes to make finance committee meetings an opportunity for residents to be educated on confusing financial topics. She plans to run meetings “in a way that our citizens understand” and “provide transparency so that people do not feel confused or misled by anything that’s going on within the city’s finance department or with their taxpayer dollars.”
“I think it’s extremely important that our citizens have a better understanding of how their taxpayer dollars are being spent and invested by the city government so that they develop a better trust of at least our city government,” she said.
The city council will not meet over the winter holidays. The next full city council meeting is scheduled for Jan. 13, and the next finance committee meeting is scheduled for Jan. 27.