(The Center Square) – Richmond could spend more than it brings in for three straight years, according to a new forecast of the city’s finances.

The outlook projects a $17.3 million general fund shortfall in fiscal 2028, which begins July 1. The gap would be $16.2 million the following year and $19.4 million in fiscal 2030.

PFM Group Consulting presented the five-year forecast to City Council on Monday. It shows what could happen under current policies before officials make changes to address the gaps.

The administration is reviewing ways to limit spending growth, including a possible hiring freeze and reductions in city positions. Its stated goal is to avoid layoffs. The presentation does not identify which positions or services could be affected.

Richmond’s annual general fund surplus has already fallen sharply.

Revenue exceeded spending by $56.3 million in fiscal 2023, compared with $6.1 million in fiscal 2024 and $1.8 million in fiscal 2025, according to PFM.

Employee compensation, pensions, school funding and debt payments are putting pressure on the city’s finances as revenue growth slows.

Mayor Danny Avula said in remarks published by the city that the revenue projection tied to the new property assessment calendar was lower than he had expected.

“What we’ve heard today is that we are entering a different fiscal environment,” Avula said.

The forecast assumes Richmond keeps its real estate tax rate at $1.20 per $100 of assessed value. It includes salary increases in existing bargaining agreements but assumes no additional salary growth beyond those agreements.

PFM cautioned that the baseline is unlikely to hold because tax rate changes are under consideration and labor negotiations will resume.

Chief Administrative Officer Odie Donald II’s presentation identifies collective bargaining agreements as the largest driver of future cost growth. All five contracts expire by the end of fiscal 2027 or fiscal 2028.

Other pressures include employee health insurance costs and infrastructure needs. PFM says pension obligation bonds will increase annual debt payments by $10 million.

PFM also calculated how lower real estate tax rates would affect the budget. A 1-cent cut would increase the fiscal 2028 shortfall to $21.9 million. A 4-cent cut would increase it to $35.6 million and leave shortfalls in all five forecast years.

PFM says those options illustrate their financial effects and are not recommendations.

Under the baseline forecast, annual surpluses would return in fiscal 2031 and fiscal 2032 as debt payments ease from their peak and real estate tax revenue grows.

Monday’s presentation was informational. Council members were asked to review the assumptions and identify options to explore before decisions during the fiscal 2028 budget process.