The city’s proposed $586.5 million budget for the coming fiscal year includes no real estate tax increase, gives a cost of living increase to city employees and funds the remainder of Suffolk Public Schools’ compensation plan.

City Council members got their first look at the city manager’s proposed budget during their Wednesday work session. They said they were looking forward to studying it more closely in the weeks ahead.

“It looks pretty good on the surface right now,” Councilman Roger Fawcett said.

“I’m looking forward to delving into the budget on a line-by-line basis,” Councilman Mike Duman added.

The real estate tax rate would remain $1.07 per $100 of assessed value. That tax rate is the third-lowest in the region, behind Virginia Beach and Chesapeake, City Finance Director Tealen Hansen said.

The proposed amount designated for Suffolk Public Schools includes about $262,000 more local money than last year. The increase completes the final phases of the school system’s compensation study, which will bring employees more in line with the market rates for their positions.

The school system had requested $1 million more in local funding, which would include a proposed 2-percent raise for teachers and support staff, funded by the state, as well as 1.5 percent for permanent part-time employees that would be funded by a combination of state and local funds.

It is not yet clear how the part-time increase will be impacted if the school division’s request is not fully funded.

Hansen noted that school-related debt expenses paid by the city will increase about $864,000 this year. She also noted that local support of the schools has increased since Fiscal Year 2012, when $55.2 million was provided in funding, lease payments and school-related debt. This year, that total is proposed to be $66.2 million.

City employees would receive a 2-percent cost-of-living increase if the proposed budget passes. It will benefit all full-time and regular part-time city employees, constitutional officers and their employees, and City Council appointees hired prior to Jan. 1 of this year.

In addition, the budget would implement the city’s compensation study effective Oct. 1 at a cost of about $2.4 million, not including fringe benefits.

Nearly three-quarters of the cost is for employees who currently earn less than $55,555, Hansen said. About 43 percent of the total cost is for public safety employees.

Implementing the study also would address compression issues among city employees, which happens when the pay of newer employees is close to or the same as more experienced employees.

In addition, this is the last year of the Virginia Retirement System shift, under which employees are be required to pay 1 percent more toward their retirement plan and will receive the money as a pay increase from the city in order to make them whole.

Two new positions, one in the planning department and one in the voter registrar’s office, are proposed in the city’s general fund. Cost savings would be used to offset part of the costs of the new positions.

Hansen said 18 positions were requested by general fund departments. “These two were the most critical,” she said.

Seven other new positions in special funds are proposed.

In addition, eight public safety positions — six firefighters, one police officer and one police records technician — would be unfrozen by the proposed budget. They were frozen in 2009.

The cost of unfreezing them is expected to be partially offset by reduced overtime.

“I’m glad to see those are in the budget,” Vice Mayor Leroy Bennett said.

An estimated surplus of about $3.7 million from the current fiscal year would be put to good use. About $2 million would be transferred to the new fiscal year in order to partially fund capital projects with cash.

New revenues in the budget are coming from new construction in the real estate market, a 2-percent increase in personal property tax revenues and a 7-percent increase in other taxes, including sales, meals and recordation taxes.

The water rate is proposed to go up about 17 cents, and the sewer rate about 23 cents, per 100 cubic feet. The average user would see an increase of about $3.39 per month, Hansen said.

That’s about a 4-percent hike from the current year’s rates, but it had been anticipated to be even higher — and has been, in past years, Bennett noted.

“That will be a great help that it will not increase 10 or 15 percent,” he said.

There will be a public information meeting at 6 p.m. April 13 in City Council chambers. An official public hearing will take place April 20 at 7 p.m., and adoption of the budget would occur no earlier than the May 4 meeting.

The budget documents are available at www.suffolkva.us. They can be reviewed in person at City Hall, city libraries and the East Suffolk and Whaleyville recreation centers.

Citizens can email BudgetOfficer@suffolkva.us or call 514-4006 for questions.