[CORRECTED] Tax Rate Debate, The Carrots, and The Vote.

RVA 5x5 - November 11, 2024

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OOPS! — Apologies for resending this issue, but we incorrectly stated the City Council vote on the tax rate was tonight (November 11). Today is, of course, Veterans Day and a holiday. The Council meeting and the vote will take place tomorrow, Tuesday, November 12th and that has been updated in the text. We apologize for the error!

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This issue dives into the great tax rate debate and the vote that will be taken Tuesday, November 12th at City Council, the carrots being offered by the Mayor to ensure the rate remains the same, a testy exchange that also revealed there is information out there probably won’t ever be made public, and a look at how Councilors might vote and if any votes have changed now that the election has passed. Hold on.

STORY #1 — The Rate Debate
City Council will vote Tuesday to keep the tax rate at $1.20 or reduce it to $1.16. Property owners have seen their tax rates skyrocket since Stoney took office; the average assessed value of a home citywide increased 13.35% in 2022 and 13.04% in 2023 and for many years before that, many neighborhoods, especially those south of the river, saw repeated double-digit assessment and tax bill increases.

The Mayor is once again proposing a one-time rebate that would net the average homeowner about $150 (like he did in late 2022) and says the city can’t afford a real estate tax deduction from the current $1.20 pre $100 of assessed value because of the impact it would have on the budget.

8th District Councilwoman Reva Trammell argues every year for a tax rate reduction and this year she proposed a four cent reduction to $1.16, which would still result in a tax increase for most property owners because of rising values, but the bite would sting a little less than if the rate remained the same. Trammell argued that a reduction should go to everyone because there is development and rising home prices and tax bills all across the city.

“We've not reduced it since [2008]. And to me, with all the money coming in, all the development, all the population has grown since 2008, and you're telling me, ‘We don't have the money, and this is not the time.’ Yes, it is. This is the time to do it,” Trammell said.

Stoney counters that for every penny reduced lowers the city’s general fund budget by about $3.9 million, and a four cent cut now would cost the city about $16 million from the current budget. He has long advocated that any tax rate reduction is a bad idea and lowering the rate any amount would affect the long-term health of the budget to deal with ever-increasing need for city services.

The city’s assessor reported that real estate taxes will exceed the budgeted projections for the current budget by about 6.7%, which means if the four cent rate were approved, the Mayor and Council would still have to cut about $3.5 million from the current budget (which is about $1 billion). Chief Administrative Officer (CAO) Lincoln Saunders told Council last month the could find that money this year without a problem, but he and the Mayor are concerned it will affect the city’s future budgets when demand for services are virtually non-stop and rising each year and Stoney has no problem spending public money. Stoney has proposed to use $16 million from the surplus from last year’s budget to pay for the one-time rebate proposal just as he did in 2022.

Stoney told VPM in November 2022: “Growth is good. But there's a flip side to that. And that's what we're experiencing in some of our neighborhoods in the East End and parts of Northside. We see folks being displaced ... . [W]e don't want to see that.”  

In 2017, the median home price was about $247,000 and the median tax bill was $2,964. ($247 per month) In 2023, the median home price was about $340,000 and the taxes tally up to $4,080 annually ($340 per month).

Last month, despite the average property owner seeing a real estate tax bill rise more than $1,100 in that time period, Stoney told VPM: “A tax cut across the board … would go to those who own the most expensive homes in the city. That means those who live in Windsor Farms, in the Fan [and] Museum District.”

In 2022, while the same tax rate debate was ongoing, stories appeared that showed that areas in Northside, the East End and districts south of the river saw the largest tax assessment increases and tax bills skyrocket — especially in some neighborhoods where the average household income income is lower than the city average (in some cases, much lower), according to the U.S. Census and American Community Survey (ACS) data. Those sharp tax increases can have a massive effect on household budgets. Councilwoman Robertson said at meeting last month, “…if you're barely able to get through your day as it is, let's give these people some financial relief without creating the extra burden, let them catch their breath.”