Decreasing the real estate tax rate: Everybody’s doing it

Published 12:00 am Monday, May 16, 2005

City manager lobbying against it in Suffolk to maintain and improve city’s quality of life

By Allison T. Williams

The Virginia Beach City Council, after lobbying by hundreds of residents, recently slashed its real estate tax rate by 17 cents per $100 of property value.

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Last week, Chesapeake lawmakers followed suit, trimming a nickel off its tax rate.

The same day, Norfolk’s elected officials directed City Manager Regina V. K. Williams to pare down her proposed budget enough to cut 5 cents off that city’s rate.

In the wake of property assessments that jumped an average 17 percent, several Suffolk City Council members are calling on City Manager R. Steven Herbert to shave enough fat from his proposed $314.5 million budget to give citizens some relief on the tax rate. The budget, which makes education and public safety enhancements the top priorities, is 12 percent higher last year’s.

Herbert’s proposed budget earmarks $39.1 million for schools, about 15 percent more than the

system currently receives. The amount includes funding to give teachers a 6 percent pay raise, operate an alternative school and expand the Early Start program.

The budget also includes average 4 percent pay raises for other city employees, $1.2 million to pay state-mandated overtime to police and firefighters, approximately $1.5 million to make firefighter and police pay to the levels of neighboring cities and $300,000 for the Fairgrounds project.

Herbert recommended leaving the basic tax rate at $1.08 per $100 of property value citywide-the lowest in Hampton Roads until Virginia Beach’s recent action.

Some residents have slightly higher rates because they live in special taxing districts, where they pay more for mosquito control or extra downtown services.

&uot;Just because all our neighbors are doing it (cutting tax rates) doesn’t mean we should do it,&uot; said M. Christine Ledford, the city’s finance director.

In fact, following in the footsteps of other Hampton Roads localities could be detrimental in the long haul, Herbert said.

&uot;The reality is that we are in a different situation than our neighbors,&uot; said Herbert. &uot;We are a growing city.

&uot;No other major city in Virginia is experiencing the growth that we are right now.&uot;

He’s right.

Fact is, many Hampton Roads, including those giving tax breaks, have seen population declines or stagnant growth in recent years, according to recent U.S. Census Bureau data.

In contrast, Suffolk has averaged approximately 1,100 new homes annually recently, making it the state’s fastest growing city for the past few years.

This year, Suffolk relinquished it title to tiny Manassas Park, a Washington, D.C., suburb that grew by 4.7 percent, according to census figures.

Suffolk’s 4.3 percent population growth knocked the city into second place this year.

The city is working hard to keep pace with the capital demands of a population topping 73,000 and rapidly growing, said Herbert.

A new library is opening in the burgeoning north Suffolk area next summer. Next door, the city’s newest school, Creekside Elementary, will be opening in September. The city has opened or overhauled a school almost annually for the past decade.

Two new public safety centers – one in north Suffolk and a downtown police precinct – have opened within the past three years. The city is also a major investor in the Suffolk Hilton Garden Inn and Suffolk Conference Center, which debuted in April.

Suffolk can’t afford not to meet the growing demands on city services and capital projects if it wants to maintain the city council’s goals of providing a strong quality of life for residents and a healthy environment for economic development, Herbert said.

&uot;Not doing that would not be acceptable to the idea of building a great city,&uot; he said. &uot;It is not consistent with the notion of a good quality of life.&uot;

Ledford agreed, saying there are few extras in the proposed budget.

&uot;Firefighters and fire stations are not options,&uot; she said. &uot;As the city grows, we have to plan for fire protection for those citizens.

&uot;This budget tries to take public safety and education to a new level,&uot; she said. &uot;The council could choose not to implement the results of the police pay study this year.

&uot;But then you run the risk of officers leaving Suffolk for other localities.&uot;

Trimming the tax rate could mean city leaders end up being asked to increase taxes down the road, Ledford said. Eventually, the city’s thriving real estate market – the driving force behind the double-digit assessment increases of late – will settle, which could make a tax rate increase likely.

This year, the city’s increase in assessments is bringing in $8.5 million in new revenue, Ledford said.

&uot;Without that, in all probability, we would have to ask for a tax increase just to fund the council’s basic priorities like education and public safety,&uot; Ledford said. &uot;…If we back off now, it will make playing catch up more expensive in the future.&uot;

Herbert agreed, citing neighboring Chesapeake’s current quandary with overcrowded schools as an example.

&uot;They didn’t keep up and now they are having to dig themselves out of a hole,&uot; he said. &uot;We are not in that situation.

&uot;We have a good balance of priorities and a strong and a strong economic development program to help fund them.&uot;