Budget: No tax rate hike
Published 9:59 pm Wednesday, April 3, 2019
Suffolk City Manager Patrick Roberts’ proposed $639.4 million budget holds the line on real estate taxes, fully funds the school division’s request and provides a 2.5-percent raise to city employees.
The budget for fiscal year 2020, which Roberts unveiled during a City Council work session Wednesday, keeps the real estate tax rate of $1.11 per $100 of assessed value as is, though it projects general fund revenue to increase by $5.8 million — from $213.2 million to $219 million.
But because reassessment values went up by 1.17 percent, City Council will have to hold a public hearing for an “effective tax rate increase,” which state law requires if reassessments increase by more than 1 percent, according to Finance Director Tealen Hansen.
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“Because people’s assessments go up, their taxes go up, but it’s not due to an actual rate increase, it’s due to their assessments going up,” Hansen said.
The proposed budget calls for an additional $3.6 million in general fund money for personnel and benefits to provide for city employees’ cost-of-living adjustment and the addition of 24 new general fund positions, which include 13 new police officer/emergency communications positions. It would also address part-time and overtime requirements for public safety.
“A lot of these requests by departments for additional staff are really a result of the increased economic activity in the city (and) population growth in the city,” Roberts said.
During the work session, Mayor Linda T. Johnson and Councilman Mike Duman spoke favorably about the budget.
“This budget seems to be very heavily invested in our employees and in everything that we need to do the job that we need to do for our citizens,” Johnson said. “It seems like a fairly simplistic budget, even though it’s big and thick, and not simple by any means. But we know where the money’s going. We see the return for what we get, and it probably is one of the easiest budgets that we’ve seen in quite a while.”
Duman said positive economic growth in the city will likely make this budget process smoother. He said with 63 percent of the general fund going to education and public safety, “it’s hard to argue with that,” and he is pleased that the water and sewer rate is not proposed to increase.
“Just looking at an overview of the budget, it appears that this is going to be a rather … painless budget compared to some of the prior budgets we’ve had to consider,” Duman said, “mainly because we’ve had nearly $6 million in additional revenue.”
The school division’s $173.3 million budget, which the School Board approved March 19, includes a $1 million increase in city funding, from $59.8 million to $60.8 million. The city’s proposed budget would fund the school division as it has requested.
Replacing portable radios for public safety also gets attention in the proposed budget, which includes short-term debt issuance of about $2.7 million to be spread out over five years to buy them. In the proposed budget, the city would spend $448,000, which includes debt service for the short-term financing of the radios and the related information technology costs for the radios’ setup and maintenance.
The budget also maintains the stormwater fund rate of $6 per month per equivalent residential unit, though other fees would increase.
The meter service charge in the public utility fund would increase by $1.25 per month, which would not include any Hampton Roads Sanitation District adjustments. The city is proposing a $1.80 per month increase in the refuse fee, from $19.50 to $21.30 to address the cost requirements of trash disposal.
Roberts said the city’s real estate tax rate, as proposed, would be the third-lowest among South Hampton Roads cities, behind only Virginia Beach and Chesapeake.
The proposed budget is a 2.7-percent increase from the current one and includes a projected revenue increase of 2 percent in real estate due to increased property values from existing property as well as new construction, Roberts said.
The city is anticipating a 5-percent increase in local tax revenue — inclusive of recordation, meals, business license, utility, bank stock and sales and use taxes — making up $2.1 million. The proposed budget also includes a 7-percent increase in revenue from public service corporations and a 6-percent increase in personal property revenue.
It also includes a 19-percent increase in revenue from fees, charges and miscellaneous sources, which Hansen said includes such things as Parks and Recreation rental fees and investment earnings on cash balances.
Hansen said there were across-the-board increases in general operating costs, totaling $790,000 throughout the city for maintenance contracts, professional services, operating supplies and public safety training and uniforms. There is also a $580,000 increase in fleet management.
All first-year projects in the recently adopted Capital Improvement Program and Plan, at nearly $64.6 million, would be funded. The city budget also proposes to replace one of its 19-passenger buses out of its transit fund, and it also proposes adding an IT security administrator through its information technology fund.
The next steps are for City Council to hold a May 1 public hearing on the budget, and then a May 15 public hearing on the effective real estate tax increase due to reassessment. May 15 is also the proposed date for City Council to adopt the FY 2020 budget.