Council holds public hearing over real estate tax increase

Published 9:48 pm Monday, May 8, 2023

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With a recent reassessment increasing property values, Suffolk’s proposed 2023-2024 budget includes an increase of 12.51% in property tax revenue.

By proposing to keep the tax rate the same as last year, City Council held a public hearing on the plan Wednesday, May 3, because this constitutes a tax increase.

Suffolk Director of Finance Tealen Hansen provided a staff report prior to the hearing.

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“The state code requires the city to hold a public hearing to either reduce the real estate tax rate, if the reassessment excluding new construction exceeds 1% or have this public hearing,” Hansen said. “So we’re asking to have this public hearing related to the reassessments because they were increased by 12.51% due to reassessment for fiscal year 23-24.”

She pointed out that they have included a 2 cent tax credit in the proposed fiscal year 23-24 operating budget.

“At this point in time, we’ll have the public hearing on the reassessments being over 12.51%…”

Suffolk citizen Julia Young asked what was “being put on the table as far as [the] public hearing is concerned, concerning real estate property taxes.”

“Is that the residential property taxes? Or is it something else?” asked Young.

Responding to Young, Mayor Michael D. Duman stated that “it does include residential and business, all real estate” while stating that it’s “not a tax increase per say.”

“Some folks may not get any tax increase, it’s based on the additional assessments amount citywide,” the mayor said. “So the citywide assessments went up an average of 12.51%. Some individuals may have actually gone down, some would have stayed the same and some could be considerably higher.

Duman said that it is the effective rate is what they’re talking about, not the tax rate itself. 

“That is not going up, but the effective rate across the city is because of the increased assessed values, if that helps any,” he said.

Young responded “maybe so” and stated that she did have an issue with the assessment and her real estate taxation.

“Because it’s just very high for senior citizens at this point,” she said. “And I am a senior citizen as you can see and for it to increase or even the thought of reassessment or a property increase is just far beyond my comprehension as far as taking care of the community is concerned.”

Following the hearing’s end, Duman stated that no action was necessary as “the ordinance to effectuate the real estate rate for the fiscal year 2023-24 is actually included in item number 14.” The 14th ordinance was for the adoption of the proposed Operating and Capital Budget for 2023-2024. 

Hansen provided an overview of the amended budget, which totaled $879,028,516. The original proposed total was $885,072,810.

Her presentation included data on the amendments, such as the General Fund, which included the real estate tax relief of two cents credit per $100 of assessed value. This caused a $3 million decrease in transfer to the Capital Projects Fund. This same $3 million was decreased out of the capital contingency funding, which saw a decrease of $12.9 million to $9.9 million. 

Water and Sewer Rates also saw amendments due to the Adjusted Equivalent Residential Unit projection going from 500 for the next year to 550. This will bring the average customer increase originally projected for $6.75 (6.6%) down to $4.45 (4.4%) per month. This doesn’t include Hampton Roads Sanitation District charges.

Council Member Roger Fawcett spoke positively about the “overall good budget,” but spoke of his unhappiness with the two cents.

“I’m just saying that I am opposed of the 2 cents. I think that this council could have been a little more aggressive on the tax rate, being that we had a substantial amount of money this year due to our tax increases on our assessments,” Fawcett said. “I will support the budget because it’s where we’re at at this point, but I just wanted to make my displeasures about that known to the public.”

Prior to the vote, Duman provided additional comments, thanking City Manager Moor, Hansen and her department for “doing exactly what we asked to be done” regarding the budget, providing “some relief” regarding the water bill and keeping its rates down. 

The tax rates set in the budget is $1.09 per $100 assessed value, with council granting the additional 2-cent reduction. This makes the rate property owners will pay this year $1.07 per $100 assessed value. 

“This year in essence for the year, not permanently but at least for the year, now we’ve reduced the effective rate from $1.09 to $1.07,” Duman said. “So the two together, I think at least sends a message that we are not insensitive to the tax burden that’s being placed on the citizens, we’re not insensitive to the inflation concerns.” 

The mayor said the city had a good year last year and is looking forward to another this year.

“But in my opinion looking forward through this year, I don’t think you’re going to see anywhere near the type of increase that we’ve had in property values over the last two years,” he noted. “And this is just me speaking, but looking at the economy and the interest rates, I think we’re going to see a slow down.”

Duman noted that “a lot of major projects” need to be completed with price tags in the millions of dollars.

“We have no deficit spending. If we have to reach into our reserves to take advantage of an opportunity that may come our way, then that also does not send a good message to the rating agencies,” he said. “Because one of the factors they’re always looking at is what do you have in reserve.

Duman said it’s the same way in households.

“How much money do you have set aside in the event that there’s an emergency,” he said. “I think that we are being fiscally responsible, I think we’re listening to our citizens and making allowances where we can — although they be conservative, I think that is the prudent thing to do,” he said.

The adoption of the proposed budget was approved by an 8-0 vote.