County tax rate drops to 97 cents
Proposed 95 cent rate is barely defeated by 3-2 vote
By Greg Pearson STAFF WRITER

Page Dowdy/Chesterfield Observer County supervisors lowered the property tax rate last week from $1.04 to 97 cents per $100 of assessed value. However, even though it's a reduction, county taxpayers will still pay more in property taxes due to rising assessments.

An attempt to lower Chesterfield's property tax rate from $1.04 per $100 of assessed value to 95 cents was defeated on a 3-2 vote before the Chesterfield Board of Supervisors compromised last week on 97 cents.

Board Chairman Kelly Miller and Clover Hill Supervisor Art Warren wanted the lower rate, but they had an unlikely opponent - County Administrator Lane Ramsey. The county administrator, who retires in August after 20 years in his position, strayed from his typical, neutral position to provide enough information for Supervisors Renny Humphrey (Matoaca), Dickie King (Bermuda) and Don Sowder (Midlothian) to oppose the 95 cent rate.

Miller proposed the lower rate and lobbied for it hard. For years, his unwavering position has been that the county budget should only grow at the rate of population growth plus inflation.

Miller

"Government is always growing," he complained publicly. "The only way to bring some control over government is to control spending. People always demand more services, [but] people need some tax relief. Government never says we're receiving too much money."

Seeking a third vote for a board majority, Miller said, "Everybody agrees until it's time to bite the bullet [and vote.]"

Warren argued that Chesterfield always runs a budget surplus so the rate reduction will be less painful. Because of rising real estate assessments, property taxes are becoming an increasing share of county revenue.

But Ramsey seemed to raise doubts among the remaining supervisors. "We see difficulty in sustaining the 99 cent rate during the third year," he said, "putting our AAA bond rating at risk. The [bond] rating services are concerned about rising medical benefits for our retirees."

"[With the 95 cent rate,] there will be major adjustments in county and school revenue," Ramsey added.

The FY08 budget was prepared using a 99 cent property tax rate. A 95 cent rate would have reduced county and school revenue by $6 million during the first half of this year and in FY08, cut county revenue by $4.2 million and $8.2 million for schools. But the 95 cent rate also generates $25 million in new revenue for FY08.

"That's just a 2.5 percent reduction [in our operational budget]," said a frustrated Miller.

"We have a problem if we can't find 2.5 percent [to cut]."

After the 95 cent rate was defeated, Sowder proposed 97 cents. After brief discussion, the board voted 3-2 for that rate with King and Humphrey opposed.

The 97 cent rate (and the 95 cent rate) did not set aside a penny for roads. King and Humphrey said that was a mistake, since they believe the state government is walking away from its traditional role of building and improving roads. Earmarking a penny of the tax rate would have provided $3 million in local funding in FY08 for road projects.

Last November, with considerable hoopla, Chesterfield held its first transportation summit in search of local funding options to replace dwindling state funds. One of those mechanisms was to start setting aside a penny of the property tax rate in FY08 and growing to a nickel over five years to sell bonds for road building. A tax on local businesses - called BPOL - is another road funding device that also appears at risk.

But supervisors were hearing from citizens that funding county road building with local taxpayer's money might encourage state government to continue in the same direction.

At a public hearing last month, some parents spoke out for a tax rate of no lower than 99 cents because two-thirds of the property taxes go to county schools. Other taxpayers were simply focused on supporting the lowest possible property tax rate.

In January, homeowners began receiving the highest property assessments in recent history - averaging an increase of 16.6 percent. The lowered tax rate is in response to disgruntled taxpayers - many of them retirees and those living on fixed incomes - who have complained to supervisors about receiving higher property tax bills each year.

This year is also an election year for Miller, Warren and Sowder. Humphrey and King have announced they won't run for reelection.

Even at 97 cents, Chesterfield will still have the highest property tax rate in central Virginia. Henrico is expected to enact a rate of 87 cents later this month. Its rate is lower because it has far more retail and office buildings, which require fewer county services.

With a budget of more than $1.1 billion annually, the level of spending may be attracting more attention from residents, whose income, according to Miller, is rising more slowly than county spending. Citizens also seem to be criticizing school spending more, partly because it represents about 52 percent of the county's total budget.

The cost overrun of the replacement school for Clover Hill High School focused considerable negative attention on Chesterfield schools. The 2004 school bond referendum projected a $55 million cost, but citizens and local officials sounded the alarm when the price tag of $92 million was first reported by the Chesterfield Observer last fall. Now the best estimate is $81 million, but the supervisors have even distanced themselves from that figure.

Last Wednesday, the county board unanimously approved a capital improvement plan that gave Chesterfield schools $65 million for building the Genito Road school but withheld the remaining $16 million. Holding back the remaining funds, according to Ramsey, was symbolic.

"The school will be built and on time," insisted King. It's scheduled to open in the fall of 2010.

State law does not allow the supervisors to specify how funding for a specific school can be spent. For example, the board cannot tell the school system it can't build a football stadium, which has been discussed, in order to save about $5 million.