Board may cut tax rate by a penny
Following a fourth consecutive year of rising residential property assessments, the Board of Supervisors is strongly considering a reduction in the county’s real estate tax rate for fiscal year 2018, which begins July 1.
Dorothy Jaeckle, chairwoman of the Board of Supervisors, confirmed via email last week that a tax cut is “on the table.”
“There is a belief within our board that the growth of local government should not be tied to the increasing assessments of existing real estate,” she wrote.
The Board of Supervisors is scheduled to vote on what property tax rate the county will advertise at its Feb. 22 meeting.
The board most likely will advertise the rate at its current 96 cents per $100 of assessed value. Under Virginia law, that would give supervisors the flexibility to reduce the rate, but not to increase it, when they approve the county budget in April.
According to sources with knowledge of the board’s discussions, who spoke to the Observer on condition of anonymity, there is support within the board for keeping the property tax rate at 96 cents when fiscal year 2018 starts July 1, then cutting it to 95 cents on Jan. 1, 2018.
Such a move, sources said, would still provide funding for the county government’s and school system’s top priorities, while allowing both staffs to begin preparing for the 2019 budget season based on a 95 cent tax rate.
In Chesterfield, every 1 cent change in the property tax rate equals about $3.1 million in revenue.
It’s unclear at this point whether at least three of the five supervisors are prepared to vote in favor of adopting a split tax year. They could make the property tax rate cut effective in July instead of waiting until December.
They also could decide to hold the rate steady for another year and revisit the discussion at a later date.
Generally, though, there’s a sense that the current Board of Supervisors is committed to reducing the rate gradually over time to make the county more competitive with its regional peers. Henrico County’s real estate tax rate is 87 cents per $100; Hanover County residents pay 81 cents per $100.
County Administrator Joe Casey said last September that he considers the 96 cent tax rate Chesterfield’s “ceiling.”
“If there is any way we can create an environment by which the 96 cents can be reduced, that’s my job,” he added.
Among metro Richmond’s four major localities, Chesterfield’s property tax rate of 96 cents per $100 of assessed value is second only to the city of Richmond’s $1.20.
Henrico, the locality to which Chesterfield is most frequently compared, has a significantly larger commercial tax base and doesn’t rely as heavily on residential property revenues to fund its local government.
Chesterfield’s property tax rate last changed in 2014, when the Board of Supervisors voted 3-2 to increase it by a penny.
Jaeckle and Jim Holland, supervisor of the Dale magisterial district, voted in 2014 to raise the rate (along with former Midlothian supervisor Dan Gecker) after the board failed to reach agreement on spending cuts needed to balance the budget.
Since then, steady growth in the local housing market has bolstered county tax coffers with additional revenue from residential property assessments.
Between fiscal years 2013 and 2017, the county’s general fund budget has grown from $722.1 million to $809.9 million.
Along the way, local conservatives argued that by failing to reduce the property tax rate as assessments continued to rise, the Board of Supervisors effectively raised the taxes of many of their constituents.
Earlier this month, the county announced that the total value of residential property increased by 3.06 percent in 2016.
The average single-family home in Chesterfield is now assessed at 97 percent of its 2008 (pre-recession) value.
“My personal feeling is operating expenses should be tied to [population] growth, the inflation rate and our identified priorities, such as increased police, employee retention and stormwater mandates,” Jaeckle wrote last week. “Any excess revenue should either be returned to the taxpayers or be used to catch up on capital improvements and major maintenance that was deferred while revenue was declining.”
The argument in favor of a tax cut gained steam last December, when county and school officials projected that they would end the current fiscal year with a combined operating fund surplus of more than $16 million.
While they were careful to note that conditions could change between now and June 30, the school system and county projected surpluses of approximately $9.7 million and
$6.9 million, respectively.
Public dissemination of mid-year financial data is part of a new approach to the annual budget process developed jointly by the Board of Supervisors and School Board. The process began last summer with a survey designed to provide citizens early input into the local government’s spending priorities.
Both boards also endorsed a revised budget calendar that gives them revenue and expense projections on an accelerated timetable.
Chris Sorensen, Chesterfield County Public Schools’ assistant superintendent for finance, said the school system “really doesn’t have $9.7 million just sitting there” because it carries forward any year-end operating balance to help fund future budget initiatives.
Among the items not already identified in the school system’s five-year spending plan, the school system could use that money to begin addressing a massive unfunded liability in its supplemental retirement program or fund the up-front costs for changing school start times beginning in September 2018.
Don Wilms, president of the Chesterfield Education Association, also contends that the School Board’s plan to increase employee salaries by 10 percent over the next five years is insufficient to keep teachers from leaving for better-paying jobs.
Of the more than 6,000 citizens who responded to the Blueprint Chesterfield survey, many cited transportation as the county government’s most pressing need. With money tight at the state level, local officials are trying to figure out how to fund needed road improvements.
“We have many challenges when it comes to transportation, and we can’t just say it’s going to fix itself,” said Steve Elswick, who represents the Matoaca district on the Board of Supervisors.
Still, with assessments rising, Chesterfield’s overall revenue picture is better than it has been at any point since the recession. ¦