Proposed real estate tax rates should ease burden for more than two-thirds of Rappahannock property owners
The real estate tax rate reduction proposed by County Administrator Garrey Curry earlier this month would cut taxes for more than two-thirds of the county’s property owners, according to a preliminary analysis by the Commissioner of Revenue. That’s a more significant benefit than policymakers expected, and it will ease pressure on the Board of Supervisors to deepen the reduction beyond the initial proposal.
The adjustment in the real estate tax rate is designed to offset last year’s general reassessment of property values, which raised the value of properties throughout the county. To shield residents from significantly higher tax bills, the budget for the fiscal year beginning in July would lower the tax rate to 55 cents for every $100 of real estate value — down from the current 67 cents. However, the plan’s impact on taxpayers wasn’t clear, leaving the Board of Supervisors wondering whether a deeper reduction was appropriate.
The Commissioner of Revenue studied 5,713 parcels, finding that 3,728 owners, or 65%, would pay less than they did last year before the reassessment. The analysis showed that 1985 property-owners would pay more in real estate taxes. The analysis excluded 152 properties that didn’t lend themselves to a precise comparison because of changes in boundaries or land-use status.
Hampton Supervisor Keir Whitson — who had called for consideration of further rate cuts — said the analysis “shows that we’re hovering around a pretty good place.” The usual goal after a general reassessment is to keep real estate taxes even with what they had been before. But Whitson applauded the fact that the budget goes further, actually reducing tax bills for a significant majority of property owners. “This isn’t a time to be over-taxing our citizens,” he said.
Indeed, even with the cuts in tax rates, the county expects to bring in $13.7 million from real estate taxes and personal property taxes under the new budget. That’s by far the largest contributor to county tax revenue, up from $13.4 million in the current fiscal year.
And while the COVID-19 pandemic didn’t hit the county as hard as many feared, the Russian invasion of Ukraine, and the resulting sanctions, is sending shockwaves through the agricultural sector. Sharp rises in fuel prices, fertilizer and livestock feed are hitting farmers hard, and appear unlikely to abate any time soon. “The last thing we want to do to people is to make things more difficult,” Whitson said.
Rappahannock residents pay relatively high property taxes, because the county’s real values are comparatively high. An evaluation of last year’s taxes showed the median property tax in Rappahannock was $2,287, well above the statewide median of $1,862.
Taxes on personal property, which includes cars and farm vehicles, are also in play. When pandemic-related supply chain disruptions drove up the market value of used cars, the aggregate value of personal property in the county shot up to $101 million from $76 million just one year earlier. To insulate taxpayers from a surge in personal property taxes, the budget proposal calls for a 24% reduction in the tax rate for this category.
Tax cuts, predictably popular with voters, can’t go so deep that they cause a shortfall in revenue. Rappahannock is required by law to balance its budget, meaning that reductions in revenue must be matched by cuts in spending. A cut of one penny in the tax rate results in a loss of $193,000 in tax revenue. For the coming fiscal year, the county envisions spending $32.9 million.
The county’s largest single expense is its school system, whose budget would rise to $15.4 million in the new fiscal year, with the county contributing $8.9 million, and state, federal and foundation funds providing $6.5 million. With the state demanding, but only partly funding, salary increases, and a variety of curricular and reporting requirements, the schools would have difficulty absorbing cuts.
Another concern are the county’s Fire & Rescue companies, which face higher outlays as they, like many others around the country, bring in paid firefighters to work alongside a shrinking pool of volunteers. These services are supported by a separate fire levy based on assessed real estate and personal property values. The proposed budget sets the levy at 6 cents per $100 of real estate value, plus 20 cents per $100 of private property value. Since the assessed real estate values are higher, Whitson plans to push for a one-penny reduction in that part of the levy to 5 cents.
As residents push to contain or chop their taxes, tourists are partly offsetting any resulting falloff in revenue. Meals and lodging taxes and sales taxes have surged in the last two years, emboldening planners to project $2.2 million from these sources in the next fiscal year, $443,000 higher than in the current fiscal year.
The budget, and any changes in tax rates, will be the subject of public hearings on April 18.
