Proposed Rappahannock County budget includes tax increases

• More money for public schools — but less than requested
• Residents real estate, personal property taxes would rise

Rappahannock County’s budget debate is about distributing the distress. 

Local budgets by law must be in balance, but to get there, the Rappahannock County administrator’s office is proposing a mix of hardships in the county’s $30 million budget for the fiscal year beginning in July: 

• Rappahannock public schools last month were hit with the state legislature’s decision to ditch an expected $1.5 million subsidy; now under the proposed budget, the county would only partly fill the gap left by the state. 

• Landowners face a jump in real estate taxes. 

• Residents owning cars, motorcycles, tractors, boats and planes would face higher personal property taxes. 

• In the least painful “balancing mechanism,” some general funds not otherwise earmarked, would be deployed to cover the county’s remaining debt service payments.  

The county administrator’s budget proposal is the opening salvo. It was presented to the Board of Supervisors Wednesday, and will be the focus of public hearings and behind-the-scenes horse-trading until a final budget is adopted in mid-May. Overall the budget comes to $30,181,369, a 2% increase from the adopted budget of $29,602,987 for the current fiscal year. 

Though many in the county were angered that the state of Virginia jettisoned the $1.5 million schools subsidy, the state remains a key player in funding programs Rappahannock residents count on. According to the budget documents prepared for the Board of Supervisors, the state covers 25 cents of every dollar spent in the county budget. The federal government, less crucial than the state, steps in with seven cents of every dollar spent.   

County employees would see modest good news in the budget through a 3% state-mandated pay increase. 

Van Carney, supervisor for the Stonewall-Hawthorne district, anticipates “pushback” to the  pattern of regular increases to the school budget. Listening to constituents, he figures, “We have relatively equal halves: one is ready to give the kids what they need; the other thinks we already spend too much.” 

And while the proposed budget scales back the schools’ request, the schools’ overall budget, including from sources outside the county, would rise to $14,564,013 under the proposal, from $14,246,447 in the current fiscal year.  

Bonnie Jewell, who leads the budget preparation process for the administrator’s office, calculates that without the mix of spending cuts and new taxes, the county would face a deficit of $889,816.  

The proposed hike in real estate taxes would push the levy to 57 cents per $100 of assessed value, up from the current 55 cents. The change would increase county revenues by $383,367, the largest contributor to closing the shortfall. 

The schools, after giving up on the hoped-for infusion from the state, had hoped to see $10,142,234 from the county, but the proposed budget would chop $191,683 from that request, ending up with a local transfer of $9,950,551. That’s $1 million more than the $8.9 million contribution Supervisor Keir Whitson, of Hampton District, prefers.

On the personal property tax, a 5% increase would cut the budget deficit by $162,300.  

By tapping available general funds to cover the county’s final debt service payment from earlier borrowing, the county would chop the budget gap by another $190,255. 

In past years, increases from three key sources of county revenues enabled budget planners to stave off unpopular tax increases. As tourists flocked in greater numbers to the county, the inflow from meals and lodging taxes rose, coming to about $565,000 in the current fiscal year. Meanwhile, sales taxes surged to $1,037,000 this year, as residents increased online buying. However, Jewell said that both revenue streams are leveling off. “We’re not expecting any change this year,” she said.

Interest earnings on county funds also have been a painless source of revenue, rising to $500,000 in this year’s budget. But the proposed budget plan warns that this source will be declining as the Federal Reserve Board cuts interest rates after taming inflation.  

Taxing real estate has been Rappahannock’s tried-and-true tactic for meeting budgetary pressures from the schools and other programs. Fending off large industrial enterprises and big-box retailers, the county typically depends on real estate taxes for about 70% of local raised revenues. Real estate taxes account for $10.6 million in revenue for the county this year.

Any discussion of property taxes touches on the issue of Rappahannock’s widely used land-use tax breaks, which shrink taxes on land employed in agriculture, forestry and horticulture. The system had long raised fairness questions because large landowners harvest the most significant tax reductions from the arrangement and end up paying a lower effective tax rate than those with smaller lots. However, the land-use system is considered central to maintaining the county’s treasured agricultural landscapes.

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