Virginia Beach to weigh lower real estate tax rate
As assessments increase, city looks to provide relief
VIRGINIA BEACH — Real estate assessments are increasing this year, and the City Council will consider lowering the tax rate to partially offset the cost to taxpayers.
Residential and commercial assessments will be 6.7% on average higher than last year in Virginia Beach, Budget Director Kevin Chatellier told the council at a two-day retreat last week.
The City Council directed City Manager Patrick Duhaney to provide a budget proposal next month with a 2 cent reduction in the real estate tax rate. The relief could be increased or scaled back before the council votes on the budget this spring.
Virginia Beach has the lowest real estate tax of Hampton Roads’ seven largest cities — 99 cents per $100 of assessed value. A 2 cent reduction would cut city revenue by roughly $15 million. Each cent of the current tax rate generates about a $7 million change in the total tax revenue.
Last year, residential real estate assessments increased on average by more than 9%. Despite the growth, residents didn’t get a tax break in the $2.5 billion budget. It included raises for city and school employees. But this
year, inflationary concerns are of high interest as costs increase.
“We had a very rich budget last year,” Vice Mayor Rosemary Wilson said at the retreat. “This year is the time we’re really going to have to tighten our belts and have some balance and give some relief to our citizens and taxpayers.”
Most residents could still see an increase in their tax bill, because the cuts under consideration would not completely offset the growth in assessments.
For a home assessed at $300,000, with an annual real estate tax bill of $2,970 at the current tax rate, a homeowner would get a break of $60 a year under the 2 cent reduction. Of local revenue sources, the real estate tax is the largest and what the city
depends on most to sustain operations. It comprises 47% of the General Fund.
Assessments are projected at $76 billion in fiscal year 2024, an amount that would reap $755 million in tax revenue for the city. The city assessor will present the latest data for fiscal year 2025 at a council meeting Feb. 27.
Reductions in departmental spending could help offset taxes, Chatellier said, but the council also wants staff to comb through the city’s long-standing revenue dedicated funds, most of which have existed since the 1990s. Among them is the Tourism Investment Program, a $54 million fund comprised of 100% of the tax on amusements — tickets sales across the city, as well as other taxes. The TIP funds sponsorships of large-scale festivals,
supports various venues and other projects.
The council could then consider redirecting those funds for taxpayer relief or to help fund affordable housing or storm water projects, Duhaney said.
In addition, the city manager will scrub the city’s annual regional grants provided to nonprofit organizations, college and governmental groups, some of which have received millions of dollars since the 1970s. The amount of those contributions could be adjusted, Duhaney said.
The city manager will present the proposed budget to council March 19.