Virginia Beach Considers Lowering Real Estate Tax Rate to Offset Assessment Increase

CEO Khai Intela
The real estate market in Virginia Beach is experiencing an increase in assessments this year, and the City Council is taking steps to alleviate the burden on taxpayers. Budget Director Kevin Chatellier revealed that residential...

The real estate market in Virginia Beach is experiencing an increase in assessments this year, and the City Council is taking steps to alleviate the burden on taxpayers. Budget Director Kevin Chatellier revealed that residential and commercial assessments in Virginia Beach will be, on average, 6.7% higher than last year. To counterbalance this increase, the City Council is considering lowering the tax rate. This move aims to provide some relief to taxpayers while still ensuring the city's financial stability.

Kevin Chatellier Kevin Chatellier - Courtesy photo

Virginia Beach currently boasts the lowest real estate tax rate among Hampton Roads' seven largest cities, with a rate of 99 cents per $100 of assessed value. The proposed reduction of 2 cents in the tax rate would lead to an estimated $15 million decrease in city revenue. It's worth noting that each cent of the current tax rate accounts for approximately a $7 million change in total tax revenue.

While last year saw a significant increase of over 9% in residential real estate assessments, residents did not receive a tax break in the $2.5 billion budget. However, this year, the City Council recognizes the importance of addressing inflationary concerns and rising costs. Vice Mayor Rosemary Wilson emphasized the need for balance and relief for citizens and taxpayers. Despite the potential tax rate reduction, most residents can still expect an increase in their tax bill, as the cuts may not fully offset the growth in assessments.

For example, a home assessed at $300,000, with a current annual real estate tax bill of $2,970, could see a $60 yearly reduction under the proposed 2 cent reduction.

The real estate tax is the largest source of local revenue, comprising 47% of the General Fund. Therefore, it plays a crucial role in sustaining the city's operations. However, reductions in departmental spending, along with a review of the city's long-standing revenue dedicated funds, are being considered to help offset taxes. These funds, some of which have existed since the 1990s, include the Tourism Investment Program (TIP), a $54 million fund derived from amusement-related taxes. The City Council is exploring the possibility of redirecting these funds for taxpayer relief or to support initiatives such as affordable housing and stormwater projects.

In addition to examining revenue sources, the city manager will also evaluate the annual regional grants provided to nonprofit organizations, colleges, and governmental groups. Adjustments may be made to the amount of these contributions.

The proposed budget will be presented to the City Council on March 19. By striking a balance between the financial well-being of the city and providing relief to taxpayers, Virginia Beach aims to navigate the evolving economic landscape successfully.

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Assessments for fiscal year 2024 are projected to reach $76 billion, which would generate $755 million in tax revenue for the city. The latest data for fiscal year 2025 will be presented by the city assessor at a council meeting on February 27.

Stacy Parker, 757-222-5125, [email protected]

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