Four of the five James City County Supervisors agreed Saturday a tax increase is probably needed to maintain quality of life for citizens while addressing impending issues like the county bond rating and school costs.
Supervisor Mary Jones (Berkeley) said citizens are already feeling the squeeze due to trouble in the economy, pushing them to work longer hours for less money.
But the others agreed looming issues are likely better addressed by boosting the tax rate now instead of pushing the costs to another year.
County Administrator Bryan Hill will advertise a real estate tax rate increase of 8.2 cents per $100 of assessed value, a boost that would restore the county’s tax revenues to what it was receiving in 2009 while addressing what he believes are the most pressing problems facing the county this budget cycle: shifting additional funding to the county’s cash reserves, buying new school buses, increasing spending on school maintenance, increasing spending on maintenance of county property and allocating more dollars to stormwater problems.
That 8.2 cent figure does not represent the supervisors’ final vision for a tax rate increase, as they have not decided the amount they want to boost the rate. That increase would add about $240 per year to the tax bill of the owner of a $300,000 home.
“There’s no question in my mind that we have to do something,” Supervisor John McGlennon (Roberts) said. He said the county took a “compassionate and reasonable” approach during the recession by keeping the tax rate stable, but that caused the county to reduce staffing levels and scale back on services.
The county has not raised its real estate tax rate since 1996. Prior to the start of the recession, the rate decreased from 87.5 cents as real estate assessments grew. The recession chipped away at real estate values, so the current rate of 77 cents is not enough funding to address Hill’s priorities without a rate increase.
Hill wants to send more money to the county cash reserves to maintain the county’s bond rating. A presentation from financial services firm Davenport & Company at a budget meeting Jan. 31 shows a declining balance in a fund designated to pay down debts associated with debt from infrastructure costs could harm the county’s current ratings. Two of the three ratings firms give the county the top-flight AAA, while the third is the second highest at Aa1.
By sending an additional $1.5 million per year to the cash reserves, that fund would become solvent. Each penny added to the tax rate generates an additional $1.1 million.
Hill also suggested $1 million for new school buses, $2.2 million for maintenance of school infrastructure and $2.2 million for maintenance of county infrastructure.
The administrator wants $1.85 million to shore up spending on stormwater management, expenditures he says will help the county get ahead of looming requirements from the state and federal governments about how the county deals with runoff from precipitation.
“If we want to kick the can down the road, I’ll have to come back to you in the future and say the cost is this much higher,” he said.
He said if the tax rate remains level, he will leave public safety spending as-is but everything else is fair game. That would likely mean cuts to Parks and Recreation and leaving vacant county jobs open.
“I think it’s time we do some serious long-term forward thinking,” Vice Chairman Kevin Onizuk (Jamestown) said. “If we are too concerned about our pennies now, it’s going to cost us dollars in the future.”
Chairman Michael Hipple (Powhatan) agreed, saying he would prefer to see a real estate tax increase to concentrate the additional money required of citizens in one place. Supervisor Jim Kennedy (Stonehouse) advocated looking at all available ways of generating revenue, including the creation of a utility tax and requiring paid decals for vehicles registered in the county.
Kennedy said if a tax increase happens, he would prefer that it is tied to real estate assessments. So if assessments climb, the tax rate decreases so citizens are not stuck paying extra in the future.
Hill will present his proposed budget for the upcoming fiscal year — which runs from July 1 through June 2016 — next month. Any tax increase would go into effect at the start of that fiscal year. The supervisors will hold a public hearing on it in April, prior to a scheduled adoption in May.
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