THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, April 19, 1995 TAG: 9504190415
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY KAREN WEINTRAUB AND FRANCIE LATOUR, STAFF WRITERS
DATELINE: CHESAPEAKE LENGTH: Long : 132 lines
Property owners here face the equivalent of a 3.75 cent real-estate tax rate increase in the coming year, even though the operating budget proposed Tuesday by the city manager actually contains a minor tax cut.
The culprit is a 3 percent increase in overall city property assessments, which drove up the prices - and therefore the tax bills - of many homes and businesses in the past year.
In a work session Tuesday, at least two council members raised the idea of reducing the city's real estate tax rate to compensate for the increased value of property.
Last year, the council dropped the base tax rate by one penny to $1.27 per $100 of assessed value. Most of the city actually pays $1.295 because of an additional 2.5-cent mosquito-control-district tax that applies to 97 percent of the city.
City Manager James W. Rein warned the council that rolling back the tax rate would be shortsighted. The extra money, he said, is needed to keep pace with the city's growth. He also had recommended against last year's rate cut.
``It could be financial chaos next year if we roll back the rates this year,'' Rein said Tuesday. ``The council would be forced to dismantle major services.''
He explained that, next year, a rollback would leave the city short of money to give city employees a raise or to pay operating costs for new school and city projects that are coming on line.
``We are in excellent financial shape,'' Rein said. ``That's the good news. The bad news is you will not be able to participate in that excellent shape because all the funds will be committed to capital projects.''
The only tax cut Rein supported was a half-penny off the mosquito-control-district tax, a cut he said could be made without harming services.
While some council members encouraged giving money back to the citizens, others said the city would benefit by properly using the extra money.
``If the council prudently prioritizes its projects for the city,'' Councilman John M. de Triquet said, ``then that is returning money to the citizens in terms of better services for the city.''
The council discussed the proposed $403 million 1995-96 budget Tuesday for the first time.
According to Rein's proposed budget, city spending will increase by 9.6 percent next year. The city will be spending $35 million more next year on basic services, Rein said in his budget proposal.
Much of that will go toward completing building projects and staffing those new facilities.
Running the new Thurgood Marshall Elementary School, a new gymnasium in the Camelot neighborhood, and a larger jail and juvenile detention facility will cost about $4.4 million, according to the proposed budget.
Other cost increases include $11.4 million toward the city's debt on construction projects, $2.3 million to educate new students and $4.4 million for new city programs.
In February, the council approved an $816 million capital, or five-year, spending plan. It calls for new classrooms, parks, libraries, fire stations, police precincts and roads.
Yearly operating costs will continue to increase as those projects are completed and must be staffed, Rein said in his budget message to council members.
The approval of last year's road-bond referendum led to the need for 17 temporary employees this year, Rein's budget noted.
Most of the services residents are used to getting from City Hall will remain the same next year under Rein's proposed budget.
``Continuation of existing programs at the current service level'' was a constant theme in the 300-page document.
The only increase in service Rein is recommending is more frequent mowing of the grass along road shoulders and medians.
He proposes contracting the work out to a private company and eliminating six positions in the Street Maintenance Division through attrition.
Rein's budget also calls for hiring seven new police officers, funded in part by federal money provided for community-based policing efforts. And it provides an average pay raise of 2.25 percent for city workers.
The council has scheduled a public hearing for Thursday and may call for more budget workshops before approving the budget May 9.
Rein estimates the city's population will continue to grow at about 4 percent for the next year, which will add to the city coffers.
Property assessments across the city rose overall by 3 percent this year, the highest percentage increase since 1990, Real Estate Assessor Laurence Street said Monday. Anything more than a 1 percent increase qualifies as a tax-rate increase under state law, and the council is required to hold hearings on whether to endorse that increase or roll back rates to offset it, Street said.
Unless the council again drops the tax rate, most Chesapeake landowners are likely to end up paying more next year. Owners of waterfront property or in growth corridors can expect the highest increases, Street said.
Only 36 percent of properties will not be reassessed. The 64 percent of taxpayers with new - mostly higher assessments - will add $2.7 million to the city's coffers next year, Street said. ILLUSTRATION: Graphic
WHAT IT MEANS FOR CHESAPEAKE RESIDENTS
The basic real estate tax rate would remain at $1.27 per $100 of
assessed valuation. But tax rates for nearly all the city will drop
half a penny to $1.29 per $100 because of a cut in the Mosquito
Control District tax rates. Those taxes apply to 97 percent of the
city's properties and drop from 2.5 to 2 cents per $100 of assessed
valuation. Real estate taxes are actually increasing, however,
because assessments in the city have jumped by 3 percent.
IMPACT ON HOMEOWNERS: Most would pay $1,270 for a house valued at
$100,000 - down $5 from last year. (A similarly priced house in
Norfolk, which has the area's highest real estate tax rates, was
taxed $1,380 last year.)
IMPACT ON SCHOOLS: School employees would receive a 2.25 percent
salary increase. The scheduled opening of Thurgood Marshall
Elementary School and additions to Hickory Elementary, Portlock
Elementary, Indian River High and Western Branch Intermediate
schools should help reduce classroom overcrowding in 1995-96.
TRACKING THE BUDGET
First council workshop: April 18
Public hearing: April 20
Budget adoption: May 9
* The public may attend any of these meetings, but people will be
allowed to speak only at the public hearing. The work session will
be held on the fourth floor of City Hall in the Personnel Training
Room, beginning at 5:15 p.m. The public hearing will begin at 6:30
p.m. in council chambers. All meetings will be aired live on TCI
Cable Television Channel 23. The council may schedule other work
sessions.
KEYWORDS: CHESAPEAKE CITY COUNCIL BUDGET PROPOSED REAL ESTATE TAX
REAL ESTATE ASSESSMENTS
by CNB