VIRGINIA BEACH — Giving residents a real estate tax break will require a shuffling of funds and the elimination of more than two dozen vacant positions, but overall, budget officials said the city’s proposed spending plan for fiscal year 2025 includes no major service cuts.
Coming in at $2.6 billion — a 2.8% increase from last year — the proposed operating budget introduced Tuesday includes a 2 cent reduction in the real estate tax rate at the request of the City Council.
The city manager’s proposed budget includes new public works, firefighter and paramedic positions as well the transfer of $60 million from a resort area parking fund to build a park at Rudee Loop. Virginia Beach Budget Director Kevin Chatellier shared the details of the budget proposal, which also include a roughly 3.5% pay increase for city workers as part of the step pay raise program approved in 2022. It’s based on years of service with a 3% wage increase for each step. Roughly 80% of the workforce qualifies for the plan. The pay increase totals $19.5 million.
With real estate assessments increasing again, reducing the real estate tax rate is a City Council priority.
Virginia Beach’s current real estate tax rate is currently 99 cents per $100 of assessed value. Fiscal year 2025 assessments in Virginia Beach are going to top $82 billion, a 7.4% jump from the previous year. Even with the 2 cent rate reduction, most residents would still see an increase in their tax bill because the cuts under consideration would not completely offset the growth in assessments. For a resident with a median home value of $388,200, the 2 cent reduction would save $78 a year.
Real estate taxes are the major funding source for city operations. A 2 cent rate reduction is equivalent to forgoing $15 million.
The city shares revenue with the public school division. The division’s operating budget proposal, approved earlier this month, stands at $948.9 million and factors in a $5.7 million potential loss if council moves ahead with a 2 cent real estate tax reduction. State funding for schools has not yet been finalized.
While the plan cuts the real estate tax rate, other city fees would increase. To help pay for increased costs for residential services, fees for water, sewer and curbside recycling would increase. Per month, water would increase by $2.70; sewer by 79 cents; and recycling by $3.05. Parks and Recreation program and membership fees would also go up to allow for the hiring of four pool lifeguards and other park positions.
State transportation funds would help support new hires in Public Works. Eliminating vacant positions will allow for the hire of 17 new firefighters, but Councilman David Hutcheson said more are needed. The department had requested 60 new hires.
Reductions include the elimination of vacant full time positions across several departments including emergency communications, human services and libraries. Non-departmental grants without a formal agreement will be reduced by 2%.
One-time costs this year will be $1 million to hold the presidential election, and $2 million for sheriff’s department body worn cameras.
Separate from the city’s operating budget plan is a proposed six-year capital improvement project budget. That $5.4 billion plan includes new funding to upgrade the Great Neck Bridge, add turn lanes on Pacific Avenue and begin the first phase of infrastructure improvements along 17th Street.
To reduce general fund obligations, a total of $2.3 million would be pulled out of several tax funds including the Tourism Investment Program, Tourism Advertising Program, Open Space and Agricultural Reserve Program. Chatellier said $800,000 from the TIP would help support Oceanfront capital projects and Virginia Beach Amphitheater maintenance.
Two veteran council members had differing opinions on the potential redirection of money in funds that were established for a specific purpose.
“That upsets the balance,” said Councilwoman Barbara Henley, who suggested the city may eventually need to repeal and reallocate those taxes to meet needs.
But Vice Mayor Rosemary Wilson didn’t seem worried about it.
“A 2% reduction on dedications is pretty small,” said Wilson. “We have an opportunity here to have some balance, to help those who are really hurting.”
The City Council will be able to make adjustments to the budget before it’s adopted May 14. Public budget hearings will be held April 17 and 23, and the document will be available to view at public libraries, City Hall and online at budget.virginiabeach.gov.
Stacy Parker, 757-222-5125, stacy.parker@pilotonline.com
Correction: A correction was made on March 20, 2024: Due to a reporting error, an earlier version of this article incorrectly spelled a Virginia Beach City Councilman’s name. His name is David Hutcheson.
