$1.7B Budget Includes Four New City Facilities, Preserves Lowest Tax Rates in Hampton Roads

Tuesday, March 27, 2012

​City Manager James K. Spore today proposed a $1.758 billion budget for fiscal year 2012-13, which includes funding operations of four important new city facilities – an animal shelter, a recreation center, a library and a fire station.

Despite adding staff for these buildings, the total budget is only $1.7 million – or one-tenth of 1 percent – higher than the current budget. It proposes eliminating 15.78 positions.

To close a $90 million gap, Spore proposed a 4-cent increase in the real estate tax rate, reducing some programs and using $21 million in city fund balances. Half of the money raised from the higher real estate tax rate would go to schools.  Despite the higher rate, most Virginia Beach homeowners would pay less in real estate taxes because of lower home values.

Under this budget, Virginia Beach would still have the lowest tax rates in Hampton Roads, including:

  • The lowest real estate tax rate
  • The lowest car tax rate
  • The lowest meals tax rate
  • The lowest machinery and tools tax rate

On the expense side, the single biggest hurdle is a substantial, mandatory increase in the city’s contribution to the Virginia Retirement System. This accounts for $40.4 million of the $90 million budget gap – nearly half.

On the revenue side, falling home values continue to hurt the budget. This is the fourth year in a row of declining real estate values in Virginia Beach.  The real estate tax is the single largest revenue source for the city.  The city assessor believes Virginia Beach will see two more years of declining home values in the future.

In a letter to the City Council accompanying the budget, Spore wrote, “In a difficult year, the budget offers a choice. We can raise the tax rate a little and maintain our well-known quality of life. Or we can take a scalpel to the outstanding services that our residents expect from their city government. I propose that we choose quality of life.”

The city will hold a public open house on the budget on April 5 from 6 to 8 p.m. at the Virginia Beach Convention Center, 1000 19th St. Leaders from every city department, including City Manager James K. Spore and city budget director Catheryn Whitesell, will be available to answer questions. This will be an informal meeting of citizens and city staff to discuss the proposed budget and Capital Improvement Program. It will not be a public hearing.

Public hearings are scheduled for April 18 at 6 p.m. at Cox High School and April 24 at 6 p.m. in the City Council chamber at City Hall.

To view the proposed city budget, visit www.VBgov.com/budget.

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