Portsmouth real estate tax increase is in play

PORTSMOUTH

Five years ago, city leaders declared they wanted Portsmouth to have one of the region's lowest real estate tax rates by 2025.

Since then, the City Council has steadily decreased the city's rate, from $1.45 per $100 of assessed value in 2004 to $1.21 in the current budget year.

Although double-digit increases in residential assessments means residents haven't seen financial relief, council members have lauded their ability to bring Portsmouth's rate to the lowest point in more than two decades.

So when City Manager Kenneth Chandler proposed an 8-cent property tax increase for the coming budget year, it struck some as a reversal for a city that still has the highest real estate tax rate in South Hampton Roads.

Council members said their philosophy hasn't changed. Many said they are doing all they can to keep the rate at $1.21 and avoid a rate hike this year, despite the recession.

"These are completely different times than any of us have ever seen," Councilwoman Elizabeth Psimas said.

The city manager did not have many places to go for money to balance the budget, she added.

Each penny on the real estate tax rate generates roughly $700,000 for the city.

"There are not but so many things he can tweak," Psimas said. "And the revenue projections are lower, so where are you going to go?"

Two things she and other council members said they know the City Council will not do: dip further into Portsmouth's rainy day fund or back off a $2.3 million public safety retention plan.

"I am going to do everything I can to keep the real estate tax rate at $1.21. I am absolutely committed to the public safety pay plan; that is the No. 1 priority for me," Councilman Doug Smith said.

The plan, which would address salary inequities and bring Portsmouth's sworn police officers and firefighters in line with the regional average, is the only thing Psimas said she'd be willing to raise taxes to fund.

She said 3 cents' worth of the 8-cent increase Chandler proposed March 31 is already off the table. That tax increase would have offset increases in residential trash collection fees.

Portsmouth's trash tipping fee is set to increase in July to $170 per ton from $104 per ton under a plan to bail out the regional trash authority.

With that $2.1 million off the table, city leaders now need to find $3.5 million to keep the tax rate at $1.21.

"We need to overturn every stone in seeking to keep it at the level where it is," Vice Mayor Bill Moody Jr. said of the tax rate. "I think if we could keep it where it is, that would be a victory. Our citizens can't afford it."

Moody said he thinks the city is still trying to conduct business as if it were before the recession.

Portsmouth's revenue from the state and from other taxes, such as retail sales and personal property tax, have been severely reduced, Moody said.

He said he thinks it's important to hear from citizens which services they value and which they would be willing to sacrifice to keep the city's tax rate down.

Psimas envisioned city leaders would reach the $3.5 million through some combination of savings. Council members are still discussing options.

But Councilman Charles B. Whitehurst Sr. said he doesn't think the city manager has yet provided council members enough options to cut expenses.

"He hasn't given us opportunities to make a decision," Whitehurst said.

Decisions about employee furloughs, for example, should be up to council members, he said.

The City Council is scheduled to vote on the budget May 12.

Jen McCaffery, (757) 446-2627, jen.mccaffery@pilotonline.com