Beach real estate tax rate increase looks dead in the water

VIRGINIA BEACH

A majority of council members said they oppose a real-estate tax increase, all but killing City Manager Jim Spore's proposal to bump up the rate by three cents.

Virginia Beach can balance it s $1.8 billion budget and preserve necessary services, such as police and fire, "without raising the real-estate tax rate," said Councilman Jim Wood, one of seven council members who have come out against the increase.

As the council begins budget deliberations this week, with a goal-setting retreat today, Wood, Glenn Davis, Bill DeSteph, Bob Dyer, Louis Jones, Rita Sweet Bellitto and Rosemary Wilson all said the tax increase is unnecessary. Of those members, four are up for election in November.

"I want to avoid a real-estate tax increase," Vice Mayor Jones said. "I think it's possible."

Spore recommended increasing the tax rate to 92 cents per $100 of assessed value as one way to close a $111 million city and schools shortfall. The rate increase would raise $15.4 million. But with an average dip in home values, the owner of a $290,500 home would pay $79 less in taxes.

Spore also suggested eliminating positions, reducing library hours, cutting the police mounted patrol program by half and delaying some construction projects.

The Beach needs to tighten its budget even further, Sweet Bellitto said.

"I would not vote for one," Sweet Bellitto said about the tax increase. "To me, the case hasn't been made that we need to do that."

Several council members are hitching onto a strategy used last year to balance its budget and avoid a tax increase: dipping into the piggy bank.

"It looks to me like there are some reserves we can go through and make it through this budget," Jones said.

The council drew on $45 million in "rainy day" funds last year and was warned by the Beach's budget staff that it was a one-time option.

But some of the special programs can be suspended or tapped even further to at least offset a tax-rate increase, Davis said.

Over the years, the council has set aside some tax revenue for special projects, such as preserving open space and farmland, replenishing the beach at Sandbridge and economic development.

A few of those funds have accumulated millions of dollars. For example, the city has built up an $11 million cushion in the agricultural reserve program, which buys potential development rights from farmers. The 2010- 11 budget proposal also calls for $4.6 million in funding for the program, based on the council's goal to save 20,000 acres of farm and forest land by buying easements from the owners. So far, more than 8,000 acres have been preserved.

The city has stockpiled about $30 million for Sandbridge beach restoration. That's enough to cover the full cost of two projects over the next four or five years - a council goal - in case the federal government doesn't come up with its share.

The city plans to put another $4 million or $5 million into the Sandbridge fund next year. A portion of the money comes from a special tax that residents of Sandbridge pay, and those dollars could not be used outside of the beach area, said David Bradley, the city's assistant budget director.

Budget officials didn't suggest dipping further into these funds because suspending the agricultural reserve program for a year or banking less into the Sandbridge replenishment are policy decisions for the City Council to make, Bradley said.

"If the money is coming in higher than expected, that's when we recommended using it," Bradley said. "But it's their right based on the economy versus doing some of the programs."

Mayor Will Sessoms, who had floated a tax rate increase, said the city can't keep tapping savings.

"Band-Aids are Band-Aids, but they're not permanent," Sessoms said. "Can we get through this time without a tax increase? It's possible."

Deirdre Fernandes, (757) 222-5121, deirdre.fernandes@pilotonline.com