Windsor Town Council favors lowering real estate tax rate to 13 cents
Published 3:50 pm Friday, May 19, 2023
The Windsor Town Council directed the town manager to proceed with a proposed fiscal year 2023-24 town budget that includes a real estate tax rate that moves from 14 cents per $100 of assessed value to 13 cents.
Windsor Town Manager William Saunders proposed on May 3 a balanced general fund budget of $3,974,712 and a balanced water fund budget of $1,696,000.
The full proposed FY 2023-24 draft operating budget and five-year Capital Improvement Plan that were presented May 3 can be viewed at www.windsor-va.gov/page/2023-town-council-agendas-and-minutes/ by clicking the link under the “May 9, 2023, Meeting” heading that is titled “FY24 Draft Budget and CIP.” Just above that link is another link titled “FY24 Draft Budget and CIP Staff Report” that outlines changes that have been made to the proposed budget since the council’s April 25 work session.
One of those changes was to reduce the future space needs fund from $200,000 to $100,000.
PERSONAL PROPERTY AND MACHINERY & TOOLS TAX RATES
Saunders noted in the proposed budget that the Isle of Wight County commissioner of revenue determines the value of personal property and machinery and tools in the town of Windsor. Saunders stated that the commissioner has estimated a countywide decrease of 3.8% in personal property (vehicle) values — decreases at that level are not envisioned for Windsor — and a 1% increase in machinery and tools values.
The proposed town budget maintains the town’s current personal property and machinery and tools tax rates of 50 cents and 25 cents per $100 of assessed value, respectively.
MEALS AND CIGARETTE TAXES
In his proposed budget, Saunders stated that the largest source of revenue in the “Other Local Taxes” category is the meals tax, and no rate increase is planned there, although meals tax revenue is estimated to increase +15% for FY 2024.
The proposed budget maintains the town’s cigarette tax of 40 cents per pack, Saunders wrote.
REAL ESTATE TAX RATE
Saunders stated in the proposed budget that the county commissioner of revenue is also responsible for conducting the assessment of real property values within the town of Windsor. The county conducts these assessments approximately every four years, and Saunders stated that a new assessment has taken place in FY 2023, but the town has not yet received the book.
The commissioner of revenue has reported a countywide real estate value increase of plus or equal to 1.5% in the 2019 assessment from new home construction and sales, Saunders wrote. He then noted that the proposed town budget projects a 1% increase in real estate values based upon the 2019 assessment and maintains the real estate tax rate of 14 cents per $100 of assessed value. He explained that at this rate, one penny generates $21,900+/- in real estate tax revenue.
In his May 9 memorandum to the mayor and Town Council, Saunders provided a table with rough estimates of the revenue that the real estate tax rate would generate at different levels, taking into account a change in total value of $229,600,000 in 2022 to $285,130,700 in 2023. Part of the table reads as follows:
- 14 cents — This rate generated $321,440 of revenue in 2022; it would generate roughly $399,182.98 of revenue in 2023. This represents an increase of $77,742.98.
- 13 cents — This rate would generate roughly $370,669.91 of revenue in 2023. This is $49.229.91 more than was generated by the 14-cent rate in 2022.
- 12 cents — This rate would generate roughly $342,156.84 of revenue in 2023. This is $20,716.84 more than was generated by the 14-cent rate in 2022.
- 11.27 cents — This rate would generate roughly $321,440 of revenue in 2023. This is net neutral compared to the amount that was generated by the 14-cent rate in 2022.
- 11 cents — This rate would generate roughly $313,643.77 of revenue in 2023. This is $7,796.23 less than was generated by the 14-cent rate in 2022.
- 10 cents — This rate would generate roughly $285,130.70 of revenue in 2023. This is $36,309.30 less than was generated by the 14-cent rate in 2022.
COUNCIL DISCUSSION ON REAL ESTATE TAX RATE
During the Town Council’s May 9 meeting, Councilman David Adams opened discussion on the proposed real estate tax rate by expressing his desire to see the rate lowered.
“This is a hard one because going back to the June ’22 meeting, I was definitely against raising it up to the 14 cents,” he said. “I would be hard pressed to defend staying at the 14 cents and sitting on $80,000 of revenue that we’re holding onto for a rainy day. That’s going to be a real cost to people, especially in a tougher economic time.
“I would much rather go to the 12- or 13-cent target,” he added. “And we could discuss what we would do with that money, because the last thing I want to do is take it out of people’s hands and put it in an account just to sit there.”
Councilman Marlin W. Sharp said, “Like Mr. Adams, I had also opposed going to the 14 (cents) since last summer. My opinion was at that time if they had gone to 12 cents rather than 14 cents, I wouldn’t have said anything. I thought 12 cents was fair, and I would support going back to 12 cents.”
Adams noted that he understands why the town increased the rate last year.
“I remember the discussion about the police share going up from (a) 1.70% (retirement multiplier) to 1.85% for the (Virginia Retirement System), and I support funding that,” he said. “I just don’t think we need a large surplus at this time. Some surplus I think is OK, but I don’t want to get too aggressive on that.”
Vice Mayor J. Randy Carr later said, “So what are we going to do next year? What are we going to do the following year? Are we going to come back to the town and come back to the citizens each year and say, ‘We need an increase’?”
Carr favored the idea of maintaining the 14-cent rate to help avoid having to increase the rate for possibly several years.
Responding to Carr’s questions about next year, Saunders said, “There’s not a lot of (American Rescue Plan Act) money in the operations budget right now; most of it’s in capital (projects) — that’s the good thing. But there is about $90,000 of operations being funded by ARPA right now, so that is something that we’ll need to be prepared to cover in not this year’s budget but FY25, likely.”
Carr reiterated his desire to not have to come back to the citizens year after year with increases, suggesting that in the next five years, discussion might begin about a new town center and then the council will be coming to the citizens again talking about an increase.
“The way I look at it, they’re liable not to vote me in next term, but I’m going to hold strong to the 14 cents,” he said.
Councilman Walter Bernacki said he saw Carr’s point.
“It would stink to say, ‘Let’s back it off this year,’ then next year’s budget, preparing for 2025 and that ARPA money goes away, then we’re short, then we’ve got to come right back at it,” Bernacki said, alluding to a rate increase. “Whereas, for the short term, if we keep it at (14 cents), yes, that money would be in an account, not necessarily rainy day because you do remember back just a few minutes ago, you reduced the (future) space needs by $100,000 because we needed it for operations money, so that way we could put it in there and then that way as we move forward, like Randy said, maybe it’s three to five years — or more, hopefully — before we would have to do something again.”
Sharp said, “In my mind, if we would reduce it this year and then have to come back next year and take it back up, we can at least say we reduced it.”
He noted that, to him, it is kind of like flipping a coin.
“You’re probably going to have to have an increase sometime anyway,” he said. “With the way the economy is right now, you don’t know what’s going to happen. With or without the ARPA money, you don’t know what’s going to happen. It could get worse, it could get better, but we don’t know that. All we know is what it is right now, and what it is right now isn’t very good.
“Again, going back to what Mr. Adams said, I think it would be a real benefit to the people of Windsor to drop it back, at least one cent if not two,” he added.
A COMPROMISE ON THE RATE
Adams said, “I could definitely compromise on a 13-cent (rate) as opposed to a 14-cent. I definitely understand Randy’s point of continually going up like Oliver (Twist), asking for more; I can definitely understand that would get frustrating as well.”
Bernacki, Councilman Jake Redd and Councilman Edward “Gibbie” Dowdy indicated they would go along with a council consensus of 13 cents per $100 of assessed value.
“I’m not going to sit here and say I’m totally against it,” Carr said, later noting, “If 13 is the consensus of council, then I’m for that.”
Saunders said, “And as far as the budget amendment with that, would you be putting that excess into the future space needs (fund)?”
Bernacki said yes.
The council will hold a budget public hearing on Tuesday, May 30, at 7 p.m. and is expected to hold a public hearing on the tax rates at its Tuesday, June 13, meeting at 7 p.m.