The Richmond City Council has approved the first in a two-step process that will pay property owners a rebate on a portion of next year’s real estate tax.
On Monday, the council reaffirmed the city’s current $1.20 per $100 of assessed value real estate tax rate and formally introduced a separate proposal to rebate a portion of next year’s tax at that rate. The vote was 7-2.
The rebate will amount to 5 cents for every $100 of a property’s assessed value and would come out of the surplus left at the June 30 end of fiscal year 2022, Mayor Levar Stoney said.
For a house assessed at the latest median sales price for the city, $335,000, the $1.20 rate means a tax bill of $4,020.
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If that house saw the city’s average 13% rise in assessed value, its owner’s tax bill will be up from last year’s $3,558.
The 5-cent rebate, which will come before the council later this year, translates to $167.50 for that house.
Once the rebate checks are mailed early next year, the payment would have the net result of temporarily reducing the effective tax rate to $1.15.
That brings it below a cut to $1.16 that was proposed by council members Kristen Nye and Reva Trammell. Trammell has separately proposed cutting the rate to $1.10. Their proposals were defeated Monday.
Chief Administrative Officer Lincoln Saunders said the city could not offer larger rebates because state law says the payment must come from the surplus.
The $18 million the rebate will cost would still leave enough money in the surplus in case the city had to deal with any unexpected expenses this year, Saunders said.
He has said cutting the rate itself would not be prudent, because a possible economic recession looms.
That would depress real estate values and, if the city were to cut the rate, depress tax collections with a doubled effect of slumping values and a lower rate.
Several Virginia cities, including Richmond, were hit by just that double blow after the Great Recession of 2008.
Stoney has said Richmond is still working off the effects of the 2008 recession’s impact on city finances.
Longer term, Stoney wants to ease pressure on city taxpayers by trying to win General Assembly approval for a proposal to freeze rates for long-term residents — people who risk being squeezed out of their neighborhoods as property values rise with the influx of new residents.
That would require amending the state constitution, which requires two separate General Assembly votes in two different years, as well as approval in a statewide referendum.
Stoney also wants to bring the timing of property assessment into better alignment with writing the city budget.
Currently, in the first few months of the year as the budget takes shape, city officials and the council work with projections about the value of land, but they don’t find out the actual amount until the city assessor’s annual review is completed in the fall. A better alignment means tax bills will better reflect the city’s needs, he said.