HAMPTON, Va. (WAVY) – Hampton residents will get a discount again on their personal property tax bills for vehicles this year, but at a lower discounted rate than 2022.
Meanwhile as part of its fiscal year 2024 budget talks, City Council is also considering lowering the real estate tax rate again for relief to residents, after another large increase (around 10%) in assessed property values this year (something other local cities are seeing as well).
The overall proposals would lead to an increase in recurring revenues for the city of $27.2 million, from $394.5 million to $421.7 million, Finance Director Karl Daughtrey said during Tuesday’s council work session.
“A 6.9% increase [in recurring revenues] is a good rate, and because inflation has been between 6% and 8% we want to see a significant increase in our revenues to really deal with the inflationary pressures,” Daughtery said.
Here’s a deeper dive into the city’s budget projections and what it means for residents:
Personal property tax, relief approved
Last year, Hampton City Council discounted the taxable assessments for vehicles by 25% (a 75% assessment ratio) as car values, particularly for used cars, soared (around 44%) due to supply chain issues related to the pandemic.
Recently, the market has “begun to correct, but it hasn’t fully corrected,” said City Manager Mary Bunting on Tuesday, summarizing comments two weeks ago during a council work session from the Commissioner of the Revenue Ross Mugler. “[Ross Mugler] indicated [with car values down around 11% compared to 2022] we didn’t need to be as deep as 75% because the market had started to reverse, but recommended somewhere between 90% and 95%.”
On Tuesday night, council went in the middle of those recommendations from Mugler and approved a 93% assessment ratio for qualifying vehicles.
Daughtrey said that will lead to a revenue increase of about $2.3 million, or 4.7%.
Real estate assessments and possible relief
Hampton notably lowered its real estate tax rate from $1.24 per $100 in assessed property value by six cents to $1.18 last year as relief for citizens as real estate assessments increased nearly 17%.
This year’s assessment increase was about 10% overall, with 96% of residential properties seeing increases, City Assessor Libby Griebel reported. The median sale price for homes increased to $253,000.
Bunting has recommended a tax rate decrease, but the final number has yet to be determined as council continues to work through the budgetary process.
On Tuesday during the council’s work session, Daughtrey presented to council what revenue would look like if council approved a 2 cent decrease in the real estate tax rate to $1.16. Hampton’s currently in the middle of the pack for local cities, with Portsmouth at the high end at $1.30 and Virginia Beach the lowest at 99 cents.
Daughtrey also took into account uncertainty in the overall national economy (including inflation and a possible recession) and the fact that the Virginia General Assembly hasn’t reached a compromise on the state’s budget.
The $1.16 tax rate would lead to about a $11 million increase (6.9%) in revenue for fiscal year 2024, up to $170.4 million compared to $159.4 million for 2023.
Real estate taxes and personal property taxes account for more than 50% of the city’s revenue budget, Daughtrey said, something city leaders are looking to address.
“We don’t have that kind of big contributor that we can look at,” said Mayor Donnie Tuck after noting how many of the city’s major employers (Langley Air Force Base, Hampton University, etc.) are not taxable. “So our reliance really is on real estate taxes and personal property taxes.”
Tuck is seeking to decrease that reliance through tourism and attracting private industry, pointing out the Boo Williams Sportsplex and Hampton Aquaplex, as well as the upcoming Unmanned Systems Center of Excellence from Huntington Ingalls.
Hampton spoke more about the FY24 budget process in Tuesday’s work session and and at a work session earlier this month. WAVY will continue to follow the latest updates.