VIRGINIA BEACH, Va. (WAVY) — Virginia Beach residents could see a real estate tax increase this upcoming fiscal year, on top of already rising assessments.

On Tuesday, Virginia Beach City Manager Patrick Duhaney met with City Council and proposed raising the real estate tax 2.3 cents per $100 of assessed property value in the fiscal year 2023 budget.

Even with the increase, the rate would still be the lowest in the region at $1.013 per $100 of assessed property value.

The increase is not unexpected, however. Raising the tax rate was part of the deal to fast-track flooding projects that voters approved via referendum last fall.

In November, nearly 73% of voters approved a $567.5 million bond referendum that would help fund 21 flood protection projects. The money to pay off the debt service would come from an increase in the real estate tax. The referendum authorized the rate to increase up to 4.3 cents, but only a 4.1-cent increase would be needed now due to organic growth in real estate assessments, the city said.

However, city officials recommend only raising the rate by 2.3 cents. In the fiscal year 2023 budget executive summary, officials said the funding will come from a 2.3-cent increase in the tax rate. The rest of the money needed to pay the bond debt service, about $12.3 million, would be redirected from the general fund and school funding formula.

“Through organic revenue growth within the General Fund, this Proposed Budget only includes a 2.3¢ increase and still provides for enhanced general city services,” the executive summary reads.

Last budget season, Virginia Beach City Council voted unanimously to reduce the real estate tax rate by 2.75 cents. That saved residents a total of $17 million, city documents state.

Most other city fees would remain the same.

As for the personal property tax, which is for property such as vehicles, the city decided that cars will be assessed at 75% of their value against the personal property tax rate. The change aims to give relief to residents as assessed values for used vehicles skyrocket.

In addition to changing the real estate tax to help fund flood protection projects, the city manager’s proposed $2.5 billion budget includes cash to “put the city’s workforce needs at the top of the priority list,” according to a city manager’s letter included in the executive summary.

Initiatives to hire and retain employees include:

  • Establishing a $32.8 million compensation reserve that could potentially fund cost of living adjustments, recruitment and retention stipends to help with childcare and student loan costs, reduction in healthcare premiums and more.
  • Establishing a formal, paid internship program to grow connections with local students and educational institutions.
  • Creating a human resource analyst position to enhance recruitment and outreach efforts.
  • Increasing the number of user licenses for Salesforce Marketing, which could help departments more regularly follow up with those applying for city jobs.

The city manager said the Virginia Beach Correctional Center and Parks and Recreation need additional funds to support jail operations and critical community programs such as “Out of School Time.”

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A dwindling number of rescue squad volunteers has also led the city manager to propose adding 23 full-time paramedic and EMT positions to this year’s roster.

“The City of Virginia Beach has long enjoyed and will continue to benefit from the partnership with our various Volunteer Rescue Squads and the outstanding services that our interdependent emergency response network provides; however, recent declines in volunteers have created a service gap delivery that I fear is not sustainable and a risk that I feel needs immediate attention,” Duhaney wrote.

Funding for schools makes up a large portion of most localities’ budgets. This year, it makes up 46.1% of the total amount.

Schools across the country are facing staffing shortages, which have only increased since the COVID-19 pandemic hit the United States. The school board approved the superintendent’s proposed budget, which would include $46 million in compensation-related increases, including a 5% raise for most employees and reclassifying teacher assistants and security assistants to a higher pay grade, among other changes.

Duhaney’s proposed budget also recommends investing in improvements in the resort area to attract more tourists.

Click here to read the full Virginia Beach budget executive summary.