Citizens criticize proposed 34% RE tax increase
Over 30 citizens spoke against a proposed 34% real estate tax hike last Thursday at a public hearing on the FY11 Middlesex County budget.
The hearing was held in the historic county courtroom in Saluda, and the room was filled to capacity.
The proposed budget totals $19 million; includes a 12-cent increase in the real estate tax rate; and provides no additional local funds for education.
The current rate is 35 cents per $100 of value; the proposed rate is 47 cents per $100. Under the current rate, a house valued at $100,000 is taxed $350; under the proposed rate the tax would be $470.
County officials have said the large tax hike is needed to replenish the county fund balance, which is used as a reserve to pay bills when revenue is needed between tax collections.
Over the years, Middlesex has had a relatively high fund balance, but those funds have been drawn down over the past two fiscal years to pay bills, leaving the county with no savings.
Part of the reason for the need to use money in the fund balance to pay bills was the miscalculation of the amount of revenue the county received in FY09 and FY10. The miscalculation stemmed from county officials making mistakes in determining revenues.
The shortfall also was possibly caused, in part, due to reductions in some property values after the 2008 county reassessment was complete.
The bottom line is that there has not been enough revenue coming into the county treasury over the past two years to operate the county without using money from the fund balance or by borrowing.
The proposed 34% tax hike obviously has many citizens upset.
Hal Muller of the Kilmer’s Point and Cedar Pointe Homeowners Association said, “Our suggestion is that the county give a percentage rebate to taxpayers who pay their taxes in advance. You would be getting money in all during the year and that would level the amount of money coming in.”
Muller also said that members of his homeowners association are tired of the county coming back to landowners to get more revenue through higher real estate taxes. “You don’t seem to try very hard to get money in other ways,” he told county supervisors.
“We have no lodging taxes, yet the county has costs from those people coming to our area,” said Muller. “Why hasn’t the board of supervisors been pro-active toward taxing tourists?
“We have an enormous amount of vehicles and other personal property in campgrounds that are here year-around,” Muller continued. “We hire land assessors who look at every piece of real estate, but we don’t spend a dime for anyone to go out to the campgrounds or anywhere to check on those values. Somebody has not done what they are supposed to do, and now you come back to us saying you need a 34 percent tax hike,” said Muller.
A meals tax has been proposed by county supervisors twice over the past 10 years, but each time the proposed referendum has been voted down by county residents.
“It (meals tax) wasn’t sold properly,” said Muller. “The meals tax was thrown out there like a bunch of dead fish and nobody bought it.
“I’d admonish every man on that board to look into your heart to say to us that you have looked at every avenue to cut this budget,” he said. “We are not good-hearted souls any longer because we are just trying to survive these hard times.”
Monica Sanders of Topping agreed there is a need for both a meals tax and lodging tax, and supervisors need to stop using higher real estate taxes as the only means of creating additional revenues.
She also recommended that supervisors need to make sure mistakes made in calculating the budget are not made again. “Two people need to work on the math each year so we don’t have any more surprises.”
Sanders was referring to revenue mistakes made in the FY09 budget by county administrator Charles Culley. The administrator mistakenly added non-taxable revenue values on the revenue side of the budget. This falsely indicated the county would generate $399,719 more in real estate tax revenue than it actually did.
Daniel Downs of Hartfield said he appreciated that Culley came forward to the public last week with his mistake, and that “everyone makes mistakes.”
Downs said, “The majority of the people who pay taxes are not here tonight. They are home wondering how they are going to pay a 34% increase in their taxes.”
He suggested supervisors make a 7% across-the-board cut in the budgets of all county departments.
Irving Rogers of Hartfield spoke in favor of a meals tax and noted that Gloucester generated $900,000 in revenue the first year it had a meals tax.
Bob Calves of Urbanna suggested that the county “move as quickly as possible” to have meals tax and lodging tax referendums placed on the ballot this November.
“Unless we start now, we won’t have them (meals and lodging taxes) in place this time next year,” he said. “So, I’m asking you to immediately address these things. I don’t think it’s going to put the restaurants out of business. The meals tax in Urbanna hasn’t hurt the restaurants in town.”
Calves also pointed out that the county debt service is high for the next three years. “It might help to inform the people that much of our debt service will be gone in three years. We are going through a tough time now, but there is slight relief down the road.”
Don Scott of Urbanna said he came to Middlesex from Northern Virginia to escape high taxes. “You won’t attract people and businesses by raising taxes—especially that high. I think the answer is to cut government. I know everyone feels the pain, but raising taxes 34% is not the answer.”
Bob Henkel of Urbanna said that on two previous occasions he chaired a county tax study committee charged with finding new ways of generating revenues. This group spearheaded a major revision of business license taxes, he said.
“We recommended many other things too,” Henkel told supervisors. “We had a referendum twice [on a meals tax], but both times no one really got out and sold the public on the tax. I suggest you reconsider the options that we brought before you.”
Jane Cutler of Deltaville said, “I’m shocked you would consider this kind of an increase without a reassessment. She said her bank has indicated the county’s assessed values on her property are not true values. They are too high. “Banks are telling me my property is worth less than what you have it assessed.”
Middlesex’s last real estate reassessment was completed when property values were high. A short time later, the nation, state and county plummeted into a major recession and real estate values fell considerably.
Cutler contended taxpayers already are being taxed on inflated real estate values and will be for two more years.
She also noted that there are “no fixed incomes” out there. “Our income is going down,” she said.
“You can only go to the same well so many times until the well goes dry,” said Cutler referring to increasing real estate taxes.
Cutler noted these hard times are an opportunity to foster creative thinking to solving problems. She said the county is not tapping the intelligent people who have moved here and who might have some creative suggestions.
“I assume this outrageous proposal (34% tax increase) is to soften county taxpayers to the lower, but still high, increase that supervisors are going to [eventually] approve,” she said.
Cutler noted the country is in a major recession and part of the problem is that people are not paying their taxes. “There are reasons taxes are not being collected,” she said. “I assume people can’t pay them, and if they can’t pay them now they are not going to be able to pay them later.”
Ann Austin of Hartfield said she decided not to fight a 250% reassessment increase two years ago because supervisors were willing to adjust tax rates. She said the value of her property has now dropped.
Austin said some localities such as West Point have adjusted their real estate values. However, she noted that the Town of Urbanna and Middlesex County have not made any adjustments and are taxing real estate at an unfair market value.
Austin asked for a promise from supervisors to have a reassessment of county real estate as soon as possible.
Gordon Cutler said his real estate value tripled two years ago after the reassessment, and people suggested he “fight” the increase, but he did not. “Something is wrong with the way the system is being managed,” he said. “It’s a tragedy you are going up 34%.”
Joe Heyman of Urbanna, a local contractor and businessman, said 2010 has been the worst year for his business since he started in Middlesex 24 years ago.
“I will only support a tax increase if this board has looked specifically at every line item and made sure there is a need,” said Heyman. “I don’t think you’ve done that. If you had you would have cut out the entire Parks and Recreation Department that amounts to $37,000. Yet, you’ve got a YMCA in the county that could easily take over those programs.
“If you are going to fund Wings & Wheels and other things, make sure they have a benefit to the county,” continued Heyman. “If you’ve looked at every single line item, then I’m for a tax increase.”
Charles Powell of Urbanna said supervisors have been relying on the residents who come and retire here to generate most of the tax revenue. “You have not promoted business in this county,” he said. “You drive down the street of Urbanna and all you see is brown paper. You drive through Gloucester, where I spend most of my money, and there is a well-established business area. The only thing you get in Urbanna is a speeding ticket, and the only thing I get for my county tax dollars is to go to the dump free—that’s it.”
Alvin Wake of Wake was the last speaker. “These are tough times,” he told supervisors. “You all need to look over everything carefully and sharpen your pencils. Do what’s best for Middlesex County. You fellas look out for us.”
