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Council votes 4-2 for 10% tax hike

by Tom Chillemi

Urbanna’s real estate tax rate will go up 2 cents to 22 cents per $100 of value in the 2009-10 fiscal year, which begins July 1.

Council looked for ways to avoid the 10% hike. For two hours at Friday’s finance committee special meeting, council debated whether a tax increase is justified, especially in a sagging economy.

On Monday, council voted 4-2 for the increase that will raise an extra $24,000 in revenue through real estate taxes. Council members Don Richwine and Janet Smith voted against the $578,000 general fund budget.

The votes on the rest of the budget were unanimous.

The consensus of council was that the town needs to “save a little for a rainy day,” as Mayor Beatrice Taylor put it.

The budget contains about $70,000 in “reserves.” These funds would be used to meet revenue shortfalls.

One example cited was the meals tax, which is projected to bring in $90,000 in 2009-10. The meals tax is estimated to bring in $72,000 this fiscal year, which ends June 30. The higher estimated meals tax revenue for next year is due in part to the fact council has raised the meals tax and the lodging tax from 4% to 5%, effective July 1.

However, town administrator Lewis Filling illustrated the need for reserve funds by saying he cannot be certain that $90,000 in meals taxes would be collected.

Richwine argued that reserves could be trimmed. Richwine, who is not on the finance committee, said, “The reserves are good intentioned, but the money gets spent.”

Finance committee chairman Bill Thrift and committee member Rich Donoff both said that if there is not a 2-cent tax increase this fiscal year, then council may need to raise taxes 4 cents next year.

The 2-cent tax increase will add $50 in taxes to a house that is valued at $250,000, noted Filling.

Council member Joanie Ward noted that traditionally council has budgeted only for immediate expenses and not created reserves. “That’s why we’re sitting here,” she said. “There should have been more money here.”

Thrift noted that the town water lines are aging and there are 6 or 7 streets that need upgraded water lines. “We need to put some money away,” he said. “We can’t keep living day to day.”

The town spent $18,000 to upgrade water lines on Watling Street recently, said Filling. He said the lack of a water line reserve amounts to “robbing Peter to pay Paul.”

Thrift also said the total for legal expenses to fight proposed condominiums at Urbanna Yachting Center is unknown. The town increased funding for legal expenses in 2007-08 and in the current fiscal year. (The town and developer are negotiating the case, with a deadline of June 29.)

Town resident Jim Ray told council his taxes will have gone up 93% in two years under the new budget.

“The people who are paying need consideration,” said Ray at Friday’s finance committee meeting, adding that just about all governments are cutting back.

During the current fiscal year that ends June 30, the town’s general fund budget is $632,725. However, the town will actually spend $54,725 less, an estimated $578,330.

The new general fund budget for fiscal 2009-10 is set at $578,000.

The 2009-10 general fund budget is relying on $40,000 in revenue from the Taber Fund.

The water fund, which is self-sustaining, is $224,350. Water rates will increase a dollar. The minimum (under 3000 gallons) in-town water rate will increase from $11 to $12 per month; while the out-of-town rate will go from $25 to $26 a month.

The over-3,000-gallons-a-month rate for in-town customers will be $2.40 per 1,000 gallons, up from $2.20. The out-of-town rate increases 20 cents to $5.20 per 1,000 gallons over the 3,000 gallon minimum.

The budget of the Urbanna Town Marina at Upton’s Point is $60,000, not including the salary of the manager ($23,137).

The town will pay 20 percent of the cost to renovate and upgrade the section of Virginia Street that runs from Cross Street to the town marina.

To date, VDOT has approved $800,000 in grant funds for the street beautification project. The town has budgeted $160,000 for the project, plus $5,000 for loan payments.

posted 06.17.2009

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