Thus far, it looks like the real estate tax rate in Charlottesville will not increase next year. But tax bills are likely still be going up.
The city manager released the draft FY2024 budget in early March proposing $226,239,155 for the next fiscal year. That represents a 6.27% increase from last year’s budget, with no tax rate change proposed. Why? Assessed property values increased a lot last year.
“You say there’s no tax increase but it’s a hidden tax increase with these crazy assessments,” resident Kimber Hawkey told councilors, further noting that the city’s assessments often inflated the values of residential property in ways that failed to reflect actual conditions on the ground. “It seems the city is systematically pushing out the middle class and working class.”
Hawkey was far from alone in her concerns, as Charlottesville’s slipping affordability and accessibility became a through line that ran through most of the comments offered by the seven people who spoke at the Council’s public hearing on the proposed tax rate Monday night.
For their part, Council members offered no commentary on citizen perspectives beyond thanking them for sharing their thoughts, and none of the Councilors could be reached for comment Tuesday morning.
City Council will vote on the tax rate sometime in April, according to the city manager’s office.
Assessed property values increased by about 25% in Charlottesville in the last two years. Real estate tax bills are calculated by multiplying the assessed value by the tax rate — so when those assessments go up, so do the bills.
In their first conversation with constituents on the subject, city councilors heard from community members who are deeply concerned about what those rising costs will mean for the community’s future.
“I’m concerned I will no longer be able to afford to live in Charlottesville because of the tax rate,” Jane Evans, who said she works as a school social worker, told councilors. Evans further noted that Charlottesville’s tax rate of $0.96 per 100 of assessed value is markedly higher than the state average of $0.75 per $100.
Moreover, she noted, as only 41% of the housing units in Charlottesville were occupied by their owner, according to the most recent data from the U.S. Census, the cost of increased real estate taxation will likely be passed directly to the renters who occupy the majority of housing units in the city. If affordable housing is the city’s goal, she said, ever increasing real estate taxes are not the way to get there.
“No one is immune to this,” Tom Gallagher told the Council. “Particularly low and fixed income residents. I find it hard to understand that the City Council is always talking about affordable housing while approving these really rather remarkably large real estate taxes.”
Gallagher went on to note that while he understands inflation has also run up costs for the city, when stacked against each other, tax assessments have risen far faster than inflation, leaving him and other residents wondering just where exactly all this money is going.
“I’ve never opposed tax raises in my life,” said John Hossic. “I oppose this one.”
But while concern about inflated tax bills was nearly universal at the Council meeting, solutions to the problem were a bit more varied. Some suggested lowering the overall tax rate to $0.85 per $100 to offset the assessment related increases. Others were more concerned with modifying the assessment process itself, to ensure that houses have more understandable valuations for residents. Still others noted that real estate taxes fund critical community infrastructure, and that while residents need protection, dropping tax rates isn’t necessarily the best route for getting there.
“It was a mistake not raising real estate taxes a few years ago during the good times and it has been tough the last few years with COVID and inflation,” lifelong Charlottesville resident Brandon Collins told the room. “But if we can do a better job with affordable housing those assessments can change, too. I’m glad you’re not raising taxes but I don’t think you have to lower them.”
Last night marked the Council’s first public conversation on the forthcoming tax levy, but it almost certainly won’t be their last. The Council has scheduled a series of public hearings on the budget before approving it later this year. The next public budget hearing will be hosted via webinar Thursday evening from 6 p.m.-8 p.m. Residents can register to attend here.