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Friday, April 19, 2024

This week, Charlottesville City Council unanimously approved a bigger budget with higher taxes. It's a trend that's been happening for the last several years.

The city has uses for the money, councilors said. Officials plan to increase staff pay, fill longstanding vacancies, hire more bus drivers and purchase more buses. The Daily Progress published a thorough and easy to follow report about this year's budget that its subscribers can read here.

But even as they were approving the budget, councilors expressed trepidation. The city has increased taxes multiple times in the past few years, as its expenditures ballooned.

In the last five years, the city's general fund expenses have grown by 25% — from $189 million in 2020 to $253 million projected in 2025. The general fund is where most of the city's local tax revenue goes, and it is used to cover city operations. Money is also transferred from the general fund to the capital improvement fund to cover larger construction projects — like new stormwater pipes, or a new middle school.

Some of the extra cash came from tax increases.

Here are the tax increases over the last five years:

  • 2020: Meals tax increased from 5 to 6%, and the lodging tax from 7 to 8%
  • 2021: Unchanged
  • 2022: Unchanged
  • 2023: Real estate tax increased by $0.01 per $100 of assessed value and the meals tax increased by 0.5%
  • 2024: Unchanged
  • 2025: Real estate tax will increase by $0.02 per $100 of assessed value, meals tax by 1%, personal property tax by $0.20 per $100 of value, and lodging tax by 1%
A screenshot shows a Zoom meeting with nine participants.
Credit: Screenshot of Charlottesville City Council meeting taken April 12, 2022

From 2022: Despite a budget surplus, Charlottesville City Council voted to increase real estate and meals taxes

But not all of the city's additional cash came from tax increases. Over the years, the city has pulled in more money from personal property tax as more people started owning cars of greater value. Meals and lodging taxes have gone up and down. But the most striking increase came after the pandemic when the revenue from real estate taxes skyrocketed. That wasn't all because of the tax rate — though that did increase. The main driver was assessed property values. Between 2022 and 2024, the average assessed value of Charlottesville homes rose by more than 30%.

A property’s assessed value is the figure local governments use to determine how much to tax landowners. Localities calculate property taxes by multiplying a property’s assessed value by the local tax rate. So, higher assessments mean higher tax bills.

A woman walks a dog in a residential neighborhood.
Credit: Andrew Shurtleff/Dexter Auction

From 2023: Local property assessments rose 25% in two years, which means higher tax bills and more money for local governments

From the community

An aerial image of homes, trees and cars with text overlay that reads: "The Financial Resiliency Task Force is closing the wealth gap in our community." And orange button says: "Learn more" and two logos say "Envision, helping all families thrive" and "United Way of Greater Charlottesville"

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The decision to raise taxes as revenues continue rising left some councilors uneasy.

“We're asking a lot of our residents,” Councilor Natalie Oschrin told The Daily Progress.

Councilor Michael Payne was troubled for a different reason.

“Meals tax is very regressive,” Payne said. (A “regressive tax” is one that is applied at the same rate to everyone, which means it takes a larger percentage of income from people who earn less money.) “Lower-income families spend more of their income as a percentage on going out — whatever we think of the statistic, lower-income families eat out more than wealthier families. Not fine dining, but just eating out.”

But both councilors concluded that the city's need to bring in more revenue is greater than their desire to spare residents the greater tax burden. This position is mostly in line with what both told Dexter Auction when they were running for Council last year.

“City Council needs to fund critical priorities, but we should first seek to cut any spending that doesn’t actually benefit the community and only increase taxes as an absolute last resort for funding vital needs in our community,” Payne said in response to a Q&A for the 2023 Voter Guide.

Only Councilor Lloyd Snook said that he was outright against raising taxes.

“I voted against the tax increase that Council adopted in April 2022. I do not favor changing the tax rate,” he said.

Snook voted in favor of raising taxes in 2023 (though he expressed disapproval) and again this year.

Voter Guide: Q&As with the three candidates for Charlottesville City Council

After voting in the new budget, Oschrin told The Daily Progress that city leaders must “do right by that revenue production.”

It is our role as journalists to keep an eye and ensure they do. Covering local government is one of a myriad of roles that local journalism fulfills in a community. What are our other responsibilities to the community? What should they be?

These are questions that our CEO and Editor-in-Chief Angille Shah will discuss this afternoon at a panel on the future of local journalism.

Join a conversation about the future of local journalism in central Virginia

Angilee Shah will join local colleagues Courteney Stuart, host of WINA’s Charlottesville Right Now, and Richard DiCicco, editor of C-VILLE Weekly, in a conversation about how we get news — and how news is produced — in our region. The panel, moderated by Dr. Allison Wright, executive editor and publisher of the Virginia Quarterly Review, is part of the 12th Annual Tom Tom Festival. It is co-sponsored by the Karsh Institute of Democracy at the University of Virginia and C-VILLE Weekly.

The one-hour panel is at 1:15 p.m. in the CODE Building at 240 W Main St., in Charlottesville. To attend the session, you can purchase a pass for the Friday, April 19 events about “Society and Justice.” But you don't have to buy tickets. You can attend the event for free just by showing up and registering right then and there.

Hope to see you there!

Jessie Higgins, managing editor

P.S. Special thanks to reporter Erin O'Hare who pulled together years of historical tax rates for this newsletter!

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I'm Dexter Auction's managing editor and health and safety reporter. If there’s something you think we should be investigating, please email me at [email protected]! And you can follow all the work we do by subscribing to our free newsletter! Hablo español, y quiero mantener a la comunidad hispanohablante informada. Si tienes preguntas o información que debo saber, por favor, envíame un correo electrónico a [email protected].