Those who spend much time around local government know that it always feels like it’s budget season. At certain times of the year, January being one such time, we find ourselves in the midst of working with three different budgets: Closing out the previous year’s budget (FY20), implementing the current budget (FY21) and preparing the next year’s budget (FY22). Why the emphasis on budgeting? Put simply, it is how we determine what services will be provided and at what level. The type and extent of public safety services, street repairs, park maintenance, sidewalk construction, etc. is completely dependent upon the tax revenues and fees received.
The first step in our annual budgeting process is for the City Council to determine their strategic priorities—the high-level things they seek to accomplish over the course of the next year or two. This starts with the Council’s annual strategic planning retreat, this year held in August 2020. At this retreat, the Council validated the community vision and the seven strategic priorities upon which the budget will be built. This effort is furthered annually at the Council’s budget planning retreat, this year held in December 2020. The work of these efforts is captured in the Council’s Strategic Plan, a draft of which was presented to Council at their meeting on Jan. 4, 2021. This year the Council is particularly focused on services that help address the COVID response and recovery, disparities and inequities that exist in our community, and the well-being of our residents.
As noted, the services we provide, and the type and extent of those services is directly related to the revenues provided by taxpayers and service users. One of the most significant sources of revenue is from taxes on real property—that is, the homes we live in and the buildings where business is conducted. This source of revenue accounts for more than 30% of the total revenue received by the City ($93 million of nearly $300 million for the upcoming year). This source of revenue is so significant that it is always the subject of the first monthly budget briefing the Council receives as work progresses on the development of the upcoming budget. The Council received this update at their meeting on Jan. 4, 2021, and here are a few of the highlights:
- The total value of taxable real estate in the City of Roanoke is nearly $8.2 billion. This represents the cumulative value of all of our homes, shops, offices, etc. This year that value is nearly 3% greater than last year. By way of comparison, Roanoke County currently has a cumulative value of $9.3 billion, nearly 4% greater than the preceding year.
- In the City of Roanoke, more than half of the total value of real property is associated with residences, equating to nearly $4.5 billion in assessed value.
- The year-over-year increase in assessed value totaled slightly more than $214 million, with most of that ($165 million) coming from increasing values of existing property, with nearly $94 million associated with new construction.
- This is the first year in nearly a decade that the increase in assessed values of single-family homes outpaced that of multi-family and commercial properties, indicators of both a strong residential market and a COVID-weakened commercial market. This is partly exhibited by the fact that the median sales price for homes in Roanoke has increased more in the past two years than the last 10 combined!
So what does this mean? For many, it means our homes continue to increase in value (a good thing) and that the increase in value also means our annual tax bill is going up. The increase will result in an additional $3 to $4 million in revenue, of which 40% is, by formula, dedicated to the Roanoke City Public Schools Division. To put that in a bit of perspective, if we use the $4 million figure and the City retains 60% for delivery of essential services ($2.4 million), that equates to roughly 6% of what it takes to run our public safety departments, or the equivalent of half the cost of our entire street paving program, or would cover about two-thirds the cost of our twice-monthly payroll, or the cost of a new fire truck and six replacement garbage trucks. Though grateful that our local property values are increasing and, along with it, tax revenues, these additional revenues continue to fall well below that needed to advance on many of the City’s strategic objectives or provide much of a safety net should the economy take a turn for the worse.
Over the years, the General Assembly and City Council have taken steps to ease the impact of increasing values and thus, increasing tax bills for many in our community. Tax freezes and relief are provided for the elderly, disabled, and veterans. Additional relief is provided to advance certain strategic objectives, such as for rehabilitation of older homes or installation of solar panels or other energy efficiency improvements. Combined, these programs provide relief for more than $171 million in assessed value, equating to about $2 million in reduced taxes annually.
What About Disagreements?
What if you believe an error was made, that your property is not worth what the City indicates it is? There is a process for appealing your assessment. That process begins this month and concludes in the spring. Additional information may be found by following this link Appeals Process.
It is said nothing is certain but death and taxes, and few would claim they enjoy paying taxes. But the reality is that without the revenue received from taxes, we would be unable to provide schools, fire fighters, police officers, streets, libraries, parks, and on and on. And I venture to say, few would consider that as desirable. To help citizens better understand decision making for the Fiscal Year 2021-2022 budget, I will be providing information via this blog as the budget development process continues, as well as through other outlets accessed through our website or social media accounts – ‘Tis the season!
The Real Estate Reassessment presentation given at the Jan. 4, 2021, City Council meeting is available here. To view the presentation at the Jan. 4 City Council meeting via Facebook, click here.
-- Bob Cowell