Warrenton council votes to equalize real estate taxes; mayor, senior staff raise concerns

From left, Warrenton Town Councilman William Semple (Ward 2), Mayor Carter Nevill, Councilman Brett Hamby (Ward 3) and Vice Mayor James Hartman (Ward 4) vote on a motion to equalize the town’s property tax rate at a May 10 meeting.

The Warrenton Town Council voted unanimously this week to change the town’s real estate tax rate from 5 cents per $100 of assessed value to 4 cents in an effort to keep taxes level for local homeowners, and the Council appears poised to reject further tax increases in Town Manager Brandie Schaffer’s fiscal 2023 proposed budget.

But Mayor Carter Nevill and senior staff argue that failing to raise taxes could put the town in a precarious financial position and impact the quality of town services.

During the Town Council morning work session Tuesday, several council members signaled they had major concerns about Schaffer’s $32.4 million spending plan, which would increase the town’s budget by $5.9 million, an increase of 22 percent from fiscal 2022. The main argument from several council members, including Ward 2 council member William Semple, was that increasing taxes would negatively affect many town residents who are suffering from things like rising inflation and gas prices.

“We’re increasing faster than we should,” Semple said during Tuesday’s work session.

Local taxes, including general property tax, make up nearly a third, approximately $11.3 million, of the town’s operation budget, which funds services such as, trash collection, street paving, police services and snow removal, among other things. And failing to increase taxes, according to the town manager’s office, may directly affect the quality of these services.

Schaffer had proposed in her budget that the town keep its current rate of $0.05 per $100 of assessed value the same. Because the value of properties in town increased by 22.05 percent, the average resident’s tax bill would increase from $171.87 to $209.68, or $37.81.

The council was required by Virginia law to adopt the property tax rate before May 15, and consequently opted for equalization – meaning council members lowered the property tax rate to that which keeps taxes steady for the average homeowners – so that residents would not have to pay the additional $37.81.

According to the town manager’s office, the council lowering the property tax rate from 5 cents per $100 of assessed value to 4 cents is currently projected to eliminate $189,916 in revenue from the town’s operating budget for fiscal 2023 based on the commissioner of revenue’s total assessment of real estate value.

Schaffer told FauquierNow that the additional $189,916 in revenue would have helped offset the rising costs for the town due to inflation, as well as the potential loss of the grocery tax which the Virginia legislature is currently debating cutting. The elimination of the grocery tax would cost the town an additional $265,475 in tax revenue.

“The proposed rate partially filled that anticipated loss,” Schaffer said. “Council can adjust to offset in other areas, but staff views this as an anticipated recurring loss revenue that will need to be made up each year, not just fiscal ’23 … Once we cover fiscal ’23, it is not a new loss each year, but when considering a five-year outlook, it is a source of revenue that will likely not exist that did prior so there is a need to plan for that loss.”

The town manager’s office noted that lowering the property tax rate not only affects the town’s fiscal 2023 budget but it also reduces Warrenton’s current operating budget by approximately $95,000.

Schaffer said she doesn’t know how the reduced property tax rate will affect this year or next year’s budget in terms of services and compensation. That will be up to the Council, which has a work session scheduled for May 18 at 7 p.m. to discuss the budget.

Semple told FauquierNow he does not think that equalizing the property tax rate means there will be a reduction in funding for services. He noted it could impact the general fund but added that the council needs to “make sure that the budget aligns with the needs of the citizens.”

“I’m just assuming under the $35 million budget, we’ll be able to come up with some money somewhere,” he said. “There are always some places that you will be able to cut back … if you took all the departments and chopped them up, there might be some [money] here and some [money] there.”

In addition to fighting the rising cost of inflation and reduction in state subsidies, the increased taxes Schaffer proposed in her budget would allow the town to fund new capital improvement projects, hire more full-time positions and give raises to current employees.

Among the most pressing capital improvements are water and sewer projects, which would be funded through an increase in the town’s water and sewer rates.

If Schaffer’s proposed budget is adopted, customers’ water and sewer bills would increase slightly. For customers with minimum water usage (2,000 gallons per month), their bills would increase $1.39 per month. The median water usage in Warrenton is 3,000 gallons per month, which would increase customer’s bills by $3.08 per month, according to the town manager’s office.

All together, there are 42 proposed items the council and staff are funding that have been deferred the last few years due to the pandemic.

Schaffer noted in her proposal that the town experienced a 13 percent turnover rate in 2021, with the hardest hit departments being police (23 percent), public utilities (17 percent) and public works (36 percent).

The top reasons listed for leaving were compensation, retirement and better employment opportunities elsewhere.

To address this issue, Schaffer proposed increasing employee salaries 5-7 percent, with 5 percent guaranteed “to address the cost of living increases for all employees” and an additional 2 percent based on employees’ “work performance.”

Schaffer proposed funding five new employee positions, including a new police sergeant and public utilities junior engineer position, as well as moving the town clerk’s position from part-time to full-time.

Mayor Carter Nevill told FauquierNow he was disappointed the Council decided to lower the property tax rate to 4 cents for a few reasons. First, he said it makes the town more reliant on other forms of revenue, including meals tax (currently the town’s largest source of revenue, totaling 21%), which makes the town more susceptible to recession.

“When you look at revenue streams, there should be some degree of balancing … if you’re reliant upon the business sector to carry the load of your revenue. In cases of economic downturn, you’re leaving yourself vulnerable,” he said.

Second, Nevill noted that failing to raise tax revenue jeopardizes the town’s ability to provide quality services to residents.

“The [tax increases] are being painted as exorbitant … but I pay $190 in property taxes for my house, annually,” Nevill said. “From the town I get trash picked up twice a week … for every dollar I probably get two and a half dollars and services in return. It’s wonderful and we should be celebrating that.”

Nevill said he is skeptical of council members who voted to lower the property tax rate and are advocating for possibly preventing other tax increases but still back pay raises and increased funding for infrastructure projects.

“ … that money’s got to come out of somewhere,” Nevill said. “The challenge is, you have council members who have expectations and want shiny new things … but how do we increase our recreation parks and recreational opportunities … all of that, when you’re contracting the budget?”

Nevill, who is only allowed a vote when there is a tie between council members, said he would have voted against the rate reduction if he had the option.

During the morning work session Tuesday, Town Council members indicated they were also considering possibly preventing other tax increases Schaffer proposed, including increasing the meals tax from 4 to 6 percent and cigarette tax from $0.20 to $0.40 per pack. Combined, both tax increases would generate nearly half a million dollars in revenue for the town.

Alec Burnett, president of the Fauquier Chamber of Commerce, said Tuesday he wanted the Council to consider revising the proposed meals tax increase because of the burden it could place on business owners.

However, by equalizing the property tax rate, Nevill said, the Council may inadvertently place a heavier burden on business owners, including restaurants, if they decide to raise the meals tax.

“I would still stand in favor of a meals tax of 6% … I think it’s going to be an interesting question that the council will have to answer as … they have shown willingness to ease the burden of taxes on the residents,” Nevill said. “Will they do the same for businesses?”

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