Budget pressures force tax increase

Budget pressures will force another tax increase, the Fluvanna County Board of Supervisors learned Wednesday (Feb. 7) afternoon.

While presenting his fiscal year 2019 (FY19) budget, County Administrator Steve Nichols recommended raising the real estate tax to 93.9 cents per $100 valuation from the current 90.7 cents. This constitutes a 3.5 percent tax increase.

But Nichols’ budget contains no additional money for the school system – an issue supervisors will need to address.

For at least the past two budget cycles, Nichols’ proposed budgets have not included additional money for the schools. This is partially due to the fact that the school system does not formally request money until later in the budget process. Superintendent Chuck Winkler will present his budget request to supervisors Feb. 21.

Almost the entire proposed tax increase comes from the cost of two new projects: the Zion Crossroads water and sewer system, which requires an additional $580,000 debt service payment in FY19, and a $250,000 price tag for operating and maintaining the new E911 radio system.

The uptick of one penny on the real estate tax rate generates about $293,000. The new costs of the two projects therefore account for almost three cents on the tax rate. Nichols has proposed a 3.2-cent increase.

Nichols’ proposed budget totals about $75.5 million. He suggested holding the personal property tax rate steady at $4.35 per $100 valuation, but recommended lowering the business personal property tax rate to $2.40 per $100 valuation from its current $2.90. The machinery and tools tax rate would remain at $1.90 per $100 valuation.

Supervisors have been lowering the business personal property tax in an effort to make Fluvanna more appealing to businesses. Nichols indicated that he would recommend lowering the tax again next year.

“There is no one, absolutely no one in…the Central Virginia region that pays less for business taxes than Fluvanna County businesses,” Nichols said. “No one…not even close.”

The county must pay a whopping $9.8 million in debt service in FY19.

“There’s never an easy budget year,” Nichols told supervisors, “but I thought this was going to be relatively easy because I thought our revenues would be more robust at this time. They’re not. But this budget is, in relation to the last one, a much tighter and harder budget than last year as far as the flexibility to do some adjustments, unless you see a significant change in revenue or unless you change rates... You’re not going to get down to [a tax rate of] 89.9 [cents] without substantial personnel changes because that’s the only place where there’s big dollars.”

Commissioner of Revenue Mel Sheridan told the Fluvanna Review that the average home value in Fluvanna is about $163,000. “This includes all stick-built structures, modular homes and doublewides,” he said. “It excludes singlewides, which are traditionally called trailers.”

A resident with a home valued at $163,000 would pay $52 more in real estate taxes for the year if supervisors adopt a rate of 93.9 cents. Those who own a home valued at $200,000 would pay $64 more for the year.

Supervisor Don Weaver pointed out that Fluvanna has the highest real estate tax rate in the region. When he learned Powhatan County had lowered its tax rate, he said, “Hey, maybe we can follow.”

“No sir. Unless you cut people,” said Nichols. “We do not have the revenue sources that the other counties have, so therefore you are going to take the hard hit on the real estate [and] personal property tax rate every year. It’s just the way it is.”

“I don’t think that’s really a good excuse,” Weaver said.

“It’s not an excuse; it’s a fact,” Nichols said.

The county could have a lower real estate tax rate if the Board were willing to implement other taxes, said Supervisor Tony O’Brien. “It isn’t fair to compare our county to other counties and say, ‘We’re the highest,’ when…continually as a Board you decide not to apply other tactics,” he said. “We’re doing that by our design.”

Weaver did not respond.

The county has $6.3 million of unassigned money in its general fund. But Nichols noted that most of the money, while technically unassigned, has been earmarked for projects.

“I think that for the public…unless they pay attention…they could be misled by how [low] our fund balance really is,” O’Brien said. “It’s really a very tight, tight situation.”

“You’ve got $1.7 million in unrestricted fund balance,” said Nichols, referring to the money that has not been earmarked. “That’s not very much.”

Nichols’ proposal forms the backbone of the county’s budget. Over the course of budget season supervisors will make changes, especially to high profile expenses such as school funding and sheriff’s office requests. But the vast majority of the thousands of line items pass from Nichols’ proposed budget into reality.

Supervisors will meet weekly through mid-April to hash out specifics and plan to vote on the budget and associated tax rates April 11.

In other matters:


  • Supervisors voted unanimously to hire Pearson’s Appraisal to take over reassessment services for the county. The county’s current firm, Blue Ridge Mass Appraisal Company, is closing. There are 19,545 parcels in Fluvanna.
  • Treasurer Linda Lenherr will provide supervisors with a monthly treasurer’s report. “You will be getting in your Board package monthly a report that shows all the investment accounts, the balances in them, and any accrued interest that you earned off of them,” said Nichols.
  • Jason Smith, community and economic development director, presented an outline of a plan to promote tourism in the county. Specifics are still in the works but the plan has a defined vision: “Fluvanna County will be recognized as a viable travel and retreat destination that maintains its small town charm, unique heritage and natural beauty.”