Minutes 03/20/2007 - Laserfiche WebLink

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March 20. 2007 The benefits are not only unequal; the backend costs of each system are different. For instance, this budget recommends $1.1 million in new funds for the old, closed system to keep it financial sound, whereas the VRS system requires less than $500,000 for more than six times the number of employees. The point of these comments is to suggest there are deeper facts to be understood about the City's compensation system, and how its costs are distributed. On balance, we have attempted to find a middle ground with our recommendations but I do want Council and the public to realize any funding enlarges or creates new gaps. Until the City completely works its way out of the closed system City Council and citizen taxpayers face the costly and continual dilemma. Tax and Other Fiscal Adiustments Real estate tax This section of our budget is also challenging. On the one hand, City Council's Vision Statement states the goal that Portsmouth is to have one of the region's lowest tax rates by 2025, it is also recognized that today the city is behind in many basic services and facilities and also has the region's highest percent of tax exempt properties. Nevertheless, I am recommending a 16 cent reduction over the next three budget years as follows: 8 cent reduction in FY08, 5 cent reduction in FY09 and 3 cent reduction in FY10. These reductions will eventually bring the tax rate from the current $1.36 to $1.20. For FY08, the recommendation is a reduction from $1.36 to $1.28. One penny on the tax rate generates approximately $626,000 in this proposed budget. If City Council adopts this proposed budget with an 8-cent tax rate reduction, the average resident will experience a $17 per month increase in their tax bill or $203 per year. Boat tax Part of the recommendations to reduce the real estate tax rate in this year's proposed budget include efforts to diversify and improve the equity of the city's taxes in other areas. This budget specifically proposes that one cent on the real estate tax rate can be reduced if the City Council approves a boat tax rate of one dollar ($1.00) per one hundred dollars assessed value. This recommendation follows discussions with the Municipal Finance Commission and several City Council budget work sessions. There are numerous services the City provides to local marinas and boat owners. Two specific examples relate to fire and police services. In 2006, the Fire Department responded to 57 calls at estimated cost of $84,000. In 2005 and 2006, the Police Department answered 616 calls to marinas and boats. HR Median Home Values It is the combination of the tax rate and the assessment that creates the tax bill. While our community has experienced relatively high increases in assessments in the past two years, the City Assessor estimates our city is at 87 -percent of market value. Other cities, such as nearby Chesapeake and Hampton achieve assessments close to the state constitutional requirement of 100 percent. Assessments are another area where our city has lagged or deferred its catch-up. Despite Portsmouth's high nominal rate and low actual assessment, the city's total tax bills continue to trail our neighbor communities. In January, The Virginian-Pilot published a table showing the median value of homes in the five South Hampton Roads cities. The table shows that the owner of a median value home in Portsmouth actually is paying less in real estate taxes than the owner of median homes in the other four Hampton Roads cities.