Minutes 03/28/2000 - Laserfiche WebLink

Home Browse Search

March 28, 2000 The growth in our real estate tax base is a significant factor in the City's economic and fiscal health, especially given that approximately 55% of the City's real estate is tax- exempt. I am pleased to report that our tax base does continue to grow, as confirmed by the City's Real Estate Assessor, William Froehlich, in a recent report to City Council. The reassessment of existing property rose 1.78% and new construction for FY2000 is expected to reach $40 million. This combination of growth results in an increase of assessed value of real estate of over $90 million which equates to a 3% increase over the value at July 1, 1999. The increased assessment will translate into approximately $1.2 million in new revenues for FY2001 at the current tax rate of $1.36 per $100 of assessed value. The projected increase, though lower than the prior year increase of 3.6%, indicates a continuation of the growth trend we began to experience in 1995, [Figure 5] but may also indicate that growth is beginning to slow. As this major revenue source has grown, we have been better able to meet our needs, but we must be careful not to assume that these recent growth rates will continue. 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 Figure 5: Real Estate Assessed Value (in 000's) 95 96 97 98 99 O0 projected In their efforts to slow the pace of economic growth, the Federal Reserve Open Market Committee (FOMC) recently raised interest rates 25 basis points. This adjustment continues a trend of rate hikes that have resulted in the highest Fed funds rate since June 1995. In its press release announcing the rate hike, the FOMC noted: "Economic conditions and considerations addressed by the Committee are essentially the same as when the Committee met in February. The Committee remains concerned that increases in demand will continue to exceed the growth in potential supply, which could foster inflationary imbalances that would undermine the economy's record economic expansion." The City of Portsmouth has clearly benefited from this record economic expansion. However, just as directly as we have benefited, we could also be harmed should a downturn in the economy occur. The Commonwealth has also benefited from the strong economy and for that reason, the City is projecting a 9% increase operating revenues from the State. The majority of this increase is from continued increased funding for law enforcement, constitutional officers and sales tax to be returned to the School system. The funding for Law Enforcement increased by 9.6% to $6.4 million and will be utilized to address public safety equipment backlog that is discussed later in this message. Despite growth in real estate taxes and state revenues, it is necessary to increase certain fees for services where the current revenue stream is not sufficient to meet the increasing costs associated with the services. First, allow me to clearly state that no real estate tax increase is recommended. This budget does propose a $1 increase in the monthly rates for both refuse collection and E-911. Increases in the water and sewer rates are also recommended.