Front Royal to advertise small real estate tax increase

FRONT ROYAL – Higher home values in town could put barely a drop of extra money into Front Royal’s coffers.

But state rules on setting local tax rates kick in anyway because the latest assessment shows property values in town increased by 3 percent on average. Virginia code requires the town to notify property owners of any change in values over 1 percent and identify it as a tax increase.

Under the real estate tax rate of 13 cents per $100 of assessed value, Front Royal could expect to see an increase in revenue of $22,730, Town Manager Steve Burke told Town Council this week.

The town would need to set the tax rate at 12.75 cents per $100 in order to equalize the levy. Council decided to have staff advertise the proposed tax rate for fiscal 2016 at 13 cents per $100 with the disclosure that the levy equates to an increase of 0.25 cents per $100.

“[T]hat would be the first time, I think, in the history of the town that we’ve ever had a not-whole-penny tax rate [change],” Burke said.

Council can adopt a rate equal to or lower than the levy advertised for the public hearing. Council cannot adopt a rate that exceeds the advertised levy without holding another public hearing.

Mayor Timothy Darr pointed out that $22,730 makes up a fraction of the town’s $36 million budget. Darr said he didn’t see any reason to not advertise the 13-cent levy for the purpose of the public hearing.

But some council members voiced concern at Tuesday’s meeting about advertising a rate that technically would, if adopted, equate to a tax increase, albeit a small one. Councilman Daryl Funk said he understood Darr’s point. Funk explained that he would rather see council reach a consensus on a tax rate at the work session than have to amend a motion at the regular meeting to lower the levy from the one advertised.

Council members John Connolly and Bébhinn Egger said they felt more comfortable advertising the 12.75-cent tax rate.

“I think it’s absurd that if we keep the same rate that we’re advertising a tax increase,” Egger said. “I would prefer to lower the rate so that we have the same income taxes, if it equalizes it.”

The town doesn’t realize all the tax that the levy is expected to bring in part because some people don’t pay their bills, Burke explained.

“I can understand the desire to do the equalization,” Burke said. “From a staff perspective … in real money, we will probably lose money if we equalize [the rate].”

The town isn’t running a deficit, the town manager said.

“Again, we’re not talking about a lot of money,” Burke added. “We typically will receive a majority of what we levy but we don’t realize everything.”

Councilman Bret Hrbek voiced support for advertising the 13-cent levy.

“Well, we’re literally talking about less than nickel-and-diming [taxpayers],” Hrbek said.

Darr reminded council that the assessment appeals process continues for some property owners contesting the new values. Should larger appraisals be decreased, then the town risks losing revenue if council reduces the tax rate, Darr said.

The town is expected to hold the required public hearing on the tax rate on March 9.

Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or abridges@nvdaily.com