Proposed county budget contains tax increase

Slashes business personal property rate

Taxes will increase by 3.74 percent if the Fluvanna County Board of Supervisors adopts the fiscal year 2018 (FY18) budget presented by County Administrator Steve Nichols at a Wednesday (Feb. 1) work session.

Currently the equalized real estate tax rate is 88.2 cents per $100 valuation. Nichols’ proposed budget sets the tax rate at 91.5 cents. But if he had funded all the budget requests that came his way, the tax rate would have ballooned to 99 cents, he said.

Nichols’ proposed budget is $73.2 million, compared to last year’s budget of $80 million.

The difference is due to a nearly $9 million reduction in spending on capital projects, Nichols said. “Difficult decisions [were] made to recommend only a few essential capital items for funding this year,” said Nichols. Most projects were pushed off to later years. 

The reduction is partially offset by recommended funding increases. The E911 radio project has a $1.1 million increase in debt service coming due in FY18. Nichols is also recommending a $477,000 increase in public safety spending, a $176,000 increase in health and welfare for social services and CSA, which provides services to at-risk youth, and a $300,000 increase in funding for the public schools.

Nichols noted that the schools have not yet formally presented their budget request to supervisors.

“There are no pockets of fat in department budgets…because we’ve stripped them down as lean as we could possibly get them, unless we start cutting programs and personnel,” Nichols said.

Fluvanna’s recent population levels have remained flat. “We have a county that isn’t growing like it used to,” Nichols said. “As the Lake Monticello build-out was happening over the last 20 years we went up [in population] catastrophically…but we’ve gone up about 400 [people] since the 2010 census.”

As county administrator, Nichols prepares a recommended budget for supervisors to consider at the beginning of budget season in February.

Supervisors will spend the next two months listening to presentations from constitutional officers, agencies and nonprofits as they all attempt to persuade the Board to fund their programs. They will also meet numerous times to discuss and debate the specifics of the budget.

Supervisors are scheduled to pass the final budget and tax rates on April 12.

Business personal property tax

The proposed budget includes a dramatic slash in the business personal property tax rate. In the past Fluvanna has not distinguished between personal property and business personal property when assessing taxes. The current rate is $4.35 per $100 valuation.

That number puts Fluvanna above its neighbors – most notably Louisa County, which has a business personal property tax rate of $1.90 per $100 valuation – and may dissuade potential businesses from locating in Fluvanna.

Supervisors have recently expressed interest in lowering the business personal property tax rate so as to appear more competitive. Nichols’ budget slashes that rate, and the rate for public utility personal property tax, to $1.89 per $100 valuation. “It would make us the lowest in the region,” Nichols said.

He also recommended cutting the machinery and tools tax rate from $2 per $100 valuation to $1.89.

Supervisors have repeatedly expressed their desire to lower the business personal property tax rate in a revenue-neutral way. Nichols has suggested updating the way business personal property tax is assessed to bring it more in line with how Fluvanna’s neighbors assess the tax. If certain changes are made, the rate slash would not result in lower revenue collection.

But though supervisors set tax rates, they do not determine the mechanics of how business personal property tax is assessed. That job falls to Commissioner of Revenue Mel Sheridan, who as of that meeting had not conveyed a desire to change how he assesses taxes.

The way it stands right now, therefore, the proposed tax slash results in a tax cut for businesses to the tune of about $200,000. The situation has created tension.

In recent years supervisors have tried to build more diversity into the tax base. They hope to increase the money received through business taxes so that they may depend less upon taxes paid by homeowners.

After the meeting Supervisor Tony O’Brien said, “I don’t think it’s a good idea to put even less diversity into the tax base by giving businesses a tax break.”

Sheridan did not return requests for comment on whether he is planning to change the way business personal property is assessed.