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Virginia Beach budget proposal keeps real estate rate flat, adds fees and taxes elsewhere

Budget manager Kevin Chatellier, right, gives a presentation on the city's budget proposal March 25, 2025 in Virginia Beach.
Cianna Morales
/
WHRO News
Budget manager Kevin Chatellier, right, gives a presentation on the city's budget proposal March 25, 2025 in Virginia Beach.

The spending plan increases stormwater fees, taxes on meals and pleasure boats to fund services and projects deemed essential to the city. Council will vote on it in May.

Virginia Beach this week proposed a $2.78 billion budget for the fiscal year beginning in June. It’s roughly a 5% increase over last year’s $2.6 billion budget.

The spending plan “keeps the lights on,” said Kevin Chatellier, director of budget and management services, by paying for essentials. It also adds some — and puts off a few — major projects and infrastructure goals.

The proposal keeps the real estate tax rate at 97 cents per $100 of assessed value, but ups stormwater fees, taxes on meals and recreational boats fees. These increases and others help close the gap created by inflation and plateauing tax revenues.

Very few program expansions occurred without a dedicated revenue source or corresponding reduction elsewhere in the budget, City Manager Patrick Duhaney wrote in a letter to the city council.

Council will consider the plan over the next several weeks and vote on May 13.

Here are more details on how the budget proposal could impact your wallet.

City council members seated at a conference table listen to a budget presentation on March 25, 2025 in Virginia Beach.
Cianna Morales
/
WHRO News
City council members listen to a budget presentation on March 25, 2025 in Virginia Beach.

Real estate tax and inflation 

Although the real estate tax rate remains unchanged, rising assessments mean property owners will pay more. According to a report from the real estate assessor's office, home and property values rose by 5.6% overall last year.

The city is projected to collect $819 million in revenue from homeowners, who comprise 80% of the tax base. Last year, the city collected $781 million.

The revenue is a linchpin in balancing the budget. It’s the city’s most significant source, making up 30% of revenue and over half of the general fund’s income.

Inflation also shapes the budget. Chatellier said a dollar doesn’t stretch as far as it used to. The city’s budget in 2018 was about $1.9 billion. While it’s grown yearly since, the budget adjusted for inflation has hovered around $2 billion for the last eight years.

“When controlled for inflation, you can see that the city’s actually gained very little real buying power,” he said Tuesday.

Despite tightening funds, city leaders have resisted raising taxes, citing rising assessments. Last year, the council knocked 2 cents off the total rate, bringing it to 97 cents, but still collected more revenue than the previous year.

The budget proposed other avenues for generating money for particular projects or purposes.

Meal taxes and major projects 

A new Major Projects fund will pay for priority capital projects.

The Capital Improvement Projects fund, or CIP, is a $5.4 billion plan for facilities and infrastructure improvements over the next six years. At a January retreat, Chatellier said there are an additional $1.1 billion in requests, completing projects in which prices have gone up and adding projects considered priorities.

The Major Projects fund will establish a sustainable source for the city's most important projects, such as a new Law Enforcement Training Academy and roadway improvements.

It’s budgeted to have $21 million, partially funded by a meals tax increase from 5.5% to 6%. Other monies will be redirected from the Open Space fund and the Town Center tax increment financing (TIF) fund.

To reduce the overall CIP budget, some roadway projects, such as with Ferrell Parkway, have been removed, and others, such as Burton Station Roadway, have been delayed.

Compassionate billing and new jobs 

A new policy to bill for emergency medical services will pay for 33½ additional EMS jobs.

Virginia Beach previously didn’t charge for using a city ambulance. Last year, the city voted to introduce a compassionate billing structure to make up for shortfalls in fundraising. The city termed it “compassionate” because it said bills would only go to insurance companies. Co-pays and out-of-pocket costs could be waived for residents, although the city has not released a final policy for the program yet.

EMS bills are expected to generate $14.8 million next year, which will pay for operating expenses, volunteer rescue squads and other EMS needs.

The budget proposal adds about 140 full-time positions, roughly 45 for the school division and 95 for the city.

That includes 30 firefighter recruits, positions that were requested in previous years and not filled. The city eliminated 15 unfilled positions.

Budget pay raises total $34 million for city employees and $26 million for school employees.

All city employees will see a 3% raise, with sworn public safety officers receiving an additional increase averaging 10% to bring their pay within range of the market average. School employees will receive between 1% to 3% raises.

Stormwater rates, boat tax going up

Stormwater fees help build and maintain systems that minimize flooding and they’re increasing by 8.9 cents to 58.2 cents per day. Property owners are billed on “equivalent residential units,” or ERUs, and the hike works out to around $3 each month for the stormwater bill for homeowners.

Commercial property owners may pay more.

In 2021, the council froze the 49.3-cent daily rate through 2028. However, in December, council considered increasing the rate to maintain services, add jobs, equipment and a Stormwater Operations Center to manage the flood protection program.

Chatellier said that other tax hikes are designed to "right-size" fees to match services.

Pleasure boats essentially don’t have a property tax. The current tax rate established in 2001 is one-millionth of a cent per $100 of assessed value. You'd have to have a $100 million boat before you paid a dollar on taxes.

The city proposes $1.50 per $100 for recreational boats longer than 18 feet. Chatellier said larger boats take up more water, leading to more dredging on canals and inlets for the city.

Revenue is estimated at $4.3 million and will support coastal capital improvement projects.

City council to weigh the proposal 

Over the next several weeks, council members will hear from department heads about their budget items. Residents can weigh in at the Virginia Beach Convention Center on April 16 or at City Hall on April 22.

“There’s going to be time to go through this line item by line item and come up with some recommendations,” Councilmember Stacy Cummings said. His initial reaction, though, is that the budget is too big.

"Inflation has also hit the budget of citizens pretty hard," he said, saying the growth of the city's spending plan has outpaced what people earn. "People aren't getting bumps in their income to offset that and that's just a true reduction in their standard of living to pay these taxes and to fund this increase in government spending."

Councilmember David Hutcheson compared the budget to making a sausage: "There's a lot of parts that go into it."

"We have to take care of everybody. That's our job," he said. "Our roads, our public safety, our city employees. You got to pay for all of that, and none of the projects are going down. Nothing's getting cheaper."

Cianna Morales covers Virginia Beach and general assignments. Previously, she worked as a journalist at The Virginian-Pilot and the Columbia Missourian. She holds a MA in journalism from the University of Missouri.

Reach Cianna at cianna.morales@whro.org.

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