On a 4-1 vote Monday night, the Pulaski County Board of Supervisors set the county’s new real estate tax levy at 74 cents per $100 dollars of assessed value.
The action came following a presentation by County Administrator Jonathan Sweet on the results of the recent real estate reassessment and his reasoning for lowering the tax rate only to 74 cents and not lower; and a public hearing in which former Massie District Supervisor and Board Chairman Andy McCready questioned the need for setting the tax levy anywhere above 69 cents per $100.
In his presentation, Sweet explained that reassessment of real estate values in the county showed values 12 percent higher than previous values.
Previous real estate value in the county totaled $2.785 billion. Following reassessment – which occurs every six years in the county – that same real estate is valued at $3.120 billion – an increase of over $335 million or 12 percent.
Sweet said considering the inflation rate for the past six years rising by 2 percent per year, there is concern over where the economy and inflation will go over the next six years.
With that in mind, he told supervisors, “We probably should enjoy the full 12 percent,” Sweet said, meaning keeping the tax rate at 77 cents.
However, he said the board of supervisors had worked diligently along with the Economic Development Authority in the past on economic development, job growth and capital investment.
Because of that, Sweet said staff is recommending to the supervisors that they set a rate that would generate 8 percent more tax revenue for the county instead of the full 12 percent.
“We can continue to work hard on economic development, expenditures and be pragmatic, resourceful and creative for the next six years,” he said.
Taking 8 percent of the increased property value would set the tax rate at 75 cents, Sweet said.
However, he said out of concern for citizens and businesses and how the 75-cent rate would impact them – along with concerns about the future and making sure the county has enough resources for law enforcement, schools, libraries, parks and recreation, ambulances, fire departments, the judicial system and more – “staff recommends a levy lower than what was advertised to 74 cents per $100.”
Sweet said by lowering the tax levy, some citizens’ taxes would go down, but unfortunately some will go up.
The county’s previous tax rate was 77 cents per $100 of assessed value following approval of the referendum to build Pulaski County Middle School, which boosted the rate from 64 cents to 77 cents.
With property values increased with the reassessment, a tax rate of 69 cents would have resulted in the county realizing the same amount of tax revenue as before. Any rate higher than 69 cents will result in the county receiving more real estate tax revenue – basically a tax increase.
McCready argued against the need for an increase.
He told supervisors he had been looking over the as-of-yet unfinished county budget for next year with all its revenue projections.
“You have gains in Public Service Authority of $100,000. You have a gain in personal property taxes of $713,000. Gain in Machinery and Tools of $184,000. These are all factors that have come about because of this board’s and previous boards’ investments,” McCready noted.
“There’s an estimated gain of $1 million in sales tax which is typically earmarked to schools. The budget is showing a slight decrease in meals tax – not sure I’m on board with that – but I’m going to take it as it is.
“Net effect is this board is looking at $1.8 million in tax revenue increases without an increase in the tax levy. That’s $1.8 million more for the coffers of Pulaski County without a tax increase.
“That’s great news. That means Pulaski County has done so much better than many of our neighbors during COVID,” he said.
McCready continued that he also notes that “our friends from the state have decided to do a little better. The state is sending $60,000 in additional funds to the Commonwealth’s Attorney, $125,000 more to the Sheriff’s Office, more money to the Commissioner of the Revenue, Treasurer, Clerk of Court. Everybody’s getting a little more money from the state.
“So, it is kind of confusing to me why we need to raise real estate taxes,” McCready said.
He continued that while he knows the budget for next year isn’t anywhere close to being final, he sees it is proposed that the county put $1.5 million more in reserves.
“During 2020 did this board vote to tap into our reserves or were they left untouched,” McCready asked. “I know what it (reserves) was when I left – I left with a healthy reserve and I hope that you guys haven’t touched it. A reserve of $1.5 million equals 6 cents on real estate.
“So, I’m left with a lot of questions about the budget. I realize not everything is in yet about the budget, but it looks like great news everywhere I look except for the real estate levy. It just seems like we’re hitting the panic button,” he charged.
“Have you dipped into the reserve and not told the public? I don’t think that has happened. I think ya’ll have maintained a sound budget. And most of you on this board promised ‘I will not raise your taxes.’ Anything over 69 cents is raising taxes,” McCready said, adding that raising the tax rate from 69 cents to 77 cents raises about $2 million. “And you have $1.8 million in growth!”
“In summary I ask you the board not to adopt a tax hike. Settle on 69 cents,” McCready implored.
Sweet responded that the increases McCready spoke of for Constitutional Offices is all Compensation Board funding and does not go to operations.
“The board is looking to provide 5 percent adjustments for those folks. It appears there is a need to increase funding to cover things such as increases in fuel for school buses, police cars, trash trucks, etc.
“There is another side of the story on the expense side on why we would need additional revenues,” Sweet said.
He added, “This board has never tapped into reserves, in fact it has grown reserves.”
He said the “one-time investment into reserves” that McCready mentioned is a “deposit to help us with the inflation that we face.”
“That’s never been done before. There’s never been a line item for a strategic investment into reserves to basically position the board to be able to have a rainy-day fund.
“Some will say, ‘well your reserve is healthy.’ But we have Moody’s and S&P Global bond ratings which basically say our fund balance is adequate for our bond rating. But if we experience a rainy day, we have no buffer and that means we’re digging into our reserve in a dangerous and irresponsible way.
“So, to prepare for the future – to in essence have a buffer around our buffer – to be able to seize upon strategic economic development opportunities such as Volvo’s investment in real estate at the Hardie Farm and allow for a $400 million investment to take place – resources were required, and those resources actually came from our strategic reserve – a working capital reserve.
“We’ve been talking during the budget work sessions about the efforts we have taken to guard ourselves against the unknown. That laundry list of potential financial threats that face not only Pulaski County but Virginia and the nation and the world.
“We are definitely guilty of being fiscally responsible, for being prudent, for looking ahead and making strategic investments that no one has made before and the reassessment and the natural growth of valuation has allowed us to do that,” Sweet said.
Draper Supervisor Dirk Compton spoke next.
“We’re losing deputies left and right. It takes $69,000 to train one up and they’re going to Christiansburg or somewhere like that. To me it’s worse than defunding the police because not only are we not creating police officers here, but we’re giving $69,000 not to have them.
“Those are the things we talk about in the budget meetings that scare me. And the schools too. They’re losing people to Montgomery County and other places like that. I want to be on firm footing to make decisions.
“I know Sheriff Worrell, before it’s over, will have to have $440,000 for body cameras for our officers. I know it looks like we’re just squirreling away money, but we’re planning for the next six years and I don’t want to fall short.”
“There is effectively nearly a half-mission dollars strategically slated for our law enforcement in our FY22 budget,” Sweet said, adding, “Our budget isn’t keeping up with inflation.
“It’s a much more comprehensive robust conversation looking at both sides (revenue and expenses) to understand exactly why. We’re going to have to manage that.”
Ingles Supervisor Laura Walters offered the motion to set the tax rate at 74 cents, with Compton adding the second.
“I agree with Jonathan (Sweet) and Dirk (Compton), we have to keep up with not only inflation, but for our law enforcement and first responders we have to provide them with the tools they need to be safe and to be effective.”
The new levy passed on a 4-1 vote with Vice Chairman Charlie Bopp voting a resounding, “No!”
By MIKE WILLIAMS, The Patriot