by Jon Baliles

Today Richmond’s Mayor and City Council will debate (and probably vote) on whether or not to maintain the real estate tax rate at $1.20 per $100 of assessed value or lower it four cents to offer some relief to property owners and renters. The Mayor and some on Council (probably a majority) say that the city has too many needs and cutting the rate four cents will create a $17 million shortfall in the budget that will have to be adjusted midyear; some services will have to be cut back or people laid off, etc.

The city’s general fund budget grew by $50 million since last year and by $268 million since 2021. While needs have also increased (as they do every year), for a decade there has been no attempt to rein in spending or make sure the money that is spent is effective and accomplishing its mission. In that time, assessments and taxes have gone through the roof and are pricing people out of their homes, making homes and apartments more unaffordable for many. The city is not offering relief nor does it seem to be planning on offering any.

In addition, a presentation given to City Council a year ago in October 2024 outlined a dire financial situation while the Stoney administration argued against a tax rate reduction. Council was told the FY2026 budget would face a $27 million deficit and by 2030, it would rise to $149 million. That presentation showed spending would increase by an average of almost 6% per year but revenue will grow by an average of about 3%. You don’t need to be a math genius to figure out there is a problem there, but nothing was mentioned about making sure spending did not exceed revenue.

In April of this year during the budget discussions, the deficit suddenly and without warning, shot up to $319 million by 2030 — more than double what was presented just six months earlier. At that April meeting, then Interim Chief Administrative Officer (CAO) Sabrina Joy-Hogg and Budget Director Meghan Brown both admitted to Council, “we’re just living above our means.”

That’s it. They didn’t say, “We’re just living above our means and need to cut or rein in spending,” or “We’re just living above our means and here are new sources of revenue,” or a combination of both. We were simply told there is a $319 million deficit headed our way and we need to keep the tax rate the same. If rising assessments don’t fill the hole, a tax increase will.

Real estate taxes account for 57% of the general fund. If those rising deficit projections were not just a scare tactic last year to get Council to keep the $1.20 rate, then the coming shortfalls that can’t be filled by rising assessments will have to be filled by rising tax rates. While some people in Richmond wouldn’t mind a hefty increase in the real estate tax rate, it would only increase the exodus of people no longer able to afford the cost of living in a city that was not too long ago very affordable compared to many other localities without half the cool factor of Richmond.

The tax rate debate occurs almost every year and since 2007, the rate has stayed at $1.20, even through the Great Recession when city revenues plummeted (and the city survived). Rising assessments (and in some cases, skyrocketing ones) in the last decade have raised everyone’s tax bills (as well as insurance premiums) and rent while generating more revenue for the city that it has ever had before.

• In 2015, the city’s general fund collected $221.7 million from real estate taxes.
• In 2020, the general fund collected $301.1 million from real estate taxes.
• In 2024, the general fund collected $442 million from real estate taxes.
• The adopted FY2026 budget estimates real estate taxes will generate $502 million this year.

So, real estate taxes alone are generating $200 million more than they did just five years ago and almost $300 million more than they did ten years ago.

Last year on the campaign trail, Avula was up front that lowering the tax rate in his first few years was going to be difficult. At a September 2024 forum he said, a rate reduction would be “really difficult” in the first few years and said he would focus on getting the city’s “financial house in order” before pushing for a lower tax rate, according to CBS6.

“I do think it needs to happen eventually,” he said. “This is an issue of competition with our counties. We’re at $1.20. Henrico’s at 80 cents. And we’re going to continue to lose people who have the choice to go over to the county.”

At an October 2024 forum, he said housing affordability was the biggest crisis facing the city “and many of my low-income neighbors getting pushed out of the neighborhood” because of rising rental rates and assessments. “It’s actually the reason that I decided to run for mayor.”

However, last month the Mayor began regurgitating the same lines Stoney used for years to offer no real relief and said a rate cut would only help rich homeowners and would not help renters at all. He said that a million dollar house would receive only a $400 reduction while creating a $17 million hole in the $1.05 billion general fund budget. The average homeowner of a $426,000 house would save $170 per year, an amount that CAO Odie Donald used his crystal ball and told Council that amount would not ease people’s financial issues.

Avula also made the argument that “We know that we have deferred maintenance investments and infrastructure and that we want to continue investing in customer service and making sure that the residents of the city get what they need when they need it,” and added, “this is not the time to reduce our revenues.”

It’s worth pointing out that while assessments and tax bills and rents and insurance have been going up and the budget was flush over the last decade, the city was apparently spending it somewhere else because we know it was NOT going towards deferred maintenance, infrastructure or customer service as we all learned when the taps went dry on January 6th and witnessed the meals tax fiasco, billing nightmares, and social services backlogs in recent years.

Avula maintains that tax relief should be more targeted “that actually helps that population is what we should be working to craft, as opposed to something that goes across the board and doesn’t actually help our most vulnerable residents the most.” As we noted yesterday, those targeted programs to help the most vulnerable were announced by Mayor Stoney last year, and approved by Council, called RVA Stay. However, no information or updates about the program were discussed at the meeting last month. If the program had been successful helping hundreds of people who need assistance in the year since it was announced, it is more than likely the administration would have touted those numbers and success while advocating maintaining the tax rate, but they did not. Perhaps there will be an update on that Monday, as well as answers to why the city has almost $100 million in delinquent taxes outstanding and stopped collecting them four years ago.

As for the Mayor’s claim a rate reduction would not help renters, 5th District Councilwoman Stephanie Lynch, set the record straight: “Landlords … are under extreme pressure and the weight of having to raise rent because their tax bills are going up and up and up and up. And they pass that on to the renters. To say otherwise is bananas.”

As an example, a 12-unit apartment building in the Museum District was assessed at $1.5 million in 2021 but has risen to $2.1 million in 2026. That tax bill went from $18,000 five years ago to $25,200 today. That is a tax increase of $7,200 in five years, which means a significant rent increase for all 12 units (let’s face it, no landlord is that generous). Just in the last two years, that building has seen the assessment climb $200,000 which means taxes went up $2,400 (which is conveniently divisible by 12, or $200 more per unit).

In Manchester, a 70-unit apartment building assessed at $8.6 million in 2021 is now assessed at $14 million. That’s a tax increase from $103,000 owed five years ago to $168,000 today, which is an increase of $929 per unit. The same effect applies to duplexes and those renting houses. To say rising assessments don’t affect renters is willful blindness and “bananas.”

Meanwhile, those advocating for a rate cut are led by 8th District Councilwoman Reva Trammell, who is joined by Lynch and 4th District Councilwoman Sarah Abubaker. Trammell has been advocating a cut for years and said to the Mayor that not offering relief in the face of ever-increasing assessments was hurting middle and lower-income households as well as renters.

Abubaker noted in an OpEd piece in the Times-Dispatch in September that this discussion and debate are about giving “taxpayers back what is rightfully theirs, or whether we continue to bend the law to suit agendas and policies while reaching deeper into residents’ pockets.”

“The question is not whether City Hall can dream up ways to spend more — it always can. The question is whether government has the right to treat the over-collection of revenue as its own by right. To suggest that government is better equipped than residents to determine how their money should be used is not only wrong, it’s dismissive of the very public that government was designed to serve.”

She notes that the state’s “rollback law” prevents localities from using rising assessments as automatic new revenue and protects residents against automatic tax increases. The rate would automatically be lowered to $1.146 to remain revenue-neutral compared to last year, unless we adopt a different rate by ordinance. Trammell’s proposed $1.16 rate would still mean slightly higher taxes and more revenue for the city, but less than with the $1.20 rate.

Abubaker points out that lowering the rate does not mean catastrophe (though you will hear that word or ones like it from the administration many times on Monday night). She points out that Arlington County has a similar population on half as much land as Richmond and maintains a $1.04 tax rate and funds more than twice the amount ($647 million) to its school system than Richmond does ($285 million); likewise the city of Chesapeake has a slightly larger population (250,000) with a smaller overall budget and a tax rate of $1.01.

Lynch also pointed out last month that not offering any relief while other counties around us have been cutting rates with out cutting services sends the wrong message to Richmonders: “When people are making a choice about whether or not to stay in the city or go, the middle-class and the lower-income folks are saying paying these tax rates is like lighting money on fire that I don’t have,” she said. “We really need to have some tough conversations: Are we living within our means?” (The answer to that is no, as the Interim-CAO and Budget Director both somehow admitted publicly in April.)

Abubaker also pulls no punches that the rate relief argument quickly changed when the $1.16 rate was brought up: “During the budget process, the administration justified [$18.6 million] across-the-board raises as “equitable,” even going so far as to have department heads making over $200,000 testify to the necessity of the increases. But now that an across-the-board tax cut is on the table, suddenly the definition of equity has shifted. The same leaders claim a rate reduction would disproportionately benefit the wealthy.”

Those in favor of keeping the $1.20 rate on Council include Cynthia Newbille (7th District), Ellen Robertson (6th), Katherine Jordan (2nd), and Andrew Breton (1st). All of them pretty much mirror the Mayor’s arguments about the $17 million hole to fill, cutting services, it would not help renters, and these are uncertain economic times (as if the city is the only one dealing with that dilemma).

The two unknown votes include 3rd District Councilwoman Kenya Gibson, who did not take a position at the last meeting and asked for more detailed data in order “to make an informed decision.” 9th District Councilwoman Nicole Jones, likewise, has not stated a position but did point out, “It just seems like it’s a circle that we are going around, that there’s really no real relief.”

Speaking of real relief (or any), after a decade of rising assessments, rents, and insurance premiums, telling residents “The impact of your reduction to (homeowners) is one that might be considered nominal” as the CAO said last month, is borderline insulting. Everyone has come to a point where you have to sacrifice and prioritize certain things, go without something or do more with less, and maybe do things that are painful in the short run but pay off in the long run. We’ve all been there. Every resident has different circumstances, and they determine what is impactful on their lives, not the second floor of City Hall.

If the Mayor is serious about turning City Hall around, he will make this a team effort, and a team shares sacrifice for a common goal. Zip code and council district are not always determinative of who benefits and who does not. Samuel Parker had a story last week about Cyndi Anderson who lives in the near West End and was shocked when she saw her assessment increase by $151,000:

Anderson said she believes in paying her taxes. She wants to “pay her fair share” and be a contributing member in her community.

“But right now I feel like I’m paying more than my fair share,” she said. “I live in the First District, and everyone thinks we’re wealthy. OK, well I just finished cancer treatments in February, and I haven’t been able to work. Then, on Sept. 1, I had a heart attack. So I have to pace myself.”

“There are issues with each individual taxpayer,” Anderson said. “You can’t just say, ‘You don’t need this. You’re wealthy.’”

A 5×5 reader wrote in after a story about the city not making an effort to collect back taxes (with the outstanding amount owed the city close to $100 million) and said she had not received a personal property tax bill in three years. She had to call and follow up with the Finance Department repeatedly to straighten out the discrepancy and pay the balance. She followed up over and over, not the city. Like Anderson, she wants to be a good resident, and wrote:

“After reading today’s article, I realized I am one of the suckers who pays my real estate tax on time, even going out of my way to ensure they receive my personal property taxes, only to realize the city doesn’t even care if you pay or not. I’ll keep paying on time because that’s my duty, but it’s time our city start their bare minimum duties.”

Doug Wilder used to say (and still does) that there is plenty of money in local government, it just depends on how and where you want to spend it (paraphrasing). It is easy to waste it and get little or nothing in return as recent years have proven, or you can commit to doing it right and build trust and participation by making residents part of the team instead of telling them to ride the bench in silence until called upon for more money.

There has never been as much revenue coming into the city as there has been the last five years. The needs are great too, but even a small amount of relief for residents would be a symbol and a pledge that City Hall is actually serious about changing the way things are done as a team instead of spending every dime on things that may or may not be working and/or putting climbing the political ladder first. Offering a token of good faith, even a small one, while pledging and working so that services actually do improve, billing won’t be a nightmare, the water will flow from the tap, and no one will chase bad deals and big, shiny projects would all go a long way to begin creating an atmosphere and environment of trust, goodwill and buy-in.

It would not be easy, to be sure; but it would show a seriousness that the needed overhaul and necessary improvements are a team effort between those that set and execute policy and those of us who fund it. Otherwise, we are headed for another decade of more of the same, and will be well on our way to becoming a city as unattractive and unaffordable as Northern Virginia and soon be seen as just an extension of it.