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Fredericksburg City Beat

This blog includes news about City Hall, city schools and other 22401 news.

Pamela Gould reports on City Hall. You can reach her at 540-735-1972 or pgould@freelancestar.com. Robyn Sidersky reports on city schools. You can reach her at 540-374-5413 or rsidersky@freelancestar.com.

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Demystifying the “equalized tax rate”

Several city residents have contacted the paper asking why the city calls the 50-cent real estate tax rate it advertised, “equalized” when it would leave some of them with heaping tax increases. As tomorrow’s real estate tax rate hearing nears, here are some things you should know about what is sometimes called the "equalized tax rate."

1. It doesn’t mean equalized for you. I talked this morning with a man who lives near Normandy Village. His property value has gone from around $161,000 to $324,000. A 50-cent tax rate would raise his tax bill by 13 percent. Meanwhile, for a house in Idlewild that was put on the tax rolls at $375,400, then reassessed at $447,800, the 50-cent rate would mean a 33-percent lower tax bill. Depending on where you fall on the spectrum of property value increases, the 50-cent rate could raise or lower your taxes. But for the city, the advertised rate must produce “no more than 101 percent of the previous year’s real property tax levies,” per state law. How do the budget gurus figure that out? Well…

2. The state dictates the math. Click here for the Virginia code section that tells localities how to calculate the tax rate they must advertise (but can then raise) when a reassessment leads to higher property values. The formula is pretty simple. Localities get there by “multiplying the previous year’s total real property tax levies by 101 percent and dividing the product by the forthcoming tax year’s total real property assessed value.” Also, the code says that new value due to new construction is not to be included in the above calculation. To translate that to Fredericksburg math (get out your calculators):

(FY07 property tax levies * 1.01)/(total property value after assessment – new construction) = tax rate

(19,945,546*1.01) / (4,089,795,100 – 128,536,300) = .005 Multiply by 100, since the rate is applied to every $100 of value, and you get: 50.8 cents

3. The state doesn’t call it “equalized.” You usually hear it called the equalized rate during the local budget process, but the state actually tells localities to label it the “lowered tax rate” or the “lowered rate necessary to offset increased assessment.”

4. What really matters is the rate the City Council adopts. That looks to be somewhere in the 53-cent range right now, although the council has not yet shown any sign of reaching a consensus on the budget. They’ll have another go at it tomorrow at 5:30 p.m. After that, you get your chance to tell them what real estate tax rate you think they should adopt. The hearing starts at 7 p.m. in City Council chambers.

In the meantime, we’re working on a wider story about the different rates of increase that homeowners in various parts of the city have seen. If you’d like to share your reassessment concerns with me, please contact me at ebattle@freelancestar.com or 540/374-5413.

Permalink: http://news.fredericksburg.com/citybeat/2007/05/14/demystifying-the-equalized-tax-rate/

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