Real estate tax rate and utility rates set to increase
RADFORD – The overestimation of revenues used to balance the city’s budget for multiple years in a row has contributed to a significant financial issue for Radford.
In a presentation to city council members and the public on Mar. 31, Interim City Manager Craig Meadows highlighted just how far off the city’s projected revenues were versus the actual revenues collected for fiscal years 2023, 2024 and 2025, the city’s current budget year that ends this June 30. The difference was millions of dollars each year.
“For this year’s budget, we budgeted $8,960,000 in real estate taxes but based on current collections that number is going to be closer to $7.6 million,” said Meadows. “Similarly, last year the budget was estimated at $8.8 million [in real estate taxes]; collections were $7.9 million. So, there’s a concern there.”
“In fiscal year ’23, the estimate was $8.8 million and the actual was $7.5 million,” Meadows continued. “So, you can see in just that line item, there is a million-plus difference in each of those years.”
And that’s just the estimates on real estate taxes. The city budgets for those years also overestimated revenues for sales tax, charges for rescue services, and reimbursements from the state and federal governments for health and welfare programs.
“It looks like the revenues are going to be almost $3.9 million short of what was projected in [this year’s] budget,” said Meadows. “Last, year, they were $3.3 million short for what was projected. The previous year, it was $2.4 million. I can’t answer why some of these are so far off, but they are.”
On real estate, Meadows had this to say. “When you take the real estate assessed valued, times your tax rate, it’s not $8.9 million.”
Meadows presented draft budget numbers to the city council for the upcoming budget year with a general fund that is $2,899,930 less than the current general fund, an 8.1 percent decrease. He said that budget will be balanced using the following assumptions: an increase in the real estate tax rate from 69-cents to 79-cents-per-$100 in a property’s value; a decrease in funding to outside agencies and the school system; the elimination of all capital purchases except where required; and a 90-day freeze on filling any vacant employee positions in the city’s work force. Meadows said he and city department heads are also in meetings to identify further cuts that can be made.
Vice Mayor Sean Gillespie said the draft numbers are a good start, but do not address the city’s nearly $4 million revenue anticipation note (RAN) that needs to be re-paid June 30, or the payments to AEP and the schools that the city is in arrears.
“I think this helps us get to a presentable budget moving forward, but it doesn’t address the elephant in the room of where we are,” said Gillespie. “Where we are is – if you take into account we average being three AEP payments behind, of $1.5 million each, that’s $4.5 million. Three school payments of $485,000, that’s $1.45 million and a $4 million RAN – and we have an average in the bank of $1.5 to $2.5 million in cash at any one time – we’re between $6-9 million upside down to catch up.”
“I think we have to do more,” he continued. “We have to go back and look at more cuts.”
Council member Jessie Foster said she agreed the city must find more ways to cut the budget, and said she feels the city must also take a closer look at the tax rates.
“I don’t think we can come in last on all of these [rates] and expect to maintain our city status,” she said.
The real estate tax rates of surrounding localities range from 74-cents at the lowest (Pulaski County) to $1.10 (the Town of Pulaski). One cent of real estate tax revenue equals $120,000 in revenue for the city.
Council members agreed by consensus to advertise the following tax and utility rates. The rates being advertised mean that is the most they can be increased but does not necessarily mean each will be increased to the maximum advertised rate:
- Real estate: up to 82-cents (current rate is 69-cents)
- Personal property: up to $2.55 (current rate is $2.44)
- Meals tax: up to 6.5 percent (current rate is 5.5 percent)
- Hotel occupancy: up to 8.5 percent (current rate is 8 percent)
- Cigarette tax: 41-cents per pack (current rate is 40-cents per pack)
- Water: $4 increase on 4,000 gallons
- Sewer: $4 increase on 4,000 gallons
- Trash: $3 monthly increase
The city council will hold a public hearing April 14 at 6 p.m. on the proposed budget and tax/utility rates at 6 p.m. A first reading (vote) on the rates and budget is scheduled for the same night with a second reading scheduled for April 21.
