York County looks at flat real estate tax rate

It's April 16. York County is looking at a flat tax rate that would allow taxes to rise and fall with home valuations. Today show coming to the Governor's Palace; here's how to get a free ticket.

Photo by Tierra Mallorca on Unsplash

While James City County is in the throes of deciding its real estate tax rate, York County is looking at setting a flat tax rate that will not change, combined with annual re-assessments, sometime after next year.

The big question is what should the new rate be, and how will taxpayers react?

Supervisors have been talking since their October retreat, when staff and consultants discussed setting a 15-year budget of $706 million for capital improvements to handle overdue work on the courthouse, the administration building, and potentially new schools and firehouses.

Staff told the supervisors York has been leaving money on the table by raising and lowering its tax rates as home values changed. They compared the county with Hanover, which implemented a flat rate in 2007, and calculated York County could have built up a $125 million reserve if it had done the same.

Analysis of $125 million in taxes foregone as a result of York County’s tax rate decreases (York County presentation)

The idea is to accumulate cash when home values go up and more tax dollars come in, and dip into reserves if home values drop, taking taxes with them.

James City County’s staff is proposing lowering the county’s tax rate from 83 cents to 80 to partially offset a double-digit increase in home values. Williamsburg lowered its tax rate to 62 cents per $100, one of the lowest in the state, in 2023 and has held it flat but still expects to make $1 million more this year because of increased property values.

Williamsburg does annual reassessments, while James City and York assess their property every two years.

The soonest York could change to an annual assessment schedule would be Jan. 1, 2028 because of all the process changes required, county staff said. They said the real estate assessor’s office would need more help.

In York, PFM Financial Advisors ran through several scenarios with county staff to figure out what the tax rate should be to pay for improvements and came up with tax rates ranging from 88 cents to $1.09 per $100 in assessed home value. York’s current tax rate is 78 cents.

The consultants said raising the tax rate upfront, rather than phasing it in, would accumulate more cash and allow the county to start with a lower rate.

“The problem we run into is that 78 cents is probably not enough to meet the requirements that we’re going to have,” warned York Vice Chair Tom Shepperd.

Shepperd raised an alarm at the last board of supervisors meeting that talking about these changes next year, when county officers are up for election, would be tumultuous.

“During that time how much turmoil do you want to have going on?” Shepperd asked rhetorically. “The more complex the issue, the easier to throw rocks ( at it and the) harder to defend.”

County Chair Douglas R. Holroyd cautioned that the county is still far away from making a decision. It is not part of the discussion for the new county budget starting July 1.

Holroyd said the county discussion picked 2028 “because that’s when the next round of assessments would occur...there’s no rush to it.”

But he said annual assessments would be helpful for taxpayers, who are upset when there are “wild swings” in taxes every other year.

Shepherd said if the county switches to a flat rate “then every year people will see in the budget what their money will buy. (You) don’t see it in a two year budget... they can disagree with how the money is spent but at least they can see where the money is being spent.”