Leesburg looks to lower home tax bills

Going against the staff-recommended 18.75-cent tax rate, Leesburg Town Council directed Town Manager John Wells to prepare a budget proposal for the next fiscal year that would keep the current property tax rate of 18 cents per $100 dollar of assessed value.

“I think the whole council is very mindful that town residents are being double taxed [by the county and town],” said Leesburg Mayor Kristen Umstattd, who is running for re-election this May.

Umstattd said taxes are the No. 1 issue voiced by residents to whom she's talked during her campaign.

Town staff had called its 18.75-cent rate recommendation a compromise between the existing rate and the equaled rate of 19.234 cents, which would have generated in the next fiscal year the same property tax revenues projected in the fiscal year 2008 budget, about $12.17 million.

“It was a tax rate that provided a reduced rate for the average taxpayer,” Wells said of the 18.75-cent rate.

Because of a slumping housing market, residential assessment values are down, so there is less value to tax. At the 18.75-cent rate, most Leesburg residents would still have paid less in property taxes than last year under the 18-cent rate.

But a majority of council members who had promoted the 18-cent rate during a non-binding vote April 8 said keeping the current 18-cent rate – further reducing the average property tax bill -- would have a two-fold benefit. It would help overtaxed homeowners and businesses.

The decision to keep the tax rate down is in part a reaction to rising county real estate taxes, which are projected to go up an average of $308. The supervisors voted April 1 to approve a $1.14 property tax rate, up from the current rate of 96 cents.

“Keeping the tax rate down when everybody's tax bills are going up ... and making the town more efficient is in everyone's best interests,” Councilman Kevin Wright said. “Holding the tax rate steady actually helps businesses.”

While residential property values have declined, most commercial real estate values are up in Leesburg. Increasing the tax rate to 18.75 cents would increase most businesses' property tax bills, said Mayor Kristen Umstattd.

Leesburg Downtown Improvement Association co-founder Peter Burnett agreed that keeping taxes lower would help businesses. Increases in taxes, Burnett said, are passed on to commercial renters or customers, which could hurt business in Leesburg.

The downside of maintaining the 18-cent tax rate is that not all projects in the town's current budget can be fully funded, council members said.

The difference between the 18-cent rate and the 18.75-cent rate is $566,159 in tax revenues for general fund projects.

Town staff has proposed a total of $717,409 in reductions to meet the 18-cent rate, about $150,000 more than what was required. Town finance staffers said the additional cuts were made to prepare for any possible additional state level funding cuts.

One reduction includes reducing funding in the proposed budget for the Leesburg Volunteer Fire Department.

“The town has been very generous. We've grown [funding] about 25 percent each year,” said Wright. “All we are saying is you aren't getting as much as you asked for. We're spending taxpayer money on something that's not our responsibility.”

Under the 18.75-cent tax rate proposal, the volunteer fire department would have received $350,000. Under the budget adjustments made to meet the council's proposed rate, the amount would decrease to about $318,000.

Other adjustments include reducing Thomas Balch Library funds by about $21,000, reducing economic development funding by $34,000 and funding $13,200 of the requested $20,000 for the town's First Friday events.

Shifting responsibility to the county was a theme of the April 8 budget discussion, at which council members said the town was footing the bill for many of the county's obligations. This includes social service funding.

“This is another example that shows that the county thinks we're a bunch of pushovers,” said Councilman Kenneth “Ken” Reid, who was the lone council member suggesting reducing the rate to 17.5 cents or lower. Reid suggested making town staff cuts to pay for the reduction.

Most council members opposed the measure but agreed that many social service groups the town is now funding are the county's responsibility.

The town has gradually reduced funding for nonprofits over the last few years, said Umstattd.

“Social service organizations are seeing the last year of [town] funding,” said Umstattd.

Council members will review the proposed budget cuts April 21 and are scheduled to vote on the tax rate April 22.

Contact the reporter at hhobbs@timespapers.com