Calling Montgomery County’s Bluff on a 21-Cent Increase in Property Taxes

Rising property tax ratesI’m admittedly behind on this, but I’m certain many of you are not.  By now you’ve probably read that Montgomery County supervisors are considering an increase of $.21 in the real estate tax rate.

First things first … it’s not going to happen.

Real estate taxes in Montgomery County are used, as they are in many counties across the country, to fund local government departments and initiatives, some medical services, and local education.  I’m sure there’s an exhaustive list somewhere, but that’s a general idea.  To be fair, Montgomery County enjoys a real estate tax rate that’s, admittedly, a bit on the low side.  The current tax in the county is $.75 per $100 of value, so for a home that’s not located in Blacksburg or Christiansburg and valued at $200000, the property tax would be around $1500 per year, or $125 per month.  Put that same home in Christiansburg, where the property tax is $.1126 per $100 of value, and the property tax jumps to $1725 per year.  In Blacksburg ($.22 per $100 of value) it climbs to $1940 per year.

Area  Tax Bill at Current Rate Tax Bill at Proposed Rate
Montgomery County $1500 annually $1920 annually
Christiansburg $1725 annually $2145 annually
Blacksburg $1940 annually $2360 annually

Say what you want about elected officials, but they know how to get our attention.  And I doubt any of them are going to authorize a property tax increase of $.21 – the impact within a community would have profound and long-lasting impact.  Consider:

  • Rents rise.  As an investor, if the taxes on my properties rises, I would be inclined to raise my rents to cover the additional costs.  Unless incomes rise proportionately, an imbalance between taxes and income exists.
  • Demand decreases.  If property taxes are too high in a particular area, buyer demand decreases.  If buyer demand decreases, so do property values.  And decreased property values lead to a host of
  • Mom and Pop retire.  The short-term effect on locally-owned businesses means an even greater financial burden for – to use a favorite political term – Main Street.  And when those businesses close up, it creates an even greater void in the tax base (and it can’t be argued that national chains will move into that space – First & Main has disproven that).

We need additional tax revenue from the property tax, sure; we’ve got one high school with a collapsed gym, and aging facilities at other schools – it’s hard to argue that point.  But it’s highly unlikely we’ll see a tax hike such as the one proposed.  As quoted in the article (bolding mine):

Supervisor Gary Creed said he wanted to see a proposal that held department and agency budgets flat except for a 10-cent real estate tax rate increase to cover school construction debt — an increase already higher than any in memory. But he suggested going ahead and advertising a 21-cent increase. “Maybe we could get some attention,” he said.

Montgomery County VA Tax Info

This quote, in my opinion, is the key to what’s likely what’s going to happen – they want our attention and input.  Budgets are tight, even more so than in recent years due in large part to the situation with the schools, and every department wants more funding.  I guarantee you that – every department/group/organization that receives funding from Montgomery County property taxes wants even more – just look at the agenda.  Two of the three delegations on the agenda are there to discuss funding.  Everyone needs it, everyone wants more of it, and most departments are being asked to do more with less of it.  Unless Mark Zuckerberg decides to make a generous gift to avoid a massive tax bill, it’s inevitable we’ll see an increase in our property taxes.  But I’ll bet it’ll be between 9-10%.
They want our input, so give it to them.  Wherever you stand on the issue of increased real estate taxes, the Board of Supervisors wants your opinion.  Their next meeting is Monday, February 13, and you can read the agenda here.  The meeting will start at 7pm, and will be held at the Government Center, 755 Roanoke Street, in Christiansburg.

Related Posts

10 comments

  1. Sarah says:

    Here’s a link to the DOE “composite index” page that shows changes in the index values over time – if you’re willing to dig deep into the data. MCPS did change but it’s not clear what the difference is in dollar amount. My understanding is that MCPS is getting less money from the state but I can’t find verification other than above composite index change. http://www.doe.virginia.gov/school_finance/budget/compositeindex_local_abilitypay/index.shtml

  2. Jeremy says:

    That’s true, Sarah – I’d forgotten about the VRS contribution. Do you have a link to the other revision, so that people could review?

  3. Sarah says:

    Interesting discussion. There are two additional pressures on the MCPS budget this year that I have been suprised not to hear more about. The first is the increased contribution to the VRS system proposed by Governor McDonnell (http://www.finance.virginia.gov/News/viewRelease.cfm?id=1050) and the second is the revision of the state formula for distributing funds to local school systems. MCPS will be receiving less from the state than in previous years.

  4. Jeremy says:

    Thanks for the comment, John, and I’m sorry for my delay. You make valid points – community members will always say not to raise taxes. Sure, that’s a no-brainer. And these are most definitely complex issues.

    I’m the son of a career teacher. My mom has devoted her entire working career to education, and she’s incredibly good at it – still teaching, in fact, and in large part simply because she loves it. She’s been recognized by her local industry groups, by the state Board of Education, and by national organizations. She’s even written a book, the subject of which deals with her expertise in one particular area of education. I’m biased,

      but she’s good

    . She’s never made a lot of money as a teacher in the public school system, and now as a teacher at a private school, she makes even less. I know teachers don’t get paid enough, they probably never have, and they certainly don’t in Montgomery County. School replacement aside, the thing I keep hearing people ask is why we haven’t been able to forecast for these shortfalls? I’m no economist and I won’t try to play one, but surely MontCo schools has the ability to factor in projected inflation/population growth/increasing salaries into their forecast models. Why, then, are we continually hearing about budget shortfalls in the schools every year?

    Your suggestion re: lodging and food is a good one. Increase taxes on other goods, as well. Heck, restaurants and bars are smoke free now, raise taxes on cigarettes (you think we have a fight on our hands now, watch that one!). I still contend that what the Board of Supervisors wants most is community input and involvement. And by announcing a $.21 cent increase in the tax rate, they’ve gotten it. We’ll see an increase, I know that, yet maybe we’ll see people get a little more involved and interested, as well. That’s a good thing, I think.

    Thanks for chiming in. Good stuff.

  5. John Walker says:

    This is the model PEOPLE wanted. They told Richmond to stop raising taxes and the state level and instead pass revenue demands down to the localities. So, now localities must raise revenue and people are perplexed by this? It’s really nothing more than a reallocation of funding.

    Regarding mismanagement, I don’t think that’s necessarily true. After several years without a payraise, the school board included a raise, which places them still below the national average. These budget demands are not simply to provide teachers and staff more raises.

    Montgomery County continues to grow — hence budgets natually increase with population and other cost increases (gas or example) at an approximate rate of 3% per year. A flat budget, actually shrinks then 3% annually. Combine that with a broken school replacement and planned construction and you’ll looking at a $6MM hole.

    It’s too simplistic to say “no more funding.” These are complex issues. Perhaps and strategy is to look at other taxes besides real esates, including lodging and prepared food.

    T

  6. Sally says:

    I have a really hard time supporting a tax hike due to the situation with public schools when it seems as though there is severe mismanagement and poor decision making present. Even if the budgets are kept flat per Supervisor Gary Creed, there would still be “a 10-cent real estate tax rate increase to cover school construction debt.” Initial poor construction of Blacksburg High School that caused structural failure should not be a burden taxpayers should have to bear. And Montgomery County and Blacksburg Town Council representatives shouldn’t have been so easy to accept that burden and push the cost to taxpayers. What about subrogration against the general contractor?

    Furthermore, facilities do not age overnight. Better facilities management and inspections should have occurred to plan and budget for asset preservation and capital improvements.

    It is no surprise that our public schools are in full-use and enrollment will not start to decline for several more years. This is common knowledge based upon demographic information for Gen Y – again this information was not hidden from County & Town officials. We’ve known for 2 decades of the potential enrollment burden that would be placed on public schools and facilities. Yet, it does not seem as though budgets planned for it. So, again, why should I pay for their poor decision making, lack of planning, and mismanagement?

    ps. I completely agree with Queen of Pith’s comments, too.

  7. Jeremy says:

    I’ve wondered this as well, Queen of Pith. The lottery funnels money into the schools. Taxes funnel money into the schools. The state funnels money into the schools. Are we just mismanaging the schools this badly?

  8. Jeremy says:

    Eric, you didn’t mean $75 MILLION, did you?

  9. What I believe we need is an audit of our school system. It seems we are constantly being asked to raise money using fundraisers for schools. Now MCPS wants more money to build two new schools and give teacher raises. Funny, it’s always money for teachers’ raises and not for administration or other stuff.

    I love my child’s school. Her teachers are amazing. But sometimes I wonder where all the money goes since it doesn’t seem to go toward education.

  10. Eric says:

    Almost all government entities are being challenged by budgets. From the federal (who hasn’t passed a budget for 3 years) to state to the local governments, revenues are not keeping up with expenditures. Two or three years ago the federal government used “Stimulus” money to temporarily support local schools and first responders. The hope was the economy would be better two years later (today), more people working meaning more tax payers paying into the system. Therefore the stimulus money was just a bandaid until the economy revenues could support itself. The economy as a whole has not performed as hoped, (that’s a whole different discussion) so the tax income has not shown up the provide for the budget needs of the governmental agencies that spend it. So now, the Federal dollars are less to the State for education, for health care (Medicaid) and other programs. But the State still has to spend the money to fund those requirements. Richmond chose to sure up our promise to teachers for their retiement by making demands to properly fund VRS. We made a promise to teachers and state employees, we should keep it. If VRS is not sound, someone down the road will not get the retirement income they were promised creating further negative pressures on the economy or future generations will have to pay a greater cost through even more taxes to fix that shortfall that is coming. That’s just one example putting a burden on our current County budget issues. While in the process of building a new courthouse, an unexpected $75,0000,0000 expense to build a new Blacksburg HS showed up. That challenges a budget too. My one caveaot to a higher local tax rate, would be this. If the tax revenues are generated from the local poplulation, let the decisions as to how those dollars are spent stay on a local level. The problem is when taxes are collected here, then sent to DC or Richmond, and DC or Richmond distribute those dollars as they see fit. Often those dollars are spent where we may not locally agree with. Demands are also put on us locally to support and fund programs that we can’t becasue DC and Richmond has our money, not Montgomery County. I’m sort of okay with collecting the proper amount of taxes to fund our local needs as long as our local community gets to decide how to spend those dollars and not Richmond or DC telling us how to spend them. Higher local taxes should be offset by lowering our responsibilities to federal and state taxes.

    just my two cents.

Leave A Comment