Posted: July 30, 2010

By Philip Newswanger

philip.newswanger@insidebiz.com

Virginia Beach residents, at least those who own property, can sleep easier knowing the tax bills on their homes have increased at a lower rate than those of other cities.

Would you want to live in Portsmouth where the average real estate tax bill for a resident rose 7.3 percent from fiscal years 2004 to 2011?

That's the highest increase of seven cities analyzed, according to a report by the city of Virginia Beach.

Or what about Norfolk, where the tax bill on property rose 5.9 percent, the second most expensive city?

In Virginia Beach and Chesapeake, the tax bills on property rose 3.7 and 4 percent, respectively.

The change in tax rates was highlighted in a letter to Virginia Beach Mayor William Sessoms and City Council members July 16.

Virginia Beach had the lowest increase, at 3.7 percent, among the seven cities in the report - a fact that City Manager Jim Spore pointed out in his letter.

Other cities included Norfolk, Portsmouth, Chesapeake, Hampton, Newport News and Suffolk.

The changes in tax bills on properties in Hampton and Newport News were increases of 5.2 percent and 5.4 percent, respectively.

The average increase for all of the cities was 5.3 percent, and 5.6 percent if Virginia Beach was excluded from the calculation.

"These data illustrate that the property tax burden, on average, has been consistently modest over long time periods," Spore said in his letter.

The report coincides with the end of the city's fiscal year and the beginning of a new fiscal year.

This is also a very special year for members of the Virginia Beach political establishment. Six City Council seats and seven School Board seats are up for election on Nov. 2.

Because of the pervasive anti-tax sentiment in this country, it would follow that cities with higher tax bills would have a change in leadership.

But such changes aren't common in the region among localities.

An analysis of tax rates shows the tax rates and the average change in tax bills on property relative to other localities, but other disparities might account for a higher or lower change in tax bills and for the difference in tax rates,

Catheryn R. Whitesell, director of Management Services, explains in more detail.

"We believe it is perfectly reasonable to show the tax rates and the rates of change in regional cities," Whitesell said.

"As with any comparison, there is a story behind the numbers, there is an explanation, but that doesn't make the comparison unfair. It just means each city has a unique set of circumstances."

Differences in the poverty rate, population, per capita income and higher rental properties comparing Norfolk to Virginia Beach "can explain why the base level of taxes is higher in some cities, but may not explain why the annual rate of change is higher," Whitesell explained.

"So while some of the reasons you cited may explain why Norfolk's tax rates are higher, these may not explain why their annual increases are higher."

Whitesell said there are factors that favor Norfolk.

"They have a higher commercial property tax base, which generates more revenue but does not generate a significant demand for services," Whitesell said. "Their city is more geographically compact, which can help limit the cost of delivering services."

"They also have a slightly lower dependency ratio [population under 18 and over 65]," Whitesell said.

"On the expenditure side, our city provides more comprehensive recreation centers and mental health/mental retardation/ substance abuse services."

Whitesell said that, in summary, comparisons among cities are valid, but they are not the only means of comparison, and there are many factors that explain the differences. nib