Hampton city manager looking to reduce tax burden on residents in proposed budget

The Hampton City Council is considering proposals to reduce the tax burden on residents.

The city manager’s proposed budget for the upcoming fiscal year recommends reducing the real estate tax rate by 6 cents — from $1.24 per $100 to $1.18 — and eliminating the local portion of the tax on groceries.

Hampton City Manager Mary Bunting said at Wednesday’s City Council work session she wanted to lower the real estate tax rate “as much as practical.”

The real estate tax is the city’s largest source of revenue in Bunting’s proposed $582 million budget. She said home values have risen by more than 16% with the increased value of existing properties and new development within the city.

The real estate rate reduction, elimination of the 1% local tax on groceries and previously approved 25% reduction on the value of automobiles for tax purposes would total $24.6 million in tax relief for Hampton residents.

The tax relief package exceeds the $20.1 million growth in city operations and budget increases.

“In other words, we have chosen to put greater weight into tax relief than your spending,” Bunting told the City Council.

The city’s real estate tax rate has been consistent since it was raised to $1.24 in fiscal year 2014.

Gov.r Glenn Youngkin has proposed eliminating the state’s 2.5% tax on groceries, which would reduce Hampton’s budget by $3.3 million because municipalities receive 1% of the tax.

With the state’s budget unfinished, Bunting built the city’s budget without the tax. She said if the state decides to reimburse the city, the council will decide later how to use the funds. The council could consider additional reductions to the real estate tax rate or using the money to invest in the city.

Bunting said while she is often reluctant when the state eliminates a local source of revenue, she can see how citizens will benefit, especially with inflation affecting food prices.

“Eliminating this tax will benefit everyone in our community, particularly those with lower incomes,” Bunting said.

Bunting’s proposed budget does not include any increase in fees including those for stormwater, wastewater and trash.

In her letter with the proposed budget package, Bunting wrote that the city had anticipated increasing the stormwater fee, but was able to use money from the American Rescue Plan Act and the Virginia Community Flood Preparedness Fund to pay the additional cost associated with the city’s flood prevention projects.

The City Council is slated to vote on the budgetMay 11. The council will discuss the proposal at its work sessions and public hearings will be held before the vote.

Jessica Nolte, 757-912-1675, jnolte@dailypress.com