Newport News budget includes first real estate tax reduction since 2008

In a time of high real estate assessments and inflation, several members of the Newport News City Council wanted to find a way to provide additional tax relief to residents.

The city manager’s recommended budget included a real estate tax rate reduction of 2 cents per hundred dollars of assessed value, from $1.22 to $1.20 — the first reduction since 2008. Some council members, however, worried the reduction wasn’t large enough.

But the real estate tax is the city’s largest source of revenue, and after reviewing the programs that would have needed to be cut to lower the tax rate, the council decided to stick with the 2-cent reduction. The approved real estate tax rate reduction will equate to about $4 million in savings for residential property owners and businesses.

“I had not planned to vote for this,” Council member Patricia Woodbury said before the vote. “In my opinion, we should have lowered the rate much more than just 2 cents.”

She said she had several discussions with the city manager and the budget director, and praised both while saying she would trust their guidance on the budget.

“Having let my feelings and the comments that I have received be known, it would serve no purpose (to vote against the budget),” Woodbury said.

In an informal work session before the meeting, the city manager and budget director said that further reducing the real estate tax rate could have jeopardized progress on some of the city’s major projects, including the $50 million new Huntington Middle School, slated to open in fall 2024. It also could have meant pulling back on services such as the city’s planned expansion of a program that sends mental health professionals as first responders on eligible 911 crisis calls.

The assessed real estate values in the city have increased across all property types by an average of 14.44%. Each of the eight property types has a different rate, but all have increased.

Lisa Cipriano, the city’s budget director, repeatedly stressed that this kind of double-digit assessment change is an anomaly and is not expected to continue.

“The bubble will not last. It will burst,” Cipriano said. “We will have declining revenue from real estate values sometime in the future — probably sooner than we realize.”

It took about 10 years for the city’s real estate assessment rates to rebound after the last recession in 2008, she said.

“We certainly recognize that seeing a double-digit assessment change is very surprising for everyone, but it’s also what the market is showing — not only for the city of Newport News but for our other surrounding localities as well,” Cipriano said.

The city’s approved $1.04 billion operating budget includes a 5% general wage increase for city employees and funding to help the city work on raising its minimum wage to $15 an hour in coming years.

The budget includes funding for 31 new jobs including five positions in the human services department and eight in parks and recreation. The city will add three police officers — one in each precinct — to focus on reducing violence in high-crime neighborhoods by getting rid of blight. The budget also provides money for a coordinator to help women and minority-owned small businesses to compete for city contracts, as requested by the city’s economic development authority.

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