Pleasure boat tax, increasing meals tax on Virginia Beach's proposed $2.8 billion budget

Yahoo

26-03-2025

VIRGINIA BEACH — Pleasure boat owners in Virginia Beach could soon face a new tax to offset some of the city's dredging costs, and dinner out at a local restaurant could also cost slightly more to help pay for major projects in the city.
The potential tax increases are part of Virginia Beach's fiscal year 2025-26 proposed budget presented to the City Council on Tuesday. The city's total proposed operating budget is $2.8 billion, a 4.7% increase over the previous year. The Capital Improvement Program budget, a six-year plan, is $5.6 billion.
Education makes up 44% of the operating budget; the second largest segment is public safety at 13.6%, followed by planning, public works and public utilities, Budget Director Kevin Chatellier said at the meeting.
Two public comment sessions will be held in April before the council votes on the final budget on May 13.
'The ball is in our court,' said Mayor Bobby Dyer. 'The big challenge that we have is finding that balance that satisfies many needs and constituents.'
The real estate tax rate would remain at 97 cents per $100 of assessed value, the lowest of Hampton Roads' seven largest cities. However home assessments have increased by an average of 5.6%. Each penny of the real estate tax generates roughly $8.2 million.
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Public safety workers and lowest classified employees including custodians will receive a pay increase based on a recent market salary survey. The budget would also allow for the step increase plan for public safety workers. The remainder of the city workforce would receive a 3% raise.
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Employee pay increases will cost $34 million and come from the General Fund. The city plans to add 95 full time positions, including 30 firefighter recruits at a cost of $2.6 million. Public schools would add 44 positions including security personnel and English as a second language assistants.
The operating budget anticipates a total of 7,738 full-time city employees and 10,669 full-time school employees.
Employee contribution to health insurance would not increase, however the city will up its contribution by 3%. It's likely in the future that employees will have to contribute more, Chatellier said.
Some of the cost for new city positions would be offset by fees, including $14 million in projected revenue from compassionate billing for ambulance services, which could fund 33 Emergency Medical Services personnel and help with equipment replacement. Virginia Beach is the only city in Hampton Roads that currently doesn't bill for ambulance service.
Fees from speed enforcement cameras in school zones, to be implemented this year, will help fund six new police personnel positions.
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A pleasure boat tax of $1.50 per $100 of assessed value for vessels 18 feet or longer would be enacted to help offset city dredging costs.
'The larger the boat, the more likely the boat draws more water and is need of a deeper channel,' Chatellier said.
Other Hampton Roads' cities have a boat tax or charge a licensing fee. Projected revenue from the tax would be $4.3 million.
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The city's current tax on meals at restaurants is 5.5%. The budget calls for increasing that tax by 0.5%, bringing the city tax up to 6%. It's projected to generate about $9.2 million for a new projects fund.
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The proposed operating budget includes a partial redirection of money from dedicated funds to help finance the CIP. Three funds were identified as having extra capacity as a result of an increase in revenue and the retirement of debt obligations, Chatellier said.
A new Major Projects Fund would be established with a projected revenue of $21 million, which would come from a portion of the meals tax, a percentage of the Town Center TIF and .3 cents of of the real estate tax (redirected from the Agricultural Reserve Program).
The money would be used to help fund a $16 million gap in the Virginia Beach Trail project due to an increase in construction costs. It would also help pay for the design of a new Law Enforcement Training Academy, modernization of the courthouse and Indian River Road safety improvements.
Several road projects would be deleted or delayed to free up borrowing capacity.
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Stormwater bills would also increase by about $32 a year to help pay for rising costs and maintenance of new stormwater equipment being installed as part of the city's massive flood protection program. Several years ago, the City Council agreed to freeze stormwater rates until fiscal year 2028-29.
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Community grants would not change in the new budget year. The city's Parks After Dark programs at Williams Farm, Level Green and Green Run would be renewed for another year at a cost of $600,000.
The budget calls for moving $1 million from the Central Business District-South Tax Increment Finance fund, also known as the Town Center TIF, to the Town Center Special Service District to help cover the growing costs of parking garage maintenance and entertainment in the heart of Town Center. Money would be set aside in the operating budgets for additional cameras at the aquarium and in the city's public parks.
Property owners in the TIF area don't pay additional taxes (unless they live in the Special Service District boundaries), but a portion of their real estate tax is dedicated to paying down public debt on development in Town Center.
Dipping into the TIF revenue is not expected to jeopardize future projects in Town Center, City Manager Patrick Duhaney said.
'Even with redirection… it will allow capacity for council to do a $80 million or $90 million project,' he said.
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Veterans tax relief, mandated by the state, is increasing by $8.4 million to $36 million, which equates to 4.4 cents of the real estate tax rate. Elderly and disabled tax relief is projected to be $15.6 million, which is equal to 1.9 cents of the real estate tax rate. Combined, the relief is $52 million or 6.3 cents on the tax rate.
Stacy Parker, 757-222-5125, [e-mail]