Impact of Tax Relief Programs Presented at City Council Budget Work Session
Council on Tuesday met for the first of weekly work sessions on the budget for next fiscal year.
By Adele Uphaus
MANAGING EDITOR AND CORRESPONDENT
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In Fredericksburg City, the combination of tax assistance programs—such as state-mandated tax relief for disabled veterans and senior citizens and tax-exempt property—adds up to about $16.5 million.
“This is not unique to our community, but it does impact how we have to look at our land book,” said Amanda Six, the city’s finance director, during Tuesday’s City Council work session, which was entirely devoted to the budget.
City Manager Tim Baroody presented his recommended budget last week, and Tuesday was the first of several weekly work sessions scheduled to go through it in more detail.
Baroody’s budget recommends a 4-cent increase on the real estate tax rate, bringing it to $0.84 per $100 of assessed value, to offset greater demand for city services and increased real estate tax exemptions.
As of July 1, 2025, the city’s land book equated to $6.07 billion in taxable revenue, but since then, real estate tax exemptions have increased at a rate higher than new construction, staff said. About 24% of the land book is either tax-exempt, gets some sort of tax relief, or is in deferred tax status, Six said.
Government, religious, and charitable buildings are 100% tax exempt. In the city, these buildings are worth about $1.9 billion in assessed value and their combined tax relief value is about $15.3 million.
The value of tax relief for disabled veterans is a much smaller number—$868,000—but it’s still growing year over year, Six said.
“Every time the Commissioner of the Revenue’s office gives me an update, it’s grown,” she said. “When I started here, it was about $600,000. This time last year, it was $720,000, and now it’s $868,000.”
Each penny on the real estate tax rate in the city equals $575,000 in revenue.
Six said staff understand that tax increases are “a heavy consideration for Council to look at every year.”
“We don’t take the tax enhancement recommendation lightly, but there are a lot of requests and demands for service in the city budget,” she said.
About 10%, or $13.4 million, of budget expenditures are for public works, Six said. This is a greater portion of the budget than what neighboring counties such as Stafford and Spotsylvania allocate to public works, because these jurisdictions are not responsible for services such as sidewalk and street repairs and snow removal.
“The point is, residents are getting good value for their tax dollars,” Six said.
More than half of the budget goes to public safety and education together, breaking down to 27% for education and 26% for public safety.
The total proposed transfer to Fredericksburg City Public Schools is about $45.9 million, which includes $750,000 in new funding. This follows “a 12% increase [$4.2 million] in local funding to the schools operating budget” for the current fiscal year.
The city is also paying $7.8 million in debt service associated with school capital projects; $3.64 million of that associated with the construction of Walker Grant Middle School and the renovation of the building which now operates as Gladys West Elementary School, according to the budget summary.
Baroody’s recommended budget anticipates about $3 million in new funding for the school division from the state of Virginia. This is based on former governor Glenn Youngkin’s budget, and city staff expect the school division to receive additional new funding once the General Assembly’s budget is finalized, Six said.
The School Board’s approved budget for FY27 requests $2.7 million in new local funding for the division, to support a 7% “compensation adjustment” for school division staff and the addition of two English learner teachers, one gifted education teacher, a CTE teacher, and three special education instructional assistants, among other new positions.
There will be a joint work session between City Council and the School Board on April 7.
Next week’s Council work session will focus on the proposed public safety pay plan, and on the tax rate discussion. A public hearing on the budget is scheduled for April 21, and Council is required to advertise a tax rate prior to the hearing. The final adopted tax rate cannot exceed the advertised tax rate without triggering a new public notice and hearing process.
Council members on Tuesday discussed possibly advertising a higher tax rate than the proposed 4-cent increase, but made no decision.
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