Mindful of the ongoing impact inflation and rising property assessments are having on household finances, the Chesterfield Board of Supervisors voted Wednesday to amend county code to permit refunds of surplus real estate tax revenue.
The action applies to both this year – accommodating a planned 5% rebate on June real estate tax bills – and future years at the board’s discretion.
“I think it’s a great tool for the county to have in its toolbox. Moving forward, if similar circumstances come about to a future board and they have surplus year-end dollars, they could conduct a similar exercise,” said Kevin Carroll, chair of the Board of Supervisors. “The less people have to spend on real estate taxes, that frees up money in their budget.”
The General Assembly has authorized the governing bodies of Virginia localities to adopt such an ordinance and refund surplus real estate tax collections.
“This provides us extra flexibility and is prudent,” added Dale District Supervisor Jim Holland.
In response to surging assessments on used cars and trucks last year, the board allocated $10 million from Chesterfield’s fiscal year 2022 operating surplus to a reserve fund that was designated for future personal property tax relief.
Since then, however, vehicle prices have receded from last year’s supply-driven spike. As a result, 2023 personal property assessments are projected to fall by double digits, generating significant tax savings on the thousands of vehicles that are registered in the county.
Instead, the board decided to use the $10 million in the reserve fund to provide a 5% rebate on all first-half 2023 real estate tax bills -- recognizing that current nationwide housing prices, including those in the county, are still near historic highs and impacting reassessment valuations.
For context, residential real estate assessments rose by a countywide average of 8.82% from January 2022 to January 2023.
Combined with a 1-cent reduction in the real estate tax rate, the effective rate for this year will be 89 cents per $100 of assessed value – saving the average Chesterfield property owner more than $100.
That’s the lowest real estate tax rate in the county’s modern history. For perspective, it was at 96 cents as recently as 2018.
“I know we’ve had some significant increases, not only this year but last year, in the value of homes. While that’s a good thing if you’re selling your home, if you’re not selling your home it is an additional tax burden,” said Clover Hill District Supervisor Chris Winslow.
Real estate taxes are the largest source of revenue by which Chesterfield funds schools, public safety and other services. The 5% credit in June will apply to all residential and commercial property in the county, part of a comprehensive tax relief package adopted by the board.
“I do agree this is a great tool to be able to give money back when appropriate,” said Jim Ingle, vice chair of the Board of Supervisors.
Noting that apartments are classified as commercial property, Midlothian District Supervisor Dr. Mark Miller encouraged landlords to return their savings from the real estate tax rebate to their renters.
“That way it will satisfy our entire community, not just those who are homeowners,” he said.