Council aims at Real Estate Tax revenue equalization, Personal Property rate will stay same as values fall from last year’s increases

Following a summary analysis by Finance Director B. J. Wilson at a Special Work Session of Wednesday evening, March 22nd, the Front Royal Town Council, minus one member — Amber Morris was absent, reached a consensus to advertise the setting of a Public Hearing on Real Estate and Personal Property Tax rates at its April 24th meeting. The Real Estate Tax rate must be reset to equalize tax revenue or justify any increase, in the wake of real estate reassessments that generally saw significant increases in values. While at the county level those increases have been estimated as high as 40% on average, Wilson said in town real estate values increased an average of 27.8%.

The finance director’s recommendation, based on council’s stated goal of not increasing the tax burden on citizens, was to reduce the existing Real Estate Tax rate of 13 cents per $100 of value to 10 cents per $100 of value to essentially equalize the Town’s real estate tax revenue to its previous level. As reported earlier, by state code any reassessment resulting in a greater than 1% tax revenue increase must be either equalized to within 1% if its previous revenue level or advertised as a tax increase if the new rate produces more than that 1% revenue increase.

The Town’s Real Estate Tax rate has bounced back and forth between 13 cents and 13.5 cents since 2014, when it was raised to 13 cents from 11 cents where it had stood for three years. It had been at 13 cents in 2006 before dropping to 7 cents for four years (2007 to 2010).

B.J. Wilson fields question from Councilman Josh Ingram, seated upper right of table, on tax revenue variables.

An agenda packet chart accompanying Wilson’s presentation indicated that based on the 2023 real estate assessed values, 1 cent of real estate tax equals $185,630 of revenue to the town government. The 10-cent rate was estimated to produce $1,826,050 of revenue, falling $64,635 short of the proposed Fiscal Year-2023/24 budget revenue. Various ways to compensate for that loss were discussed.

Wilson also advised council to defer late fees and penalties on the Town’s first Real Estate Tax billing due in June (the second is due in December) because of the late April setting of the rate resulting in the billings being sent out very close to the first installment payment coming due.

On the Personal Property Tax side, Wilson reported a reduction in Personal Property assessed values in town of approximately 20% or $36,586,875. Initial numbers on vehicle values, which skyrocketed last year, was a 12% loss of value from a year ago. His recommendation was to leave the Personal Property Tax rate where it is, at 64-cents per $100 of value.

Regardless of valuations up or down annually, the Town’s Personal Property Tax rate has been at 64 cents since 2011, when it was increased from 60 cents.

Following this discussion, council adjourned to a Closed/Executive Session to discuss “legal matters requiring the provision of legal advice by such counsel, specifically, proposed agreement with Discover Front Royal, Inc., and proposed agreement with Warren County.” There was no action out of the closed session.

As media exits the scene, Council and staff go into Closed Session to discuss legal variables of the proposed agreement with DMO ‘Discover Front Royal, Inc., and proposed agreement with Warren County, on joint tourism efforts.

See the tax discussion in the open portion of the meeting in the Town video.