By Stacy Parker
The Virginian-Pilot
VIRGINIA BEACH, Va. — In an 10-1 vote Tuesday, the City Council approved Virginia Beach’s $2.8 billion fiscal year 2025-26 operating budget and a $5.6 billion six-year Capital Improvement Program.
City Councilwoman Barbara Henley cast the lone vote against it. She had wanted the council to reconsider eliminating four library branch service coordinator positions and hold off on a half of a percentage point increase in the meals tax.
“The time of such uncertainty as we have now is hardly the time to expand spending and taxing,” Henley said. “We should be in a belt-tightening mode as our governor has indicated for our state budget due to these short-term economic risks.”
She requested to delay the meals tax for at least six months.
“We’re putting a lot of burden on our small businesses who may not do well this summer,” Henley said. “I don’t think this is the time to increase this tax.”
Her requests were met with with silence from her colleagues.
The budget keeps the real estate tax rate 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.
Real estate assessments in Virginia Beach are projected to reach $86.9 billion for fiscal year 2026, which will generate $842 million in tax revenue.
New hires and pay raises
The budget includes a pay increase of 3% for all city employees and constitutional appointees. 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 increases will have cost $34 million and will come from the General Fund.
Virginia Beach is funding new fire apparatus and adding 30 new firefighters on top of the 30 additional ones hired last year after the department was dealing with burnout as a result of overtime shifts due to low staffing.
“If this budget was to have a theme, it would be for public safety,” said Vice Mayor Rosemary Wilson ahead of the vote. “We have got a lot of things in this budget that show our dedication to public safety, those people who take care of us everyday.”
Taxes and fees
The council decided to forgo a boat tax in lieu of an annual licensing fee after boat owners said the tax would be too much of a burden. The fee will be tiered based on the size of the vessel, and will range from $20 to $500. The fee is expected to raise more than $2 million for dredging projects.
The stormwater rate will increase from 49.3 cents to 58.2 cents per equivalent resident unit (ERU) per day. Homeowners will pay roughly $32.49 more per year. An ERU is a measure of the amount of impervious surface on a property. The money will be used to support a stormwater operating center and positions needed to maintain flood protection projects.
A tax increase on meals is included in the budget, raising it by half a percentage point to 6%, matching Chesapeake’s meals tax. The increase is expected to generate more than $9 million annually for public safety and judicial needs.
Across Hampton Roads, the state charges 6% sales tax on meals. Diners will pay a total of 12% tax on dining out in Virginia Beach.
The annual zoning permit fee for short-term rentals is increasing from $200 to $500. The additional revenue will be used to investigate and increase enforcement of illegally operating STRs.
Under the budget plan, the city will also begin billing for ambulance services for the first time. The city will implement a compassionate billing plan, which means a patient’s ability to pay, or their insurance coverage, will never be a consideration when it comes to the care they receive. The program is designed to minimize out-of-pocket expenses for insured residents by waiving any copays or deductibles after a patient’s health insurance, Medicare, or Medicaid have been billed for transport services. Uninsured residents can submit a waiver form ensuring financial hardship is avoided.
Cost for treatment and transport will vary from $200 to more than $1,000 depending on level of service.
New fund created
The budget establishes a new Major Projects Fund 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 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.
Budget cuts and shifts
Among a host of last-minute changes to the budget, Rudee Park development funding will be reduced by $10 million, bringing the total budgeted cost of the project to $50 million. The council will review park designs next Tuesday.
With tourism returning to pre-pandemic levels, more money is needed for logistical support of festivals and events at the Oceanfront. A tourism tax fund will provide $350,000 to the Department of Public Works for set up and clean up.
Library staffing cuts will proceed despite outcry from library supporters at two public budget hearings this spring. The budget includes cutting five library positions, of which four are branch service coordinators.
The budget also includes setting aside a surplus of $1 million from the Central Business District Tax Increment Financing Fund (Town Center TIF) for beautification of Town Center proper. City services in Town Center cost nearly $4 million a year and the fund had a shortfall of more than a half-million dollars this year.
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