New Kent leaders considering 79-cent tax rate for FY2020-21 due to Coronavirus

With the uncertainty of how COVID-19 will impact New Kent County financially, county leadership received a recommendation at Friday morning’s budget work session to lesson the hardship on citizens.

New Kent County Administrator Rodney Hathaway proposed lowering the FY2020-21 tax rate from 82 cents per $100 of assessed value to 79 cents per $100 of assessed value.

At his initial presentation in March, Hathaway commented keeping the tax rate at 82 cents. While this is no change from last year, the county underwent a reassessment this year, resulting in the equalized rate being 76 cents per $100 of assessed value. That number is essentially a six-cent tax increase.

But with the unemployment numbers rising throughout the country due to the coronavirus, Hathaway met with staff and received feedback before making the proposal to county leaders.

“Staff had to take a very strong look at our projected revenues,” the county administrator said. “We’re going to see a less tax rate. We’re anticipating that our collect rate will change.”

Hathaway expects the collection rate from taxes to fall to 95 percent, down from 97 percent. This is the equivalent to $735,277 in new revenue the county would lose.

“In less than a month, we have seen unemployment increase in New Kent County,” Hathaway continued. “Each week, we were receiving 10 applications for employment and now that number has jumped to 400.”

The reduced rate will result in $1,643,575 in new revenue that was projected for the county in FY2020-21. The original projection of roughly $4.1 million of intake is now slated to be around $2.5 million.

Hathaway provided a list of items and recommendations to county leadership to be sliced from the projected budget as part of the tax rate reduction. Among them are three sheriff’s positions (from $360,000 to $188,000), the salary decompression scale for New Kent Sheriff’s Office ($70,000), reducing hiring an assistant information director to half a year ($57,000), and eliminating the hiring of a building inspector permit technician, other personnel, and various department expenditures.

The 79-cent rate factored in the board’s deferment of entering the VPSA (Virginia Public School Authority) Spring pool for bond financing for the construction of a new elementary school. While construction isn’t out of the question, supervisors will work through the process over the next six months and plan to reenter the Fall pool.

The county administrator added that entering the Fall pool would provide additional revenue to help with payments for the school, as well as defer the first payment of the school until FY2022.

“Right now, we have $8,384,931 in the school set aside fund,” Hathaway said. “With projections coming in higher than expected, county leaders did designate $2.4 million in one-time use funds to assist with that.

“With an expected $4 million from Colonial Downs, we will have $14,774931 of cash to help with the new elementary school,” the county administrator added, pointing to the benefits of entering the VPSA fall pool.

Hathaway added an additional comment of increasing the contribution to the set aside fund for the new elementary school due to the decrease an amount of revenue. This, in turn, could allow for the rate to be reduced to 79 cents and still help with funding the elementary school construction, which is now slated between $35-37 million after factoring all costs that include engineering, design, and construction.

But Hathaway added one more statement, referring that deferring the costs to FY2022 will mean an additional expenditure on the county’s list of new things to pay for.

“We expect increases to operate Henrico Jail East due to the per diem rate,” he said. “We will also be paying the full amount for our firefighters as the SAFER grant is set to expire.

“With Chromebooks for students at New Kent Middle and High School factored in as well, we are looking at $743,000 in new expenditures,” he concluded.

Supervisors agreed that the pandemic affecting the nation is also having an impact on New Kent. Leaders thanked Hathaway and his staff for the work.

The proposed rate of 79-cents per $100 of assessed value will go to public hearing at the board of supervisors’ regular May meeting. Action on the
tax rate, fees, and the budget is expected to take place at the May work session.