VIRGINIA BEACH — The City Council on Tuesday adopted a $2.6 billion operating budget for fiscal year 2025 that fully funds the school budget, increases pay for city workers and cuts the tax rate for homeowners.
The spending plan was approved by a 10-1 vote. Councilman Chris Taylor, the only member who voted against it, cited several reasons for his opposition but said the budget didn’t go far enough to reduce the tax burden on residents.
The budget includes a 2-cent reduction in the real estate tax rate, lowering it to 97 cents per $100 of assessed value.
“I don’t think the 2-cent reduction is going to do much for families,” Taylor told The Virginian-Pilot following the vote. “We could have been more aggressive.”
Real estate assessments in Virginia Beach will top $82 billion in the new fiscal year, a 7.4% jump from the previous year. Even with the 2-cent rate reduction, most residents would still see an increase in their tax bill. For a resident with a median home value of $388,200, the 2-cent reduction will save $78 a year.
“It could have been lower perhaps, but the cut in funding across the board would have been too much,” Councilman Worth Remick said before casting his vote.
A 2-cent rate reduction is equivalent to forgoing $15 million, so to balance the budget, it required a shuffling of funds, the elimination of more than two dozen vacant positions and some grant funding reductions — but no major service cuts.
The approved spending plan fully funds the public school budget of $1.16 billion which includes an operating budget of $948.9 million. School officials have said its budget factors in a $5.7 million loss as a result of the real estate tax reduction. The division plans to cut 16 staff positions through attrition.
City workers will receive a roughly 3.5% pay increase as part of the step pay raise program approved in 2022, which was based on years of service when implemented. About 80% of the workforce qualifies for the step plan. All other employees are also getting an approximate 3.5% raise. The total pay increases add up to $19.5 million, according to the city.
Fees for water, sewer and curbside recycling will increase. Per month, water will increase by $2.70; sewer by 79 cents; and recycling by $3.05.
The budget funds operating expenses between July 1 and June 30, 2025. Separate from the city’s operating budget is a proposed six-year capital improvement project budget of $5.4 billion. The first year of the CIP allocates $385 million toward infrastructure projects, including new funding to begin the first phase of infrastructure improvements on 17th Street at the Oceanfront. It also includes redirecting $60 million from a resort area parking fund to build a park at Rudee Loop.
The operating budget includes redirecting 20% of the amusement tax, or $1.6 million, from the Tourism Investment Program fund to a dedicated fund for art initiatives. The amusement tax is an admission tax on concert, theater and other entertainment tickets collected citywide.
“I look forward to seeing the many positive impacts this change will have on our community,” said Councilman Michael Berlucchi, who advocated early on in the budget process for a boost to arts and culture.
Residents who are late paying their real estate and personal property tax bills will have some relief with a new five-day grace period for penalties and interest.
The City Council approved multiple additions to the budget last week, including the hiring of more firefighters for a total of 30, to help mitigate overtime cost and to support the well-being of the department. Taylor said he felt the budget didn’t prioritize public safety and had wanted more support for the fire and police departments.
Two 2025 festivals received funding in last-minute appropriations: $100,000 to the LAMBS Foundation for its Juneteenth festival and $90,000 to Hampton Roads Pride for its Pride at the Beach Festival.
Stacy Parker, 757-222-5125, stacy.parker@pilotonline.com
Clarification: A clarification was made on May 15, 2024 to better describe how raises are being implemented. The step pay raise program approved in 2022 was based on years of service when it was implemented. City workers will receive a 3.5% raise in fiscal year 2025, which is not contingent on their years of service.
