Tuesday, July 24, 2007

Why do we pay more in Richmond?

In Michael Paul William’s column in the July 23 TD he discusses whether it is better to live in Mechanicsville or Glen Allen (notice that the City of Richmond was not even discussed.) Williams refers to the article in Money magazine that lists Mechanicsville 54th best and Glen Allen 66th best among places with between 7500 and 50,000 residents. Williams indicates that the magazine lists the median home price for Mechanicsville at $267,969 while its average real estate taxes were $1624. For Glen Allen the figures were $235,885 and $2055.

It’s been years since I learned arithmetic, but it seemed to me that these figures must be wrong. The homes in Mechanicsville were costlier, but the real estate tax in Glen Allen was higher. I was sure that either Mr. Williams or the magazine must have made an error. Then it hit me. These places are in different counties and therefore they have different real estate tax rates.

So, I went to my friendly Internet to see what the tax rates were for Richmond and its nearby bedrooms. Now, some of the websites have 2006-07 rates and some have 2007-08 rates, so these figures may not exactly match. However, here’s what I found out—
City of Richmond: $1.23 per $100 of assessed value
Chesterfield County: $1.02 per $100 of assessed value (going to .97 at the end of this year)
Hanover County: $0.81 per $100 of assessed value
Henrico County: $0.87 per $100 of assessed value

So what does all this mean? If my house is assessed at $250,000 (which I wish it was), I would pay the following amount of annual real estate taxes in the various jurisdictions:
City of Richmond: $3,075
Chesterfield County: $2,550
Hanover County: $2,025
Henrico County: $2,175
Well, I live in the City of Richmond. So, I am paying between $500 and $1,000 more in real estate taxes than if my house were in the surrounding counties. (These figures do not include various miscellaneous fees that I also pay to the City of Richmond.)

So, why do I pay so much more for local government than do some of my friends? Obviously, I must pay more because I get more. I must get better schools, better maintenance of streets and other infrastructure, more police and fire protection, better libraries, etc. and etc. It’s like the old Yuban commercial (if you’re under 40, you probably never heard of it), “You get what you pay for!”

I'm a newcomer to Richmond (been here less than 37 years) so I'm not sure, but I suspect that more or better services is not the reason I pay more.

In a July 10 TD OpEd, 1st District Councilperson Bruce Tyler gave his reason for why I pay more:
“Richmond is fortunate to be the capital of Virginia. With this blessing comes the hidden burden of providing essentially free police, fire, and infrastructure to state government. Richmond taxes are higher than taxes in surrounding localities because they don't share this burden; therefore, we are less competitive.”

Tyler presents an interesting issue. Commonwealth-owned buildings in the city do not generate any tax revenue. Shouldn't the Commonwealth compensate the city for this lost revenue by means of an annual payment in lieu of taxes? I know that the Federal Government pays the District of Columbia a substantial annual payment to compensate for the revenue the District loses because the Feds pay no taxes. But, does any state government compensate its capital city for lost tax revenue?

In my opinion, making up for the revenue lost because the Commonwealth does not pay taxes can only account for a small part of the extra taxes we Richmonders (Richmondites?) pay each year.

As you all know, our beloved mayor, Doug Wilder, gives another reason for our high real estate taxes. In his Vision newsletter for January 22, 2007, His Lordship said,
“I do not believe that our citizens desire for their real estate assessments to continue to rise in order to support the exorbitant spending by our public school system, which maintains too many half-empty school buildings at a cost of millions each year.”

Well, Mr. Your Honor, I cannot believe that I pay higher taxes in the city simply because RPS has some half-empty buildings. Only about one quarter of the City’s operating budget goes for schools. (
http://www.ci.richmond.va.us/departments/budget/pdf/PieChartTotalExp.pdf) Is it just possible that there is some waste in the rest of the City government--the part that you are responsible for?

So, here is my question to Mayor Wilder. Here is my question to the nine members of the City Council. Why do we pay more for municipal services than do our neighbors in Hanover, Henrico and Chesterfield counties?

1 comment:

Anonymous said...

Check out Richmond water rates. The minimum is $43. The rates reward people who waste and penalize people who conserve. Keep in mind Richmond sells water to counties.