Property tax affects students

College students may face higher rent payments for the fiscal year 2013 as the City of Lynchburg struggles to balance its operating budget with mounting costs from a poor economy, increased state and federal mandates and investment programs intended to revitalize the city.

Property taxes are main source of revenue for Lynchburg’s general fund. According to the City Assessor’s Office, property values have been increasing, while the tax rate has remained at $1.05 per $100 of property value. To rectify this, City Manager Kimball Payne has recommended increasing the tax rate by $.10 to $1.15 — the highest since 1995, when it stood at $1.18.

“The property tax proposed increase would go into what we call non-dedicated revenue, which will support everything — schools, public safety, parks, libraries,” Payne said. “We have $163 million general fund budget, so that the additional $5 million the tax will generate will just go to support all of those activities.”

In the proposed 2013 budget, Payne offered a balance of expenditure cuts as well as the revenue increases. He found 31 personnel positions within the city that could be eliminated to save costs, since personnel make up 60 percent of the budget. Ultimately, Payne cut roughly $4 million in expenses from various programs.

Added expenses still outweighed the cuts, including higher Virginia Retirement System (VRS) costs totaling $1.4 million and $3.7 million for increased school mandates and benefits — and the school board has requested an additional $4.7 million.

Extra costs like $1.8 million for the Heritage High School debt service reserve, $1.6 million for jail facilities to counter state funding cuts, $533,000 for the Greater Lynchburg Transit Company (GLTC) and the new EPA-mandated stormwater utility added to the burden.

Many local residents still oppose the tax hikes, however, saying that the city could cut other costs such as the proposed five-year Capital Improvement Program (CIP). The $165.7 million CIP combines building and infrastructure repair with general improvements and downtown economic redevelopment like the Bluffwalk project along Jefferson and Commerce Streets. The first $12 million of the program is included in the 2013 budget.

“Personally, I think it’s a waste of money,” Heritage Park Apartments owner Josh Jones said. “The only thing they’re doing, I think, is they’re spending money downtown when there’s other things they should be spending money on — more important things.”

The Lynchburg native said safety and parking are more pressing concerns than redevelopment. Jones said he does not like to take his wife to dinner downtown because the limited parking available is now metered, and he thinks it is a dangerous area.

Apartment tenants, including local college students, will end up paying the property tax increase themselves. Jones already pays more than $17,500 in taxes on his apartments, according to the City Assessor’s Office, and the increase will cost him an extra $1,600. He will have to “eat” the costs until current leases expire, but then Jones and other landowners will be able to increase rent fees to make up the difference, he said.

“What people don’t realize is that businesses don’t pay taxes per se — they pass it along to the consumer,” Jones said. “Everybody’s going to have to pay it.”

Whoever pays the tax increase, Payne feels the most significant issue affecting local residents and their decisions on where to live is $4 per gallon gasoline, not higher taxes. He said residents’ daily commute to work will have a greater impact on their wallets. As the city attempts to balance residents’ concerns, however, Payne said there is no simple solution.

“I don’t know if it’s as simple as saying, ‘This is the top thing, and we’re going to do nothing else,’” Payne said. “We have a lot of conversations … about our core services, and I think that most people will agree that if you’re trying to build a community from scratch, you’d first of all want it to be safe. … The question is what level of public safety? We’ve talked about the difference of public safety services in the counties as opposed to public safety services in the city.”

The next budget hearing will be at 7 p.m. Tuesday, April 3, at City Hall.