"To ease the increasingly heavy tax burden on city homeowners, Charlottesville City Councilor Kevin Lynch on Monday proposed two ideas he said would increase city revenues and reduce its dependence on real-estate assessments: changing the city’s tax-relief program for the elderly and changing the method by which vehicles are assessed.

If adopted, the two proposals could add about $1.25 million to city coffers, which in turn could allow council to cut the real estate tax rate by 3 cents, Lynch said.

Lynch’s recommendations were part of a white paper he released prior to the formal presentation of City Manager Gary O’Connell’s proposed budget of $106 million for 2005-06.

The 3 cent cut would come on top of O’Connell’s suggestion to reduce the tax rate of $1.09 per $100 of assessed value by 4 cents, meaning the rate could drop to $1.02 per $100.

Lynch said he would make the proposals as the council comes up with a final budget in the next month. The budget must be approved by April 12.

Property assessments rose an average of 12 percent last year, Lynch said. The 4-cent rate cut would reduce the average effective tax increase to 8 percent, and if new construction is excluded, the average increase would be 7.3 percent, Lynch said.

“That’s still a significant increase, but it’s much less than previous years … where we’ve seen double-digit increases,” he said.

Lynch said his suggestions could help bring the average tax increase closer to the proposed 5.5 percent rise in the budget.

One of them is changing Charlottesville’s Real Estate Tax Relief program for the elderly and disabled from one based on “giveaways” to one based on “deferrals.”

Instead of helping qualified homeowners pay their tax bills, as the relief program does, the city would put any tax increases resulting from higher assessments into an escrow account payable upon the sale or transfer of the house.

The homeowner would use some of the profit from their home’s appreciation to pay off the account.

Lynch predicted this proposal could save the city $750,000 next year.

His other proposal is to assess vehicles at their average trade-in values instead of their average loan values, which underestimates their true value, he said.

This proposal could add $500,000 to the city’s revenues.

Lynch described these two proposals as short-term solutions. The key to getting the city’s expenses under control is a long-term focus on ending the cycle of poverty, which saps city resources, he said.

In a study of the city’s budget over the last seven years, Lynch noted that the city’s contribution to the Albemarle-Charlottesville Regional Jail has increased from $387,997 in 1997 to $3.4 million in 2004, a 785.8 percent increase.

That increase largely comes from declining state support and a growing inmate population, he said.

At Lynch’s news conference, Councilor Kendra Hamilton said more investment in education would help local youth stay out of trouble and reduce the jail’s cost to the city. She noted that the steep climb in the city’s jail expenditures far outpaced the rise in its school spending, which Lynch clocked at 38.24 percent.

“Are we really a community that values incarceration over education?” she asked.

At the council meeting, O’Connell noted various cuts he made in city departments and said there would be more in years to come.

“This budget, in my mind, is the first in what will be a series of budgets that focus on reducing [staffing] positions and services,” he said.

City representatives will host a community budget forum at 10 a.m. Saturday at Tonsler Park." (John Yellig, The Daily Progress, March 8, 2005)

Contact John Yellig at (434) 978-7245 or eyellig@dailyprogress.com.