Fredericksburg residents will probably pay a 70.5-cent real estate tax next year.
The City Council last night took the first of two required votes to approve that tax rate, and the $72.5 million budget it will help fund.
The current real estate tax rate is 56 cents per $100 of value.
The rate increase would provide the $1.6 million more from the real estate tax that this budget depends on, while also compensating for a nearly 13 percent decline in property values after this year's assessment.
Councilmen Brad Ellis and Matt Kelly cast the only two votes against the tax rate and the budget.
Kelly presented an alternative budget plan that would have raised the meals tax by a half-percent, and included a lower, 69-cent real estate tax rate.
The council voted in a work session last month, however, to raise the real estate tax another penny instead of touching the meals tax, and a majority of Kelly's colleagues did not want to revisit that decision.
While Kelly and Ellis both said they thought the city needed to do more to prioritize its spending on outside agencies, Mayor Tom Tomzak said there just wasn't time to look deeply into which groups should get money. But he pointed out that nonprofits really don't constitute that large a portion of the city budget.
"If we cut out all the human needs agencies, we're talking about probably $100,000 out of a $72 million budget," Tomzak said.
Despite the tax increases, this budget is 5.2 percent smaller than the current budget.
The city will give the schools $700,000 less next year than they got this year. City employees who make $70,000 or more a year will see a half-percent salary reduction.
The city personnel budget will pay for 11 fewer employees next year.
Councilman George Solley pointed out that the cuts will have an impact.
"We simply have cut back to the point where it's noticeable, and will be noticeable in the way we conduct our business over the coming year," Solley said. "None of us know what the situation will be a year from now. We may have to cut back further."
The city council still has to take a second vote on both the tax rate and the budget. That will come after a June 9 public hearing on the tax rate.
In other budget news, Fredericksburg could join its neighbors in raising its personal property tax rate to make up for a decline in car values.
City staff have proposed raising the personal property tax on vehicles from $2.99 per $100 of value to $3.40. The new rate would not take effect until the spring 2010 billing cycle.
Council members will have to hold a public hearing before they vote on this tax rate, and a date has not been set for that hearing.
The tax increase is being proposed because city vehicle values this year went down by about $28.9 million. If the tax rate stays the same, the city could lose $866,000 in revenue from the spring billing in 2010.
That loss would affect the city's 2010 and 2011 budgets.
The $3.40 rate is estimated to bring in the same amount of revenue on the new values that the city had been getting. However, its impact on individual taxpayers will vary greatly, and will depend on how much an individual's car rose or fell in value.
Emily Battle: 540/374-5413
Email: ebattle@freelancestar.com