Council may consider Kelly tax rate proposal

City Council takes a look at meals tax and real estate tax

BY EMILY BATTLE

Date published: 6/10/2009

BY EMILY BATTLE

Fredericksburg City Council members are going to take another two weeks to look at changing the way they fund next year's budget, after several city residents chastised them last night for a proposal they said would hurt businesses disproportionately.

Last night, four council members said they would support a proposal Councilman Matt Kelly has been talking about for weeks, to raise the real estate tax to 68 cents per $100 of value instead of 70.5 cents, and to raise the meals tax by 1 percent.

Kelly has been saying this would spread the increased tax burden more evenly, especially since recent reassessments would put more of the burden of a real estate tax increase on commercial property owners than homeowners. He also said the meals tax is on disposable income, and is paid partly by visitors to the city.

Last month, Councilman Brad Ellis supported Kelly's proposal, and no one else. But last night, councilmen George Solley and Hashmel Turner both said they'd be willing to consider it.

But the proposal would leave the city $100,000 short of a balanced budget.

While Solley said he'd be willing to consider changing the way the city gets its money, he said he wouldn't be willing to go back into the spending side of the budget, where Kelly and Ellis have both proposed cutting some of what the city gives to outside agencies.

That means the city could hold taxes steady overall--but not necessarily for individual property owners--by raising the tax to 65 cents.

The council considered raising it to 70.5 cents to bring in around $1.6 million in new revenue from this source. This, combined with a proposed personal property tax increase and consumer utility tax hike, is necessary, council members had said, to fund a budget that is 5.2 percent smaller than this year's budget as sales tax revenues continue to slide.

Up until last night a majority of the council members had opted to tap the real estate tax even more than was originally recommended by city budget officials instead of raising the meals tax by a half percent to find extra money to avoid across-the-board city salary cuts.

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Date published: 6/10/2009