In the proposed budget for fiscal year 2020, the Charlottesville City Council has proposed a one percent increase in both lodging and meals taxes and an additional allocation of $255,159 to the Charlottesville Affordable Housing Fund, a program targeted at providing housing to impoverished city residents.
Additionally, the proposed budget will provide $349,720 to the Charlottesville Housing Affordability Program, a program that provides grants to individuals who may not qualify for other tax relief and real estate tax relief programs, as well as an increase of $26,232 to the rent relief program.
The Council previously contemplated an increase in real estate tax of one cent for every $100 of appraised value. With the real estate tax increase, the Council would have allocated one million dollars towards affordable housing.
Many city residents expressed concern about the lack of a real estate tax in the proposed budget.
During the public hearing on the budget, city resident and Democratic City Council candidate Michael Payne asked, “Are we just putting it off a year or kicking the can down the road?”
Councilor Kathy Galvin explained that the real estate tax was only considered for a one time cash outlay to get the affordable housing program off the ground. According to Galvin, budget staff were able to find extra money in the city’s bond issuance program.
“In that process they understood that they were reserving unnecessarily, keeping from the public use, 850,000 dollars,” Galvin said.
Currently, the city maintains a meals tax of 5 percent on the purchaser of any premade meal. The proposed budget would increase that tax to 6 percent, although the median rate of meals taxes in Virginia is 5 percent.
The city estimates that 35 percent of the meals tax will be paid by visitors. This tax increase will add 2.5 million in anticipated revenue to the 2020 budget.
The lodging tax, or transient occupation tax, is currently 7 percent. The proposed budget will increase this tax to 8 percent. Lodging taxes are paid by those who stay in hotels in the city.
The proposed raise in the lodging tax will add an additional $816,969 in revenue to the budget.
According to Assistant City Manager Mike Murphy, the budget will provide a record amount of money towards affordable housing. Councilors will vote on the proposed budget April 8.
The Council has allocated a large amount of its 2020 budget towards establishing various affordable housing programs. Rather than using money from their discretionary funds, they are explicitly reserving a part of the budget to go toward increasing accessibility and quantity of affordable housing.
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