Town Council Splits on Tax Increase

By DORIE SOUTHERN
Cape Charles Wave

April 26, 2013

With one week left to agree on how much to increase Cape Charles property taxes, Town Council members are split over what to do.

Last year’s rate was 18 cents per hundred dollars of value, but the Town would have to slash its budget to maintain that rate.

That’s because Northampton County has reassessed all properties for the first time in five years, and values in Cape Charles dropped an average of 35 percent.

According to Town Manager Heather Arcos, the new “equalization” tax rate would be 27 cents per hundred dollars. That means that on average, with a rate of 27 cents, Town property owners would pay the same amount of tax as last year.

At last night’s special meeting of Town Council, Mayor Dora Sullivan said Council needs to make whatever budget cuts are necessary to keep from exceeding the equalized rate of 27 cents. But she acknowledged that this would not be easy.

“I don’t think it has ever been this difficult to arrive at a budget before,” Mayor Sullivan said, speaking as one who has served more than a decade on Council.

Her husband, Councilman Mike Sullivan, agreed that the Town needs to draw the line at 27 cents.

Councilman Frank Wendell added his voice, bringing the number of supporters of a no-growth budget to three.

On the other side was Vice Mayor Chris Bannon, who thought a tax increase to maintain Town services might be necessary.

Councilman Steve Bennett sided with Bannon.

Councilman Tom Godwin was on the fence. He would prefer equal budget cuts for all Town departments in order to hold the line, but if that were not possible he would vote for a tax increase.

The tie-breaker would have been Councilwoman Joan Natali, but she was out of town.

Natali and Bannon usually vote the same way.

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Staff had recommended a 3 percent pay raise for themselves, but that has been reduced to 1 percent.

However, the proposed budget would still be $71,000 more than the equalization tax rate would bring in.

To trim costs, Council asked all Town departments to cut their budget requests by 2 percent.

Next Thursday, May 2, Council will hear from Town staff what effect a 2 percent cut would have on Town programs.

This will be the second special meeting in as many weeks. The meeting is necessary because Council has to advertise a proposed tax rate and public hearing by Friday, May 3.

Council is expected to finalize the tax rate at its next regular meeting on Thursday, May 16. Under law, the final rate cannot be higher than the advertised rate.

In other business last night, Town Council voted to again extend the deadline for the start of construction to convert the Old School at Central Park into an apartment complex.

The deadline to start construction was a condition of the contract under which the Town effectively gave the school building and park property to a developer.

The original deadline for developer J. David McCormack of Charon Ventures to begin work was March 20. Council earlier extended that deadline to April 25, and now to August 25.

McCormack notified the Town April 18 that due to lawsuits by local activists [Old School Cape Charles], “we had no choice but to stop the underwriting process.”

According to Town Manager Arcos, Charon Ventures’ plans for the Old School have been approved by the Virginia Department of Historic Resources, but still await approval by the National Park Service.

State approval qualifies Charon Ventures to receive a 25 percent tax credit for funds spent to convert the Old School. Federal approval brings in an additional 20 percent credit.