Henry County set to discuss property tax increase to pay for schools

Henry County supervisors’ recent decision to cover education costs by raising the property tax rate could move the county from the second lowest rate to the middle of the pack among its neighbors.

Weeks after the state budget provided an increase in school system funding — passing on to counties a higher-than-anticipated local match — Henry County officials feel the current tax rate of 55 cents per $100 valuation will eventually have to change to keep up with the state.

Although county officials are advertising changing the tax rate to 62 cents per $100 valuation, there is a chance they could opt for a smaller increase.

Real estate tax rates in neighboring Martinsville and Patrick, Pittsylvania and Franklin counties are currently set at $1.03, 73 cents, 56 cents and 43 cents, respectively. Even a minimal increase to Henry County’s rate would move the county up a spot on the list, which is something supervisors said they wanted to avoid for the sake of encouraging population growth and attracting businesses.

“There are a lot of factors involved for taxes in a community,” said Supervisor Garrett Dillard, saying it’s a balancing act between limiting tax burdens on residents while having enough funds for a government to operate.

“You want to provide EMS, you want to provide public safety, you want provide police, you want to provide schools, keep the roads up, have equipment when you have snow, things of that nature.”

Supervisor Travis Pruitt agreed.

“Keeping tax rates low is important because it can stimulate economic growth by leaving more money in the hands of individuals and businesses, which can boost spending and investment,” he said.

The proposed tax hike came at the conclusion of a specially called board of supervisors meeting last week where the board discussed the county’s education budget. The state allocation will rise by 13.75% to $80 million, or $9.6 million higher than the current fiscal year.

Public hearing

The Henry County Board of Supervisors will hold a public hearing on the proposed real estate tax increase.

When: 3 p.m. June 25

Where: Henry County Administration Building, 3300 Kings Mountain Road, Martinsville, in the Summerlin Room

At issue is the county’s local match. If state education funding drops, so too does a county’s local match, but if the state’s allocation increases, the local match must follow suit. A state allocation totaling $80 million translates to a local match of $20 million, which is $3.8 million higher than the current fiscal year.

“We have to fund public education,” county administrator Dale Wagoner told the board last week.

Wagoner told the board that enrollment has declined by about 500 students, or 6.76%, since 2020. While the state believes this trend will continue, he said he and county staff believe this figure will even out in the next couple calendar years, based on projected figures that he said could be interpreted differently than the state’s conclusion.

Both Wagoner and Henry County Schools Superintendent Amy Blake Lewis said they had not  anticipated the state’s increased allocation. Analysis of past fiscal years show a gradual rise in state funding since 2020, which plateaued in fiscal year 2023 at $71.4 million. State fund allocations from 2020 to the upcoming fiscal year have increased by 47%.

Property tax increases were one of three options considered by the board; the other two were drawing from the county’s reserves or from other departments. Currently, the county’s reserves are calculated at just over $14 million. Wagoner warned supervisors that pulling from reserves would be a stopgap measure that would put them in the same situation next year.

Supervisor Debra Buchanan expressed misgivings about a departmental transfer, saying that other than education, public safety accounts for the largest part of the budget and any transfer would likely come from there.

In the 2025 budget’s current iteration, public safety has an allocation of $28.6 million.

“None of us really want to cut from other departments,” said board Chairman Jim Adams, adding that drawing from reserves over multiple years for the same issue is also something the board wants to avoid.

The proposed tax increase would target the real estate tax, and not the personal property tax or machinery and tools tax. Wagoner said the machinery tax is closely linked to industries coming to Henry County, and he doesn’t believe that raising that rate would be conducive to the county’s desire to attract new businesses.

Wagoner also said that the board does not have control over things like sales tax. Meanwhile, 100% of the real estate tax is given to education, according to Wagoner.

Supervisor Pam Cobler asked if residents had issues with paying their tax bills and if a tax increase would place an additional burden on them. Wagoner said that the county’s current tax collection rate is just below 90%.

Real estate is currently taxed at 55 cents per $100 valuation. The advertisement for the upcoming public hearing describes a potential tax increase of 7 cents; supervisors said they are willing to reduce what is advertised.

“I believe it falls on us,” Buchanan said, with others agreeing that they would eventually have to raise taxes.

“The budget is not going to get smaller, it’s going to continue to increase,” supervisor Joe Bryant said. “We have to be able to have those funds to do that, but I don’t want us to get into a situation where we raise the real estate now and when the budget rolls around next year, we have to raise it again next year.”

Supervisors also considered the impact of an upcoming property reassessment, which is scheduled to take effect in fiscal year 2026-2027. Wagoner explained that if properties are reassessed at or higher than 1% over the current level, the county would increase or decrease the tax rate to ensure that its tax revenue doesn’t change more than 1%. Supervisors were concerned about a possible scenario in which they enacted back-to-back tax increases in a handful of years.

The last reassessment was in 2021, when values increased by 0.89%.

Wagoner reminded the board that reassessment would be an issue in the coming years while the matter concerning their local match is now.

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