Chesapeake adopts $1.6 billion operating budget that will expand some tax relief, increase city worker pay

CHESAPEAKE — City leaders adopted a fiscal operating budget and capital improvement program just shy of $2 billion for the upcoming year that funds employee pay raises, a new public safety training academy project and additional tax relief for seniors and those with disabilities.

City Council adopted the $1.6 billion operating budget Tuesday, and it will span from July 1 to June 30, 2025. Members also adopted the capital improvement program , which allocates $374 million in the upcoming fiscal year.

In the city’s past two fiscal budgets, council reduced the real estate tax rate by 4 cents, making it $1.01 per $100 of valuation, to help offset steep increases in assessments. The adopted budget keeps the rate at $1.01, and the city expects to collect $390.5 million in real estate tax revenue in fiscal 2025. But one new change is the dedication of a half-cent of real estate tax to the city’s lockbox to help fund debt service on the new public safety training academy project. The new facility is a top priority in the capital improvement program and is expected to cost a total of $150 million, with most of that appropriated for fiscal 2025.

The academy will be located on a portion of the Heritage Park site near Fire Station 7 and Saint Brides Road and will include multiple classrooms, housing for training administration, indoor shooting ranges, burn buildings, a confined space maze, a vehicle extrication training area, canine training area and other outdoor training facilities.

The budget also includes more than $10 million for a 3.5% general wage increase for city employees — some of whom may receive more as a market adjustment that keeps Chesapeake workers’ pay competitive and within the top three cities in Hampton Roads — and public safety step increases.

Over the last couple weeks, more than 1,500 Chesapeake residents have signed onto a petition calling for more relief from vehicle-related taxes and fees, such as the personal property tax levied on the values of automobiles, recreational vehicles, mobile homes and business-related equipment. For years, Chesapeake has charged $4.08 per $100 of assessed value for tangible personal property such as vehicles, and the adopted budget keeps that rate the same. The city is expected to collect $76.2 million from all personal property taxes in fiscal 2025.

Since the budget was first unveiled in March, City Council has made a few modifications. Though the personal property tax rate will remain the same, council opted to spend a little more than $140,000 to eliminate the tangible personal property tax on farm equipment by slightly reducing transfers to schools and mosquito control services.

Through the Virginia Personal Property Tax Relief Act of 1998, the state subsidizes those taxes across municipalities by granting each a flat amount of funding that can be used to reduce taxes for the first $20,000 of a vehicle’s assessed value. For the upcoming fiscal year, Chesapeake expects to receive nearly $28.6 million — reducing what each individual owes on the first $20,000 of value by 41%.

The budget does expand tax relief options , however, for qualifying individuals. Council decided to allocate $850,000 to expand tax relief to seniors and individuals who are disabled by pulling from reserves in the budget, modifying eligible income threshold categories for those who receive tax relief and setting the maximum to qualify at $70,000 annually.

The city provided about $20.5 million of personal and real estate tax relief to several thousand seniors and individuals with disabilities in fiscal 2023. It’s estimated the changes in the upcoming fiscal year would benefit nearly 2,000 additional residents.

Other major priorities in the budget include about $8.7 million for facility maintenance — particularly the replacement of security technology — and about $3 million in new funding for the acquisition and preservation of open space and agricultural land. About two dozen positions will be added to the sheriff’s office, primarily due to the closure of the Hampton Roads Regional Jail but also because of additional state funding for more behavioral health case workers.

Per a council request, the cost of concealed carry permit fees were also cut in half and now cost $25.

The budget also includes a transfer of about $9 million in surplus funds from both of the city’s special tax-increment financing districts in Greenbrier and South Norfolk to the city’s general fund, with $1.3 million earmarked for public safety and landscaping services in the districts as well as an economic incentive payment for the Dollar Tree agreement . In those districts, real estate tax revenue is set aside for economic development projects for those specific areas, and additional revenue from other taxes can be funneled to the city’s general fund.

The budget includes a $281 million transfer to Chesapeake Public Schools , which is $12 million more than the previous year, and helps provide pay raises. Council also granted an additional request of $6.9 million in one-time funds from the school board for a number of projects, including communications and security enhancements and facilities improvements.

Council also opted to include $117,000 to supplement public defender pay.

Natalie Anderson, 757-732-1133, natalie.anderson@virginiamedia.com