Portsmouth adopts $934 million budget reducing real estate tax, fully funding schools

PORTSMOUTH — City leaders adopted a $934 million operating budget for the upcoming fiscal year that reduces real estate taxes, fully funds Portsmouth Public Schools and grants employee raises.

City Council adopted the budget , which spans from July 1 to June 30, 2025, at its regular Tuesday meeting. Members also adopted the Capital Improvement Program , which allocates $103.1 million for the upcoming fiscal year, funded by a mix of bonds, fund balance transfers and grants.

Nearly $16 million of casino gaming tax revenue boosts the budget, allowing for a 5-cent reduction of the real estate tax rate, bringing the effective rate from $1.30 per $100 of valuation to $1.25. Council enacted a 5-cent credit to the tax rate last year.

The budget will transfer $78.4 million to Portsmouth Public Schools, which includes an increase of $15 million in new funding from the last fiscal budget request. The $15 million was originally funded with a mix of new funds and some of the school system’s reversion funds that are sent back to the city each year, but council worked out a deal before adopting the budget to ensure all $15 million came from the city’s coffers.

Since it was unknown at the time the budget was put together how much the state would grant teachers for raises, city leaders conservatively put that estimate at 1%. But since the state budget signed by the governor this week provides raises at 3%, it frees up about $3 million in council’s budget that can be allocated elsewhere. Council agreed at a previous meeting on a “priority contingency fund” to put those dollars toward lowering the water and sewer rates and add a few extra cents of relief on the real estate tax rate if possible.

Also included in the fiscal 2025 budget is 3.5% general wage increases for full time employees and 3% raises for state-supported full time employees. More than $2 million of casino revenue will help address public safety salary compression.

The city’s personal property tax rate for vehicles will remain at $5 per $100 of assessed value, though the city will offer a percentage reduction. Rather than adjusting the personal property tax rate, cities can ease the burden on residents by calculating taxes based on a percentage of a vehicle’s assessed value. Portsmouth receives a fixed amount of state funding each year to provide tax relief, and this year’s budget maintains 50% off the assessed value of vehicles for the first $20,000 of value proposed.

Council members adopted the budget in a series of votes that were mostly unanimous. Council members De’Andre Barnes and Vernon Tillage voted against the measure that increases water and sewer rates by 5%, which would amount to $5.44 per 100 cubic feet for water and $4.28 for sewer. For the fiscal 2018 budget, the council enacted a 5% annual increase to the city’s water and sewer rates to comply with federal and state mandates for managing aging infrastructure.

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Barnes also voted against the budget items that set the real estate tax rate at $1.30 per $100 of valuation as well as change fees at the Bide-A-Wee city-owned golf course.

The budget was first compiled and presented by former Interim City Manager Mimi Terry earlier this year. Then former City Manager Lydia Pettis-Patton assumed the position as interim for about a month as council continued to make modifications to the operating budget and CIP before officially adopting it under the new permanent city manager, Steven Carter, who took over in April .

The budget initially proposed $250,000 of funding for a medical debt relief program. But last month, council opted to put those funds toward other priorities, including $15,000 to ETSI Health Clinic that will be allocated in current fiscal year, $100,000 to the Tidewater Community College Skilled Trades Academy, $50,000 for NextGen scholarships provided by the Hampton Roads Workforce Foundation and $150,000 to the Virginia Symphony.

Council added to the CIP funding to support initial work on a new recreation center in the Prentis Park neighborhood , the construction of dog parks, a regional rail-to-trail project and a host of improvements at City Park and Bide-A-Wee. Several million dollars will go toward sewer pump station improvements, dam upgrades, drainage and street improvements and equipment replacement.

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