A proposal from Davenport and push by Sup. Stroud reduced proposed increased

With a 3-2 vote, King George Board of Supervisors approved a 58-cent real estate tax rate for FY27, a 2-cent increase above the county’s equalized rate, and a fraction of the amount floated before last week’s meeting.

County Administrator Matt Smolnick had recommended a 10-cent real estate tax increase on top of the 2% meals tax increase the board recently approved to cover a budget deficit. According to Smolnick, every penny added to the real estate tax generates about $517,000 in revenue for the county.

“Even with that, you’re going to look at a shortfall if you were to take care of everything,” said David Rose from Davenport & Company, the county’s financial advisor.

While noting that King George remains in strong financial condition with high credit ratings and reserves well above policy minimums, he said the county had reached “an inflection point” after several years of using one-time money to support recurring costs.

However, for FY27, Rose proposed what he described as a temporary, one-time strategy involving interest earnings tied to the county’s 2023 bond issuance. According to Rose, approximately $20 million in unspent bond proceeds remain in a state investment account earning interest. Bond counsel confirmed the county could legally use roughly $2.5 million in bond interest to offset part of the FY27 budget gap.

“We basically can cut that 10 pennies down to five pennies and use that 2.5 million to get us through 2027,” Rose said.

However, Rose stressed the proposal was temporary. “It’s only for 2027,” he said.

Failed Rate Increase

After Rose’s $2.5 million solution was presented, supervisors debated how much of the remaining shortfall should be covered through a real estate tax increase versus reserve funding.

Supervisor Bryan Metts ultimately made a motion to adopt a 60-cent real estate tax rate — effectively a 4-cent increase above the equalized rate. That proposal ultimately failed on a roll call vote.

Only Metts and Supervisor Cathy Binder voted in favor of that motion.

Stroud’s Motion

Supervisor Ken Stroud pushed for a smaller increase, arguing the county should rely more heavily on its unassigned fund balance instead of taxing citizens for costs the county may not incur, especially when residents were already dealing with real estate reassessments that, according to Smolnick, averaged about 20%.

“The money that’s in the unassigned funds — that’s the citizens’ money,” Stroud said. “It’s not yours. It’s not mine. It’s the citizens’. So I would say spend some of their money.”

Stroud argued the county was effectively proposing to raise taxes to fund vacant positions that might never actually be filled. He argued that vacancies occur every year and it was unrealistic to assume every budgeted position would be fully staffed throughout the fiscal year.

Rather than permanently increasing taxes upfront, he said the county should wait to see whether positions were actually filled.

“I wouldn’t increase the citizens’ taxes to pay for people that don’t exist,” Stroud said during the debate. “If we do end up hiring the people and we do have to do that, then take it from the unassigned funds balance.” He argued those reserves could be replenished later.

He also tied the debate back to his controversial support for data center development. “So now to jack up the taxes and still give them a data center and the higher land assessments is wrong,” Stroud said.

Chairman David Sullins had repeatedly suggested the county was imposing unnecessary tax increases on citizens. At the end of every year, money that is not spent goes back into the unassigned fund balance. King George has been overbudgeting and underspending, returning millions to the county year after year to the point that the county is now sitting on roughly $48 million in its unassigned fund balance.

“It’s either Jesus math or smart investing or we’re overtaxing people. And we want to increase taxes again,” Sullins said.

After continued debate, Stroud successfully led a motion to approve the 58-cent real estate tax rate.

Binder voted no on the grounds that Stroud’s motion, particularly the figures he cited to support it, “was too convoluted.”

Metts also opposed the lower increase, stating, “that was a lot of mythical math.”