Watch: Making sense of real estate reassessment in Fredericksburg

by | Jun 2, 2024 | ALLFFP, Fredericksburg, Joey LoMonaco

On Tuesday night, the Fredericksburg City Council’s annual budget process crescendoed with the approval of a Fiscal Year 2025 real estate tax rate of 76 cents per $100 of assessed value. Additionally, there’s a one-cent fire levy, a first for the city as it looks to finance the purchase of two new pumper engines and public safety radios.  

So, 77 cents total. 

By comparison, the real estate tax rate for FY2024 was 89 cents per $100 of value. Sounds like a significantly higher rate, right? 

Eh, not really.  

Earlier this month, property owners in Fredericksburg received in the mail assessments with values on their land and buildings for the first time since 2021; what’s typically a four-year reassessment cycle was 3.5 years this time due to the COVID-19 pandemic.  

For example, this reporter’s total assessment went from $304,600 last time around to $399,400 on the 2025 notice — a 31.12% increase. During a pair of public hearings on the issue, residents reported even steeper hikes 

Now, it’s against state law for tax revenue to exceed 101% of the previous year’s levy in a reassessment year.  

The solution? Something called an equalized rate, which is a value at which the revenue with the reassessed values is roughly equal to the previous year’s revenue.  

In Fredericksburg, the equalized rate was determined to be 71 cents.  In essence, if City Council had passed a 71-cent rate for FY2025, the increase in residents’ real estate taxes would be negligible.  However, state code also allows for jurisdictions to set a higher advertised rate if “deemed necessary” and public hearings are held (Fredericksburg did so on April 23 and again on May 14).  

City Council set an advertised rate of 77 cents, which was then lowered to 76 cents after some deliberation. The “effective tax rate increase” for city residents — is six cents. 

Watch the video below to see what that will mean for one resident’s escrow account.

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