Richmond City Council is poised to reject any cut in the real estate tax rate in the face of soaring property values that have boosted the amount property owners must pay.

The decision to essentially raise the tax on property owners as a result of increased valuations is expected to become a done deal at the council’s next meeting on Monday, Nov.8, amid projections from City Assessor Richie McKeithen that the value of city real estate will continue to skyrocket and double within 10 years.

His projections suggest Richmond property values could hit a historic $63 billion by 2032, up from the latest re-evaluation for the 2021-22 tax year that pegged the total value of property for tax purposes at $31.7 billion. The latest value is $3.7 billion higher, or an increase of 13 percent, compared with the city's 2020-21 assessed value of real estate.

In part, the decision is being fueled by City Council’s concern to have sufficient money for various needs, most notably to cover the cost of overhauling and increasing the pay of firefighters and police officers, who now are among the lowest paid in the Richmond region. The projected cost: More than $12 million a year.

Mayor Levar M. Stoney’s administration is strongly backing maintaining the current real estate tax rate of $1.20 per $100 of as- sessed value. The administration asserts it needs every penny of real estate tax – one of the most significant revenue sources for the city—to maintain a balanced budget and also to address unmet city needs.

The push to prevent any erosion is the tax rate is being made despite the unexpected influx of $200 million in federal pandemic relief funding and a projected $22.3 surplus from the 2020-21 fiscal year.

The stage was set for keeping the current rate at the Oct. 28 meeting of City Council’s Finance and Economic Development Committee led by Councilman Michael J. Jones, 9th District.

The committee, which includes Councilwomen Kristen N. Larson, 4th District, and Ellen F. Robertson, 6th District, approved a recommendation to the full council to kill a proposal from Councilwoman Reva M. Trammell, 8th District, to cut the tax rate.

The action by the committee virtually ensures the measure to maintain the cur- rent rate will be on the consent agenda for noncontroversial items that have close to unanimous support.

During the committee meeting, Lincoln Saunders, the city’s chief administrative officer, noted the current budget was built on the $1.20 tax rate and pointed to a projection from the city’s Budget Department that the city would need to shave nearly $20 million from spending plans in the current 2021-22 budget to maintain a balanced budget.

Ms. Trammell has argued that the current rate is becoming unaffordable to many lower-income homeowners and proposed that the council roll back the rate to $1.135 per $100 of value.

That $1.1135 rate, she stated, would ensure the city would receive about the same amount of real property tax that had been included in the 2021-22 budget, while also giving owners some relief and moving the city closer to the significantly lower property tax rates in neighboring Henrico and Chesterfield counties.

On a $100,000 home, Ms. Trammell’s proposal would have reduced the tax pay- ment from $1,200 this year to $1,135, a $65 dollar savings.

The council needs to vote at its single meeting in November to set the rate so the city’s Finance Department can generate the bills for property owners who must pay the first half by the mid-January deadline.

Ms. Trammell did not attend the Oct. 28 committee meeting to defend the reduction, but her proposal set off alarm bells in Mayor Stoney’s administration.

The $1.20 rate has been in place since 2007. At the time, it represented a 13-cent reduction from the previous rate of $1.33 per $100 and dropped the city’s tax rate to its lowest level since property taxes first began being collected around 1870 to support the new state-mandated public school system and the development of school buildings.

Absent City Council action to set a higher rate, the city’s property tax rate would automatically roll back to $1.071 per $100 based on the most recent increase in property values. The rollback rate set by the state is designed to provide the city with a 1 percent increase in income from the tax compared with the previous year.

In response to Ms. Trammell’s proposal, Jason P. May, city director of budget and strategic planning, expressed the administra- tion’s view in a memo to the committee. While such a reduction might not “create any immediate financial hardships or difficult budget decision,” he stated, he noted the lower rate would reduce property tax collections and reduce the city’s ability to meet immediate needs.

For example, Mr. May cited the $289 million total price tag for addressing the long-deferred maintenance of the city’s 80 buildings, including planning, design and construction.

Mr. May noted that in the 10-year period between 2019 and 2029, the city has budgeted only $20.5 million to deal with deferred maintenance, with another $23 million in the following 10 years. That proposed total of $43.5 million over 20 years is only a small fraction of the need, and is separate from the cost of replacing worn-out school buildings.

Mr. May also cited a projected cost of $142 million to replace aging vehicles in the city fleet and the $105 million needed to maintain bridges in the city. He also cited a need for the city to spend a projected $60 million over five years to adjust public safety salaries and invest $265 million to shore up the city’s retirement system and health insurance program as well as its self-insured fund.

“The proposed rate decrease will reduce the city’s projected property tax revenues by $70.8 million over the next three years and $304 million over the next 10 years,” Mr. May wrote.