Isle of Wight County homeowners would see a 5-cent, or 6.8%, real estate tax increase and a 5% increase in their water rate come July 1 under County Administrator Randy Keaton’s proposed $113 million fiscal year 2025-26 budget.

It would give Isle of Wight County Schools less than half of the $6.6 million increase in local funding the School Board requested.

Keaton’s budget proposal, presented to county supervisors on April 3, would reflect a $5.6 million, or 5.2%, increase from the $107 million budget for the current fiscal year.

The majority of that increase is tied to $3.3 million in additional income from the higher real estate tax rate, which would be 78 cents per $100 in assessed value. Another $712,000 is tied to new houses expected to be built.

According to a chart included in Keaton’s presentation, the 78-cent rate would be tied with York County for the fourth lowest real estate tax rate in Hampton Roads. Only Surry and Southampton counties, both of which presently charge 71 cents per $100,  and the city of Williamsburg, which charges 62 cents per $100, are lower.

Windsor residents would pay a combined 89-cent rate based on the county increase and the town’s current 15-cent rate. Smithfield taxpayers would pay a 92-cent combined rate based on the county increase and the town’s 16-cent rate.

The 78-cent rate is 8.2% lower than the 85-cent rate Isle of Wight charged in 2022 before supervisors lowered it to 71 cents in 2023 to partially offset the reassessment that year that saw single-family home valuations rise 34% on average. The rate was raised to the current 73 cents in 2024.

The supervisors previously voted in March to readopt a $4.50 per $100 car tax rate ahead of the mailing of bills this month that are due June 5.

“This is strictly a maintenance budget. This is a term we haven’t used in a while … we’ve usually been able to expand programs or add staff; this does not include any new positions for the county or for the school system,” Keaton said.

The expected increase in real estate tax revenue from the rate hike would partially offset the $3.6 million Keaton expects to be uncollectible in 2025-26 due to the county’s tax relief programs for the elderly and disabled and the state-mandated tax exemptions for disabled veterans and the surviving spouses of soldiers killed in action.

In 2011, the General Assembly passed legislation allowing 100% tax relief on residences located on up to an acre of land and one vehicle to veterans identified by the U.S. Department of Veterans Affairs as having a service-connected disability, regardless of income. The median tax-exempted home in Isle of Wight was valued at just over $450,000 in 2024. Commissioner of the Revenue Gerald Gwaltney told county supervisors last year that just under 700 people qualified for an average $3,400 in relief per person. Just over 700 veterans and surviving spouses also qualified for just over $600,000 in car tax relief, rendering $2.9 million or roughly 4.5% of the county’s tax base exempt.

“Right now we’re the sixth most impacted locality in the state,” Keaton said.

A General Assembly bill that would have partially reimbursed “high exemption” localities like Isle of Wight stalled in a state Senate committee earlier this year.

“Lord knows we want to take care of our veterans, but other people above us do a program and expect us to figure out how to pay for it,” said Supervisor Joel Acree.

 

School funding

Keaton is proposing a $3.1 million, or 9.3%, increase in local funding for Isle of Wight County Schools’ annual operating budget.

The amount matches what IWCS Superintendent Theo Cramer identified as mandatory expenses at a joint March 27 meeting of the supervisors and School Board. The total includes funding for a state-required 3% pay raise for school employees and a $1.6 million increase in health care costs.

Isle of Wight County employees would also receive a 3% pay raise per Keaton’s budget.

It would not, however, fund any of the 14 new full-time IWCS positions or the 1% to 2% annual increases teachers would ordinarily be due on top of the state-mandated raise under the division’s 35-step pay scale. If Keaton’s budget is adopted as is, it would mark the second consecutive year the school system’s step increases are frozen.

“That was all we could even begin to afford even with the 5-cent tax increase,” Keaton said.

The $36.3 million contribution to IWCS would amount to 32% of the county’s total budget. Cramer had urged upping the county’s share to 35% in light of IWCS no longer receiving millions in federal COVID-19 money that expired last year.

The budget’s capital improvements plan includes an additional $12.8 million for one-time expenses, half of which are school-related.

It would fund a $4 million replacement bus garage, five new school buses at $763,000, a $1.4 million expansion of Smithfield High School’s band room, $180,000 for weapon detection systems at Isle of Wight’s two middle schools and $125,000 for Americans with Disabilities Act-compliant bleachers.

Sources of funding for the capital plan include $1.5 million in upfront payments the county expects from the Sycamore Cross solar farm approved last year, $760,000 in school capacity-related payments from housing developers, $4 million from the county’s unassigned fund balance, $600,000 from leftover 2024 bond funding and $6 million in new debt.

The county has already received $2 million from Sycamore Cross and plans to use that money before the end of the current fiscal year to purchase new fire and rescue vehicles, Keaton said.

Keaton said the proffered money from developers can be put toward the SHS band room renovation since IWCS’ plan is to renovate the school’s unused boiler room, which will free up the existing band room as additional instructional space.

Non-school capital projects include $300,000 to partially fund the expansion of the Carrollton Volunteer Fire Department, just under $2.2 million for a new Windsor branch of the Blackwater Regional Library, $265,000 for roof and heating, ventilation and air-conditioning replacements at the Smithfield library branch, $500,000 for utility vehicle shelters, just over $1.1 million for parks and recreation including funds for a first phase of the long-planned Bradby Park in Rushmere, and $2 million for upgrades to multiple pump stations including one in Windsor on the verge of failing.

 

Water and sewer rates

Keaton said a 66-cent increase to the county’s current water rate of $13.15 per 1,000 gallons is needed to keep pace with a 4% increase in the cost of buying water from the Western Tidewater Water Authority, an entity formed from Isle of Wight and the city of Suffolk. The WTWA is subject to biennially escalating payments to the city of Norfolk per the 2009-signed Norfolk Water Deal, but county officials say that’s not solely what’s driving what would be the eighth Isle of Wight rate hike since 2015. Keaton said last year that 2024’s $1.4 million Norfolk Water Deal payment accounted for 10.4% of the county’s total utility budget.

Keaton is also proposing a $2 hike in the county’s sewer rate, which is currently $7 per 1,000 gallons based on water usage and hasn’t changed in several years.

Keaton said in March that a sewer rate increase may be necessary to fund at least $1.3 million in needed repairs to the 25-year-old sewer system serving the town of Windsor. Per a 1997 agreement with the town, Windsor provides its residents with public drinking water while the count owns and operates the vacuum-powered sewer system.

Isle of Wight County supervisors have scheduled an April 24 public hearing on the budget and are tentatively scheduled to vote May 15 on the proposed operating and capital budgets and tax rates.

Editor’s note: This story was updated to correct that Isle of Wight’s 2024 water rate is $13.15 per 1,000 gallons, not $12.96, and that Isle of Wight has the fourth lowest real estate tax rate in Hampton Roads, not the third.