Richmond City Council Approves 2020 Budget, First-Ever Cigarette Tax
Richmond City Council has approved a budget for next year that includes new investments in schools and roads, and the city’s first cigarette tax.
After months of tense negotiations, Richmond City Council approved a budget that is almost identical to what was proposed by Mayor Levar Stoney in March. The new budget provides $17 million in new money for Richmond Public Schools and $16 million for street paving. One of the only things City Council rejected was Stoney’s proposed 7.5 percent increase in the property tax rate.
Fourth District Council Member Kristen Larson said she’s happy with the compromise.
“The big thing for us was to have the investments, but not raise property taxes,” Larson said. “I’m proud of my colleagues. Everybody really worked hard to collaborate, to see what we could get done without raising the real estate tax.”
In order to pay for the new investments without increasing property taxes, City Council cut $7.4 million in proposed funding from the capital improvement budget. That includes proposed renovation funding for community centers and the Richmond Ambulance Authority, among other projects. Richmond City Council also cut $2.1 million in vacancy funding for city departments.
City Council members could not find a consensus on eliminating or decreasing Stoney’s proposed cigarette tax of 50 cents per pack, meaning it will go into effect on July 1.
The Stoney administration estimates the tax will bring in around $3 million per year, but some city council members believe it could be much less because of tax avoidance. Under Virginia law, only cities, not counties, can levy a cigarette tax.
City Council Member Reva Trammell, who represents parts of Southside and the Jefferson Davis Highway Corridor, opposed the tax last month, saying convenience store owners near the border with Henrico and Chesterfield Counties would lose money.
“People in my district can just walk five minutes down the street and get their cigarettes in Chesterfield,” Trammell said. “People don’t just go to the store to buy cigarettes, they’re getting chips, sodas, and everything.”
Second District council member Kim Gray echoed those concerns. Gray said reports from the tobacco industry show Richmond could lose up to 150 jobs because of the tax.
Richmond’s utility rates are also going up. The budget calls for a 4 percent increase to water, stormwater and wastewater fees, as well as a 3.5 percent increase in gas rates. That translates into a monthly bill increase of $6 per month for the typical residential customer.
Gray and Trammell both introduced a failed amendment to stop the utility increases. Gray said many residents are already struggling to keep up with rising property taxes and cost of living.
“We want to know what’s happening with the money and we want tighter guidelines,” Gray said. “We don’t want utility rates to continually go up year after year.”
Other things of note in the FY 2019-2020 budget:
- $2.9 million for the Richmond Affordable Housing Trust Fund, the largest one-time contribution to the trust fund
- More than $800,000 in additional funding for the GRTC bus system. The Stoney administration says the funding will be used to keep buses in Southside running later and create new routes connecting Downtown and Mosby Court to a new grocery store in the East End.
- $485,000 to fund Richmond’s first eviction diversion program