Northampton Transient Occupancy Tax Collections Up 74 Percent in 5 Years

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By Stefanie Jackson – Northampton’s proposed budget for fiscal year 2020 is around $28.5 million, an increase of about $378,000, or 1.34 percent, and even though Director of Finance John Chandler said the budget has grown a little more than 15 percent over the past five years – not a lot compared to the rate of inflation – there is one “shining star” among the county’s revenues.

Transient occupancy taxes collected in Northampton increased by 74 percent in the last five years – a higher growth rate than any other tax revenue in the county. The tax applies to visitor accommodations such as hotels, bed-and-breakfasts, and campgrounds.

Forty percent of the transient occupancy taxes go into the county’s general fund, and of the remaining 60 percent, 45 percent helps fund the Eastern Shore of Virginia Tourism Commission and 15 percent is for tourism-related capital projects.

In the same five-year period, revenue from building permits, planning and zoning fees, and other permits and fees increased more than 40 percent, and sales tax revenues rose about 28 percent.

Chandler said September and October are among the best months of the year for Northampton for sales taxes because there is a two-month “lag” between the time purchases are made and the time the county receives the revenue, so September and October reflect sales activity in July and August, during tourist season.

Northampton’s towns receive more than 12 percent of sales taxes, and the county gets the rest.

In FY 2020, Northampton expects to receive $1.4 million from sales taxes, $450,000 from transient occupancy taxes, and $350,000 from food and beverage taxes.

Real estate and personal property tax revenues combined will increase about $150,000 and cover around $18.5 million of the budget. Property tax revenues have increased about 11 percent over the last five years.The county expects to get about $98,000 more from personal property taxes in FY 2020.

In 2015, the real estate tax rate was 68.05 cents per $100 of assessed value. The rate was raised to 83 cents per $100 in 2016 and has not changed to date.

Chandler said the last two changes to the tax rate were not technically tax increases, but “equalization tax rate adjustments based on assessed value,” but Supervisor Robert Duer pointed out that to the average citizen, “it looks like a tax increase.”

Northampton’s real estate taxes pay for 18.78 percent of the county’s debts, and Chairman Spencer Murray wants that figure to stay below 20 percent. He admitted accomplishing that goal may require some “creative financing” in light of structural issues at Northampton High School that must be addressed.

Supervisor John Coker asked why only about $4,000 more is expected to be collected in real estate taxes compared to last year. Duer observed last year the county had an “ex- cellent” year for collecting back taxes, which are now paid up. The commissioner of the revenue estimates the assessed value of all real property in Northampton will be a little more than $2 billion. Property values peaked in 2012, when they reached nearly $3 billion.

The Northampton County Sheriff’s Office made a more conservative estimate this year of how much in fines and forfeitures will be collected – only $665,000, or $95,000 less than last year – which Murray remarked is “not chump change,” considering how the lowered estimate will affect the overall budget.

The proposed budget includes about $607,000 in non-revenue from the county’s undesignated fund balance, a transaction that Chandler likened to transferring money from a savings account to a checking account.

In accordance with state legislators’ recommendations, the budget will be adjusted to include a 3 percent raise for regional jail employees and constitutional officers, which include Northampton’s sheriff, commonwealth’s attorney, circuit court clerk, commissioner of the revenue, and voter registrar.

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