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Staff outlines real‑estate tax stabilization policy and the revenue impact of reducing the rate
Summary
Finance staff explained the city’s tax‑rate stabilization policy, showed how each penny of the rate equals about $1.5 million in revenue, and quantified the shifting share between city and schools under different rate scenarios.
Carl Daughtry explained Hampton’s real‑estate tax‑rate stabilization policy (sometimes called the SAP cap): the policy uses the larger of resident income growth or consumer‑price measures to equalize the amount of real‑estate revenue used in the budget. For 2025 staff used a resident income factor of about 8.2% to set the policy yield.
Daughtry showed that a one‑penny reduction in the real‑estate tax rate corresponds to roughly $1.5 million in revenue and that reductions also change the split between city and schools because the city shares 61.83% of residential tax revenue with the school division. “The equalized tax rate under the tax stabilization policy is a dollar 17, which is 1¢ more than our current policy of a dollar and 16¢,” Daughtry said, illustrating trade‑offs council must weigh if it considers reducing the rate in light of rising costs elsewhere in the budget.
