Richmond CAO floats possibility of reducing real estate tax rate next year
Mayor Danny Avula isn’t changing Richmond’s tax rates in the pending city budget, but a top City Hall official recently hinted it could be doable next year.
Exercising some spending restraint this year, Chief Administrative Officer Odie Donald II told the Council earlier this month, should free up room in next year’s budget to give serious consideration to lowering the city’s real estate tax rate for the first time since 2008.
“I think the mayor is committed to some type of reduction,” Donald said at an April 6 budget meeting. “And he is the boss. He makes the final say.”
Donald cautioned that he was not trying to make any “breaking news,” but his remarks were one of the Avula administration’s most direct expressions of support yet for the type of across-the-board tax relief Avula has previously said the city could not afford.
With home values rapidly rising in many Richmond neighborhoods, a small reduction in the real estate tax rate wouldn’t necessarily translate to a tax cut for all homeowners. But it could partially offset higher tax bills expected to go out in 2027 when the city catches up on reassessing property values after taking a year off from its normal process.
Graham Moomaw
Donald said that by keeping spending in check for the city’s next budget cycle, a “bigger windfall” could come for fiscal year 2028, which begins in the summer of 2027.
“If we’re all tightening our belts this year and the amendments don’t add $20 million or $30 million to what our goals are, we should be able to potentially reduce that tax rate,” the CAO told Council members as they were reviewing and considering amendments to Avula’s budget proposal.
Several City Council members have been pushing for a reduction in the city’s real estate tax rate, which is currently $1.20 for every $100 of assessed value. The Council has taken several votes in the last few years on proposals to lower the rate to $1.16. Those votes have failed, which has left the tax rate unchanged.
“The Council has been trying to reduce the real estate tax for some time,” Councilor Ellen Robertson (6th District) said during the budget discussion as she asked Donald to address the administration’s plans on tax policy.
Sarah Vogelsong
Though the Avula administration initially resisted the Council’s push for a lower tax rate, Donald said the mayor has heard the Council “loud and clear.”
“Prices are going up for everybody and we have to have resources to be able to deliver,” Donald said. “But at the same time, we have to make sure that our community is affordable for the people who are already here, not just affordable for the people coming from all of these high-end places who can afford to live here.”
Donald said the city might be unable to pull off the four-cent reduction Council members have called for, but he indicated it should be doable to at least knock one or two cents off the rate.
One of the key arguments against lowering the city’s real estate tax rate is that it could disproportionately benefit owners of the city’s highest-value properties, who would save more than the roughly $150 in relief that would go to a typical city homeowner under a four-cent reduction.
Supporters of lowering the tax burden have argued ever-growing tax bills are contributing to Richmond’s housing affordability problem by driving up costs for long-time residents at risk of being priced out of their city neighborhoods into lower-tax counties nearby.
Both former Mayor Levar Stoney and Avula have supported targeted forms of tax relief meant to steer help to people most in need. But officials have also been increasingly blunt about the city’s struggling Finance Department being ill-equipped to handle the additional bureaucratic work that comes with more complicated relief programs.
Graham Moomaw
As part of this year’s budget talks, officials agreed to end a pilot program designed to give $1,200 in direct housing aid to lower-income Richmonders. That initiative, known as the Gap Grant program, was proposed by Stoney in late 2024 as an alternative to an across-the-board tax cut.
As Avula took office in early 2025, the city failed to effectively implement the program. The Finance Department was overwhelmed with applications for the money. As of early this year, the city had only distributed about $732,000 of the $3.9 million set aside for the program. The Avula administration and the Council recently agreed to end the Gap Grant initiative and use the almost $3.2 million remaining on other spending priorities.
After Council members floated another limited tax relief plan that would allow some homeowners to defer the impact of tax increases until they sell their home, the Avula administration warned that too would be very difficult for the Finance Department to successfully implement.
The tax deferral proposal is still pending, but now has support from at least five Council members, indicating it could potentially pass if it clears the committee process and is put to a vote by the full body.
Contact Reporter Graham Moomaw at gmoomaw@richmonder.org
