After Richmond voters gave city officials permission to raise the city’s sales tax to help fund public schools, Mayor Danny Avula is recommitting to lowering two other taxes to ease the impact on residents.

The 1% sales tax voters approved Tuesday doesn’t take effect automatically. The City Council still has to vote to enact it. Under state law, the city has to wait at least 120 days after that vote to start collecting the higher tax.

Officials don’t have an exact timeline yet, but Avula said he’s working with Council leadership on a plan to introduce legislation to raise the sales tax from 6% to 7% while lowering the meals tax rate from 7.5% to 6.5%. 

In a news release Thursday, the mayor also said he’ll introduce a budget next year that would take a penny off Richmond’s real estate tax rate, dropping it from $1.20 per $100 of assessed value to $1.19. That won’t be a substantial enough cut to offset rising tax assessments for many homeowners, but it would be the first such decrease since 2008.

For example, if a $400,000 home were to see a 4.5% increase in value (the average projected by the city assessor), the 2027 tax bill would rise by about $215 without Avula’s reduction to the rate. With the mayor’s reduction, it would go up about $175, saving the property owner about $40.

The mayor’s office didn’t give an exact timeline for when and how the tax policy legislation will be introduced to the Council.

Avula and others have characterized the plan as a balanced approach to tax policy, enabling the city to raise more revenue to build and renovate school buildings, without overburdening taxpayers and making it more expensive to dine at Richmond restaurants.

“Keeping these commitments to increased funding for school construction and tax relief will require thoughtful planning with our partners on City Council,” the mayor said in the release. “We will need to make some short-term sacrifices this fiscal year and continue carefully managing our spending.” 

In 2018, former Mayor Levar Stoney successfully pushed to raise the meals tax rate from 6% to 7.5%, pitching the increase as a way to better fund the school system. Under city policy, about a fifth of meals tax revenue is dedicated to schools. 

Richmond’s relatively high taxes on dining out have occasionally drawn pushback from restaurant owners who feel they can hurt businesses by driving customers away.

Between fiscal year 2018 and fiscal year 2025, the city’s meals tax collections rose from $36.9 million to $58.7 million.

On an Election Night that saw many localities across Virginia reject higher sales taxes for schools, Richmond voters overwhelmingly approved it. The yes side got almost 68% of the vote, with no prevailing in just a few precincts in the western side of the city.

The extra sales tax revenue will help finance bonds that can be used to build new schools or overhaul existing ones. Over time, city officials project the tax could immediately fund nearly $50 million per year for school system projects.With the new revenue expected to grow over time, and up to $850 million over the next decade. Richmond Public Schools officials have not yet laid out a clear plan for how the funds will be spent.

Avula said he’s attended some of the community meetings school leaders have held seeking input on a facilities modernization plan, and was “encouraged by their thoughtful work to ensure that our residents’ voices are shaping facility priorities. 

“I will continue to follow the process closely, and I have asked that their final plan consider all options for maximizing the impact of every dollar,” the mayor said. “Our shared goal must be to use these resources wisely so that as many current and future RPS students as possible have access to modern school buildings as quickly as possible.”

Council delays competing tax relief plan to 2027

Three Council members have signed on to legislation that would lower the real estate tax rate by four cents, a bigger drop than the mayor is proposing.

The Council proposal, first introduced over the summer, was on the agenda to be heard at Monday night’s meeting. However, the Council agenda now says the $1.16 proposal is being pushed to March of 2027, which is when Avula will propose his next budget based on a $1.19 rate.

“I figured if I did it now it would definitely get voted down,” Councilor Reva Trammell (8th District) said in an interview. Trammell has been fighting an uphill battle to significantly lower the tax rate, but it’s consistently been rejected by most of her Council colleagues.

Councilors Stephanie Lynch (5th District) and Sarah Abubaker (4th District) have signed on as co-patrons of the proposal that’s being pushed to 2027.

CAO set to give update on city’s fiscal health

The Avula administration has portrayed the city’s finances as tight since the mayor first took office in January of 2025 and was immediately thrust into a costly emergency when Richmond’s water treatment plant failed in his first month.

It appears the administration will reiterate those concerns Monday at the Council’s 4 p.m. informal session. 

A presentation uploaded to the city’s legislative website in advance of the meeting stresses that the city is projecting a budget deficit for fiscal year 2028 even with no tax relief. Measures under consideration to tighten spending, the presentation says, include a hiring freeze for “non-priority positions” and asking departments to identify 10% in cuts.

The presentation suggests Avula’s relatively modest proposals to lower rates for meals and property taxes could create “additional cost pressures.”

Contact Reporter Graham Moomaw at gmoomaw@richmonder.org