Petersburg to lose $1 million after overestimating personal prop - NBC12 - WWBT - Richmond, VA News On Your Side

Petersburg to lose $1 million after overestimating personal property taxes

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PETERSBURG, VA (WWBT) -

One day after the City of Petersburg approved major spending cuts and personal property tax hikes in order to overcome a $12 million budget shortfall, the city has a new financial obstacle. The city won’t receive nearly a million dollars it planned on because city leaders overestimated personal property taxes.

Since June, Petersburg has been working with a third party vendor to collect past due property taxes. During that process, some residents complained they were being improperly billed. After investigating, City Treasurer Kevin Brown says Petersburg discovered $1 million had been improperly assessed to property owners. That means the city will lose additional revenue it anticipated on collecting.

The news comes as Petersburg will soon implement an increased meals tax, lodging tax, and cigarette tax to residents and visitors.

"I've never seen it get this bad," said John Hill, who has lived in Petersburg for more than three decades. "Looks like the economy is getting much worse."

Soon, he and other neighbors will feel it.

"You’re going to pay $6 more for trash pickup,” NBC 12 explained to him.

“Aww man. That's not good…$6 is $6 regardless,” he said.

Restaurant-goers will also pay, as Petersburg increases its meals tax from six percent to seven percent - one of the highest in the region.

"I don't think it's going to help business, certainly,” said Erich Wolfgang of Saucy’s BBQ.

It’s been nearly two years since the popular restaurant expanded from an outside space, offering an indoors facility for customers.

"They get a little bit of a sticker shock. You got the price on the menu, and with the high meals tax added on to it, certain people question, 'is that the right price,'" he explained.

That's just the tip of the iceberg. Schools are also being hit hard, with the city saying it must cut more than $4 million in funding this school year.

"The financial challenges of the city will affect schools. We will continue to identify areas where budget cuts could be made through attrition and not filling vacant positions, while minimizing the impact on classrooms. These cuts will delay our progress, but they will not hinder our progress," Superintendent Marcus Newsome said in a statement.

He started work with the district in July, inheriting an unexpected budget shortfall.

"We will present our adjusted budget recommendations at the next School Board meeting in September," he said.

Then there's your personal property taxes that will soon go up. If a neighbor pays $200 in taxes for a car right now, that will go up to $208 when tax bills are due in February.

Just as the city was getting ready to implement the tax hike, NBC 12 uncovered a nearly $1 million mistake.

"We billed somebody and we billed them incorrectly," City Treasurer Kevin Brown explained.

He is not responsible for assessments, but he’s responsible for collecting the taxes neighbors pay. He says he discovered city leaders made the mistake after he brought in a third party vendor to help collect delinquent taxes. The vendor found that Petersburg miscalculated tax bills, and that’s leading to even more money that now, won’t be coming to the cash-strapped city.

"The city sent $10,388,628 of both Delinquent Real Estate and Personal Property Taxes to collections. Approximately $942,000 of that $10 million was adjusted. However, only $1.6 million of delinquent Personal Property and $2.3 million of delinquent Real Estate was included in the budget to collect. Therefore, the $1 million in adjustments does not affect the budget nor does it add to the deficit," city spokesperson Stephanie Harris said in a statement.

"We need to make sure that our books are correct, because you can't budget against books that are incorrect," Brown added.

Neighbors are just hoping their beloved city will come out on top.

"Hopefully the man upstairs will get us through it. I believe in Him, man," Hill said.

Across the board pay cuts for city workers are already in place, but the tax hikes for personal property, meals, cigarettes and lodging won’t take effect until October.

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