FREDERICKSBURG, VA — The Fredericksburg City Council on Tuesday formally adopted an operating and capital budget for fiscal year 2027 that will increase the real estate tax rate to 84 cents per $100 of assessed value.
The new rate represents a 4-cent increase over the current level. For the owner of a median-priced home in the city, the adjustment is expected to result in an approximate increase of $14.00 to $15.00 per month in real estate taxes, depending on individual property assessments.
Utility Rates Spark Equity Debate
While the real estate tax passed unanimously, a new two-tiered water and sewer rate structure drew significant scrutiny. The ordinance, which passed 6-1 with Councilmember Matt Rowe dissenting, aims to fund more than $110 million in mandated upgrades to the wastewater treatment plant and the Motts Run facility.
Under the new plan, the city’s largest users—who represent 10 percent of customers but consume 50 percent of the system's capacity — will pay higher "Tier 2" rates. However, advocates for vulnerable residents argued that apartment complexes, often served by a single master meter, would be unfairly swept into the higher tier.
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"This policy unfairly impacts vulnerable renters living in multifamily apartment housing," said Taylor Collins, speaking on behalf of the NAACP Fredericksburg. "When these multifamily complexes are moved into a higher pricing tier, the cost will be passed directly onto tenants."
Councilmember Willie McIntosh countered that because fixed fees are divided among many units in a building, the actual material difference between an apartment and a single-family home is "relatively small." He urged the council not to "lose the forest for the trees," identifying the "forest" as large-scale industrial and commercial users who must pay their fair share for infrastructure.
Councilmember Rowe, explaining his opposition, noted that his calculations showed apartment residents could pay roughly $60 more per year than single-family homeowners for the same water usage.
Councilmember Emily Kirchner emphasized the necessity of the revenue, stating, "If we want good water, we have to pay for good water." The council pledged to revisit the rate structure over the next year to explore more equitable billing categories.
Labor Unions Rally For Data Center Project
The meeting saw a massive turnout from regional labor unions advocating for the proposed 1500 Gateway Data Center Campus. Dozens of electricians, carpenters, and steamfitters urged the council to approve the project, which developers claim will generate $26.5 million in annual tax revenue by 2032.
"This project is worth the equivalent of 46 pennies on [the tax] rate with no new burden on residents," said James Kisler, an apprentice with IBEW Local 26. Other speakers highlighted the potential to "buy back time" with their families by working locally rather than commuting to Northern Virginia.
School Funding and Community Safety
The adopted budget includes a $1 million appropriation from the school system’s operating fund balance, a move requested by the School Board to meet their 2027 goals.
In a moment of personal reflection, Vice Mayor Charlie Frye was recognized for his work on HB702, a state bill inspired by his local gun give-back initiative.
"I sit before you... because of gun violence, because of witnessing a murder when I was in the third grade," Frye said. "Taking pain and turning it over to something that can help everybody... the fact that it's going statewide is huge."
Next Steps
The FY2027 budget will take effect July 1, 2026. Residents are encouraged to download the "iOn Water" app to monitor their usage under the new tiered system.
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