The Virginian-Pilot
©
RICHMOND
The General Assembly won't authorize local governments to give real estate tax relief to home-owners this year, or anytime soon.
Two pieces of legislation that were part of a package to give localities that power - the so-called "homestead exemption" - were sent back to a committee Monday by the Senate, effectively killing the issue this year.
The measures would have placed the tax relief question on the November ballot for the purpose of amending the state constitution.
The homestead exemption legislation would have permitted cities and counties to exempt or defer up to 20 percent of residential real estate taxes owed by homeowners.
Because state law requires that constitutional amendments be passed twice by the General Assembly - with an election of state delegates or senators in between - the earliest the tax relief program now could be approved by voters is 2010.
Both proposals, HB11 and HJ4, were sent back to committee on identical 21-19 votes.
All 19 Republican senators and two Democrats - Sens. Charles Colgan, D-Prince William, and Phillip Puckett, D-Russell, voted to send the measure back to committee.
"It doesn't give everybody a 20 percent tax break," said Sen. Kenneth Stolle, R-Virginia Beach, who made the motion to send the proposals back to committee. "What it does is they're going to give some residential areas a tax break at the expense of other residential areas. And I think that's the fundamental problem with the bill."
Similar measures passed both the House and Senate last year with broad bipartisan support. Those bills passed, Stolle said, because last year was a General Assembly election year.
"People wanted to get a bill through that they could say they voted for and there wasn't a lot of scrutiny given it," he said.
Sen. Chap Petersen, D-Fairfax City, urged his Senate colleagues to support the proposals, calling the homestead exemption "a tax cut for folks that can't afford a lobbyist."
But Colgan said he couldn't support legislation "to tax real estate in different categories at different tax rates."
"I think that's wrong," he said.
The homestead exemption isn't a new idea, but the recent incarnation of the proposal got a push from the Norfolk Tea Party 2, an anti-tax group that sent caravans of people to the General Assembly this year and last year to support it.
Proponents of the homestead exemption have said it is needed to fight escalating real estate taxes that have fallen largely on homeowners and have not affected commercial or business property as much.
Norfolk City Councilman Barclay C. Winn, a Republican, expressed anger at the vote, saying business interests "got to the state Senate."
Sen. Ralph Northam, D-Norfolk, who sponsored a homestead exemption bill this session that passed the Senate but was killed in the House, called it "by far the No. 1 issue with the voters - the skyrocketing property taxes."
Northam pledged to carry similar legislation next year "because the people need it desperately," he said.
Virginia Beach City Council members took no formal stand on the homestead exemption, but Councilman Bob Dyer supports the concept.
"I'm disappointed," Dyer said. "The residential taxpayers have been subjected to a disproportionate burden over the years with an unfair and arbitrary way of taxing."
Stolle said local governments don't need approval from the General Assembly to cut real estate taxes. "They have the ability to cut taxes if they have the backbone," he said.
Staff writers Harry Minium and Richard Quinn contributed to this article.
Julian Walker, (804) 697-1564, julian.walker@pilotonline.com
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Once again protecting the banks
Once again our shameless legislature is protecting the credit industry and turning a blind eye to the citizens of Virginia. While the elderly are loosing their homes because they can't protect equity in their homes from payday lenders and credit card companies, the politicians are lining their political pots and lobbying frm coffers with contributions and fees from credit companies. Shame on you all.
Value is not realized until you sell
This talk bout Fair market and real market is just laughable in this area. The "Fair Market" was the same market that made a 1.00 beanie baby worth 20 bucks. It's not the fair market when investors buy up property with the hopes of striking a well of cash. This is the difference between the two. The real fair market are what the people themselves can afford, not a conglomeration of companies like Runnymede are able to buy. This is artificial inflation. So while the increase of taxes go up the people who just get by suffer. I've been extremely late on tax payments before because I was near poverty, so I know what a 12% increase in total taxes does to hard working people. And it is truly laughable when VB had a surplus just a couple of years ago. Now that Surplus gives them the ability to charge more for the next year to keep the funding the same amount. Talk about a shell game.
Fair Enough
I have to agree that every citizen should be involved in the budget process to speak up for the kind of community they want. Some clearly put low taxes as the highest priority, others want a range of quality services even if it costs more. That is what the budget process is about. But we certainly did not need a Homestead Exemption for that discussion to take place. Every council budget is the allocation of scarce resources, and in my view it is up to members of council to deliberate on the balance between the tax rate and the services citizens want.
The problem is...
The problem is, in VB, City Council reduced the tax rate, but not nearly enough to offset the rise in assessments. The real estate tax I've paid on my home went up 12% last year, 11% the year before, 8% the year before that. I guaranty, my income did NOT go up at rates anything like that. City Council should have cut the rates more, to keep their revenue in line with inflation. Instead, city revenue and spending has grown at exorbitant rates, and now that the market value increases have stopped, the bureaucrats and pols can't feed their spending habits. It's time for new leadership that gets back to basics and protects the taxpayers money, not steals it.
Market Value/True Value
To me, it is really scary when citizens distrust the market and want to put caps on what the market is telling us. A free market is absolutely the best way to determine value, and in the case of homes, in almost every case there are adequate comparables to establish a market value. The basic problem here is that for years, homes were undervalued, and while the run up in values a few years ago may now appear to be excessive, the fact is that the value to which homes have run up is still holding up, just not increasing like it did. Perhaps values will decline in some neighborhoods, but generally, values are holding steady. So while homeowners will complain about their assessments, they should take pleasure in knowing that their home has increased in value. Since that has occured , it enables the city council to cut the real estate tax rate, which is exactly what has occurred at the Beach as rates have declined from $1.22/$100 of assessed value to the current $0.89. Like Stolle said, council can cut it more if they can.
Forget the Homestead Exemption and pass something with teeth.
The Homestead Exemption would only have been a stopgap anyway. Let's work on passing what we really need: an ammendment capping assessment increases at the rate of inflation or salary growth. Face it, "fair market value" isn't fair because the folks who set real estate prices (realtors and builders) will keep driving up prices because their own incomes are tied directly to sale prices of homes.
Democrats Should be Ashamed
Democrats, who would normally protect the rights of moderate and low income citizens really abandoned their principles to support and vote for the Homestead Exemption. For it is hard to support a tax break of $8,000 for a wealthy oceanfront homeowner, to be paid for by higher taxes on rental property. As pointed out herein, city councils would have had to raise the tax rate to make up for the loss of $60,000,000 at the Beach, so renters who were not eligible for the tax break would have paid 30% more in property tax. Ironically, even homeowners would have had to pay more, and if they wanted the break, would have had to stand in line to apply for the tax break. At the Beach, that would have been 106,000 homeowners, and if their spouse was on the deed, both of them would have had to prove who they were and that they did not rent out their home. Ironically, Senator Stolle and colleagues saved face for a lot of politicians, the Governor included, and instead of condemnation, he should be praised for his courageous action.
Why some worry what the rich get or don't get ?
"Stolle said local governments don't need approval from the General Assembly to cut real estate taxes. "They have the ability to cut taxes if they have the backbone," he said"
What is it that people don't get? Go after your city council if you're unhappy you elected them.
You keep elected the same people for another term.
Not everyone can be rich so get over it unless you win the lottery but that's ok if you're rich just not the other person.
Make you local government reduce taxes instead of given tax breaks.
We wouldn't want that
God forbid there were a chance we might see some tax relief of any sort! What would the local cities and the state of VA do if we weren't being bent over nearly to the point of breaking to finance every pet project, social program, road repair, and school lunch a tax collector could think up?
Answer: find YET ANOTHER WAY to tax us literally out of our homes (double digit increases in tax revenues), out of being able to afford fuel, out of dining out (10.5% tax on meals), and the list goes on and on and on and on.
Where will it end? There really is only one way out of this mess: ELECTIONS. I have motivated groups to see the light in the past by presenting the facts (numbers don't lie), but I'm not sure I have it in me to try to motivate the citizens of five or more cities to see the light with the combined efforts of VB/Ches/Norfolk/Portsmouth/Hampton councils, the HRTA, and the Gen Assy in Richmond. I think it might just be time to move...
To shagy27
Your worried about tax breaks for the rich? Well guess who got the biggest break out of this Homestead Exemption...the folks with the biggest houses, that would be rich folks. Folks that rent get whacked twice, because they don't get the exemption, and they get to pay higher rents when the cities raise the taxes on rental real estate to offset the H.E. Talk about unfair! Then, anybody who buys from businesses will get to pay higher prices to help the business pay the higher real estate taxes it has to pay. All this HE did was shift the burden around, without, as I said below, solving the underlying problem.
Think about it. You get your HE tax relief, so you no longer put pressure on your local government to cut taxes or control spending, and same old spendthrift politicians are still in office, still wasting taxpayers money. What we need to do is let those pols feel the heat, throw them out of office at the next election.