Real Estate Assessments- hoodwinked
We get hoodwinked on an annual basis when it comes to real estate assessments. 58.1-3321 in the Code of Virginia is an arcane provision relating to local real estate assessments that is a well-kept secret. It is difficult to explain simply in a sound bite.
This law provides that if the local real estate assessments rise so that the total real estate tax revenue collected by the locality goes up by more than 1 %, the real estate tax rate will automatically adjust downward so that the tax collections remain revenue neutral to the previous year unless the local governing body proactively intervenes to counteract the automatic reduction. Whew. What a mouthful!
In order to prevent the automatic tax rate adjustment, the governing body must hold a public hearing and then vote to set the rate. So if the county-wide assessment goes up 16.6% as it did in Chesterfield, if the supervisors did nothing, the tax rate would drop approximately 16.6%. So to some degree, most property owners would not experience an increase in their out-of-pocket tax paid. Most localities would still experience increased revenue collections because of new construction, both residential and commercial, added to the tax rolls.
My unsubstantiated understanding of the purpose of this law was to prevent locally elected officials from passively allowing inflation and increasing property values to allow existing rates to remain unchanged while property values went up, which was in effect a de facto tax increase. This requires them to go on record voting, even if the old rate is maintained, which is a tax increase. At election time,this allows incumbent candidates to claim that they never voted to raise taxes, or even voted to lower taxes, blurring the line between voting for maintenance or lowering of the rate versus real tax lowering. Contrary to their claims, taxes have usually been raised.
Public hearings are held regarding the real estate tax rate. But almost invariably, the new tax rate has been decided in advance between the county administration and the governing body. The public hearing is usually going through the motions to satisfy the state code requirement. The tax rate usually ends up being what has been publicly proposed in advance. If it is lower than proposed, I am cynical enough to believe that this has also been decided before the meeting, and the public orchestration of lowering the rate from that which has been requested by the administration is for show. When the gavel falls calling the meeting to order, the new tax rate has been pre-ordained, regardless of the public input at the meeting.
When I spoke at the last public hearing in my locality, I pointed out that to my recollection, I did not recall a single year during the service of any of the existing board members that taxes did not go up, regardless of where the rate had been set. A board member conceded my point as being accurate and then denigrated my remarks by saying he was proud of his voting record regarding always raising taxes. He then proceeded to tick off a long list of accomplishments and projects in the county over the last twenty years which could not have been accomplished without the transfer of wealth from the private citizenry to the public trough (my words, not his). So much for a public hearing and citizenry input.
Will we ever see the day when a locally elected body allows the automaticity of 58.1-3321 to kick in and keep the real estate collections revenue neutral except for the inevitable increased collections from new growth?
Max Maizels
Henrico County