Legislation introduced this week in Richmond would give local governments greater ability to cut their residents’ taxes, but the faltering economy likely will prevent reductions from coming in the near future.
Sen. Mary Margaret Whipple, D-Arlington, has proposed a constitutional amendment that would allow localities to exempt the first 20 percent of a home’s assessed value from the owner’s annual property tax bill, as long as the property is a farm or the owner’s primary residence. Virginia’s constitution requires local governments to receive permission from the state to change tax laws, so jurisdictions cannot enact such an exemption on their own.
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To take effect, because it seeks to change Virginia’s constitution, the measure must win approval from the General Assembly in the 2008 session and from voters in November.
The slumping housing market has significantly shrunk the revenue local governments are receiving from property taxes, forcing officials to battle budget shortfalls and making the chances the governments will cut taxes remote.
Chris Zimmerman, a member of the Arlington County Board, said the 20 percent exemption would be helpful during booms in the housing market, such as the surge that fizzled out last year. In strong markets, housing values can escalate so fast that some homeowners can afford their mortgage but not rapidly rising property taxes.
“It might not happen when the market is down like it is now, but it is something better suited for stronger markets,” Zimmerman said.
Some local officials are not thrilled with the legislation. They said the state is putting pressure on them to cut their constituents’ taxes when county and city budgets are tight. If lawmakers want to trim taxes, they should cut state taxes or reimburse local governments for lowering local levies, said Prince William County Board Chairman Corey Stewart.
“What I don’t like is Richmond taking credit for tax cuts that are never going to happen and that they’re not going to fund,” Stewart said. “What Richmond needs to be doing is slashing its own funding and not taking credit for phony tax cut plans. It’s not going to work, it’s not going to be used and it’s not a tax cut.”
