The Virginian-Pilot editorial today weighs in on the 5% cap in real estate taxes being touted by Republicans Nick Rerras and Hank Giffin. A great line:
GOP leaders have responded with an outpouring of enthusiasm generally reserved for Brussels sprout casserole day at the Capitol cafeteria.
The editorial then makes the point that I’ve said before:
Cities and counties are overly reliant on real estate taxes to pay for government services. That’s a problem forced upon them by the state legislature, which offers local governments few other revenue sources.
The argument in favor of a cap says that even so, local governments should be able to live with a 5% increase each year. And, other states have done it without adverse consequences. Two things that require mention.
First, such a cap right now is unconstitutional. The Virginia Constitution requires all assessments to be at fair market value. To cap assessments, a constitutional amendment would be required. Realistically, due to the nature of constitutional amendments in Virginia, we’re looking at 2011 as being the earliest that such a cap would be able to be in place. At the very least, Rerras and Giffin should be telling folks about this delay.
Second, there is evidence that a cap on assessments has the unanticipated result of actually causing taxes to go up. There was an article in the July 2007 edition of Land Lines, a publication of the Lincoln Institute of Land Policy, that makes this claim. From the article (emphasis mine):
Researchers from Colorado, Idaho, Illinois, and Minnesota presented the results of their studies showing the effects of proposed or existing limitation measures in their states in a workshop sponsored by the Lincoln Institute in November 2006. They experienced initial surprise that the assessment limitations produced higher taxes for many property owners whom they would have expected to receive tax relief.
I plan to write a more extensive post on this article later. But for now, suffice it to say that the 5% cap, proposed by Jerry Kilgore in his 2005 campaign for governor, is just as bad an idea today as it was then. The fact that Kaine’s 2005 plan has been embraced by the legislature – on both sides – is telling.
Technorati Tags: Nick Rerras, Hank Giffin
VIVIAN J. PAIGE | All Politics is Local 
Unfortunately, Rerras’ favorite targets to sell this to are the “seniors” , as he likes to call them,who will vote for anyone who tells them that their taxes will be lower…whether they actually will be or not. There are a lot of “seniors” who are registered voters in his district.
OK. What is your solution to the problem of increasing taxes for fixed income retirees who are being forced out of their homes?
mary virginia,
That’s the problem, the Dems only solution to all problems is to increase taxes.
The V-P doesn’t want a limit on taxes, period.
mary virginia – tax relief for the elderly and disabled is available for folks who meet the income and asset limitations. I know that many people are not aware of this program, but it is there.
rlewis – and just who is advocatingfor higher taxes? The plan currently before the Legislature – to allow a homestead exemption of up to 20% of the property value – is one that Democrat Tim Kaine proposed when running for governor in 2005.
HMR – I don’t know – they are pretty supportive of the homestead exemption.
I think that all of us know that one day we may be on fixed incomes and that the cost of living will rise. If we haven’t been able to plan for it properly, we may not be able to stay in our homes, without the help of family, if we have any or reverse motgages, etc. That’s always been true and always will be. It’s no surprise. With the increased cost of everything, how DO you pay for schools, police, firfighters and public services??? Especially if you reduce taxes? I don’t want more taxes, but I can’t see how you cut them without cutting the services that we all need.
P.S. We are losing the aforementioned police, teachers and firefighters and deputies to other cities (and have for years) because of the low pay in Norfolk. And Rerras promised at the Northside Civic League Meeting increased pay and police presence in Ocean View. Who is going to pay for that?
“Tax relief for the elderly and disabled is available for folks who meet the income and asset limitations. I know that many people are not aware of this program, but it is there.”
That is a problem with many such programs. Where is the incentive to inform people of these programs? Where is the money to advertise these programs?
VP,
You are advocating higher taxes by posting this article and supporting the theory it won’t work. The solution is to cut spending not raise taxes. The Dems and unfortunately some Republicans refuse to understand this.
AEM – You can lead a horse to water but you can’t make him drink. The city advertises this program every year in the local papers (due to the filing deadline), the information is on the website and I certainly post about it. But I am very much aware that folks still don’t know about it.
rlewis – that’s quite a leap you made there. Neither the article nor I said anything about raising taxes. The choice between a tax cap of 5% – which is currently unconstitutional and may cost money to the very people we are trying to help – or a 20% homestead reduction – which we are going to get in 2009 – is an easy one. How supporting a 20% homestead exemption is “advocating higher taxes” is beyond me.
There are programs available to reduce your property taxes “if you qualify”. Have you ever thought about what those requirements are? Have you ever considered what a demeaning process you have to go through just to get some TAX relief? Do you think the city considers homeowners when they plan a budget? NO! The city’s budget is carried on the backs of homeowners. I have to live on a budget, so should the city. A 5% increase in property tax each year is enough for any city and it has worked in many other States. I wonder how Norfolk would fair if it were on a fixed income like some seniors are?
Mary, since you asked: what are the requirements?
VP,
I must apologize, I spoke to soon. I didn’t read your links and just skimmed your post. For that I apologize.
Commissioner of the Revenue, Sharon M. McDonald web page:
To qualify for Real Estate Tax Relief:
• You must be 65 years of age or totally and permanently disabled;
• You must live in the property to be exempted;
• Your combined income of owners and all relatives living in home cannot exceed $52,000 per year; and
• Your net worth, exclusive of the home, cannot exceed $350,000.
Which by the way, it was Paula Miller’s Bill that helped increase the income and asset level. So far over 700 Seniors in Norfolk have taken advantage of the change.
mary virginia – one little point I will make and that is that the proposed cap is on the assessments and not on the taxes. This is a critical distinction because if the assessments are capped and the tax rate is not, there is nothing to keep the taxes from going up. (And that is one of the points in the paper that I have in front of me that I’m going to write about later.)
rlewis – thanks!
orfdem – thanks for posting that info. I posted on my blog here last May.
As a member of the Real Estate Board, I heard an awful lot of complaints about rising assessments and taxes. In 2001, Norfolk was not at the state maximum for real estate tax relief. I urged council to raise its limits to the state maximum. Norfolk’s limits were $20,000 in income and $75,000 in assets, while the state limits were $50,000 and $100,000, respectively. Council did raise the limits to the state maximum.
As orfdem said, Paula Miller carried the bill to increase the income and asset limits to their current amounts.