Saturday, March 01, 2008

Virginia commercial and residential property tax issues returning to the table

Late in 2007 I posted a few blog entries about the Virginia law that allows increased property tax rates for commercial properties in Northern Virginia jurisdictions. Several jurisdictions, including Arlington and Fairfax counties, passed ordinances authorizing the commercial surcharges.

The Sun-Gazette has a story by Scott McCaffrey, “Manager Proposes 12.5 Cent Surcharge on Commercial Property”, Feb. 26, 2008, link here. The story refers to a proposal by Ron Carlee in Arlington.

In the Feb. 29 print issue, McCaffrey has a story “Tax Bills Headed Higher for Most Property Owners.” The residential tax rate would rise 3.4 cents per hundred. That would raise the median residential tax bill by $126. There was no link for the story as of now.

Assessments have dropped only slightly in Arlington; but the DC area, like many other areas, is suffering from the real estate slump associated with the subprime crisis. The house price drop problem is not as severe here as in many other areas, because the federal government tends to stabilize employment and incomes. The drop is more simply a product of the national economy as a whole, a combination of the current administration’s laxness on regulation, and carelessness (or even fraud sometimes) in the mortgage industry leading to the crisis.

Arlington will have a public hearing, probably on March 29, about real estate taxes, link here. A related link is here.

Still, there is concern that local governments will look for other sources to hit for revenue, in the light of declining property values. There is a concern whether to hit certain taxpayers for projects that do not benefit residents equally (yes, some people would like light rail on Columbia Pike). As one speaker noted in November at the Board meeting, local governments are sometimes tempted to regulate home-based business activity or telecommuting in order to increase revenues, and then make up an ideological justification. This hasn’t happened yet. Northern Virginia jurisdictions do tax home-based business incomes, but only income over a certain minimum; they also tax personal property (computer hardware) associated with business in a manner similar to the personal property tax on cars, but the rate is low.

The home-based occupancy permit link in Arlington is here.

An important related story from the Richmond Times-Dispatch is "State's high court rules Northern Va. transportation authority, taxes unconstitutional," by Jeff E. Schapiro, link here.

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