Legislature to Consider Bill That Could Offer Rebates of Up to 20%, Easing Rocketing Valuations
By Kirstin Downey
Washington Post Staff Writer
Monday, January 7, 2008;
B01
A big tax break might be on the way for Virginia homeowners as the legislature edges closer to passing a constitutional amendment that would permit a homestead property tax exemption.
Under the bill, submitted by Sen. Mary Margaret Whipple (D-Arlington), local governments would be allowed to give homeowners as much as a 20 percent rebate on their real estate assessments, which could mean savings of hundreds of dollars a year.
Whipple has championed the concept for years as a way to give voters some relief from double-digit increases in their property taxes, and now the measure appears to have a good chance of approval.
The homestead exemption also was promoted by Gov. Timothy M. Kaine (D) during his 2005 campaign. It requires a change to the state constitution, which means the legislature must approve it twice before it goes to voters, who are unlikely to turn down a tax break.
Lawmakers easily approved it last year, and if they do again, Virginians will vote on the proposed change in the Nov. 4 election. The legislative session begins Wednesday.
"I believe what's important is fairness in the tax system," said Whipple, who said it would allow the tax burden to be shifted from homeowners, who have been carrying a heavier load, to commercial property owners.
During the recent real estate boom, residential assessments soared while commercial assessments rose less dramatically, shifting some of the burden from commercial property owners. State law required residential and commercial assessments to be set at the same level, so local governments responded by cutting the tax rate. Whipple said the homestead exemption would allow local governments to give homeowners a break in years when assessments skyrocket.
Many homeowners are licking their lips in anticipation.
"The assessments have risen so steeply," said Hans Bauman, an Arlington County resident who said his taxes have more than doubled in the past five years as real estate values rose, and now cost him an extra $325 a month. "It's welcome news to hear there may be some relief coming."
With a 20 percent exemption, Bauman would save more than $1,400 a year on his home, which is assessed at $862,000.
Wayne Kubicki, a Republican activist in Arlington, said he hopes the legislature will pass it.
"It's something the board should be able to do" to help residents deal in the future with rapidly rising assessments, he said.
But local governments, already wary of budget hits from the declining real estate market, are worried about the potential impact if taxpayers ask for the full 20 percent rebate. Local elected officials would have the option of setting a lower percentage.
"We're nervous; we don't know what will happen," said Arlington County Board member Barbara Favola, who said she supports the concept but is wary of how the bill would be implemented.
"The idea of it is obviously good and well intentioned," said Alexandria City Council member Paul Smedberg (D). "But the only vehicle we have to pay for services is the property tax, so this needs to be very carefully thought out."
Many local governments, including Arlington's, have endorsed it in general terms.
"Arlington supports the homestead exemption," said Patricia Carroll, Arlington's liaison to the legislature. "We'd like to have it as a tool in our toolbox."
Officials are concerned, however, about the drafting of the enabling legislation, which will define exactly how much latitude local governments will be given in deciding how they interpret and implement the tax, Carroll said.
"We're pushing for as much flexibility as possible so each locality can determine the kind of ordinance it wants," Carroll said. For example, a local government could decide the exemption should be 5 percent, or 20 percent, or the first $100,000 of assessed valuation, she said, and the formula could be recalibrated each year depending on the locality's needs.
Some officials fear that officials in parts of the state that are more anti-tax will force a straitjacket approach on jurisdictions that don't share their views. Another risk is that powerful business groups will pressure state lawmakers to construct the bill in a way that favors business interests.
"It's very unusual for Richmond to give us unhampered authority," Favola said. "We view social issues differently, everything differently. . . . Northern Virginia invests more in its public schools. Our cultural and political expectations are higher . . . and we need a certain amount of money to pay for the services."
Favola said that if the bill starts to become unacceptable to local government leaders, they will oppose it.
"Local governments cannot be put into a box when we're talking about our chief source of revenue, the property tax," she said.
Whipple, a former member of the Arlington board, said local government officials should not worry about it.
"My experience has been that people in Northern Virginia insist on a high level of services and understand that it costs a lot of money to provide those services," she said. "That's the balancing act jurisdictions engage in every year."
But Arlington resident Bauman would love to see a substantial tax rebate come his way.
"I'm a dyed-in-the-wool Democrat; I love my services," Bauman said. But rising assessments have become "a horrible burden" on his Arlington neighbors who are on fixed incomes. For his family, rising assessments mean he is squirreling less away for his retirement years, he said.
"It means less for the future," he said.
View all comments that have been posted about this article.