2004 Tax Rates. Virginia s Cities, Counties, and Selected Towns. John L. Knapp, Ph.D. and Stephen C. Kulp

Transcription

1 2004 Tax Rates Virginia s Cities, Counties, and Selected Towns 23 rd Annual Edition John L. Knapp, Ph.D. and Stephen C. Kulp In Cooperation with The Virginia Association of Counties and The Virginia Municipal League

2 Copyright 2004 by the Rector and Visitors of the University of Virginia P.O. Box Charlottesville, VA (434) FAX: (434) TDD: (434) 982-HEAR Website: Richmond 700 East Franklin Street, Suite 700 Richmond, VA (804) FAX: (804) TDD: (804) 982-HEAR Southwest College Avenue Wise, VA (540) FAX: (540) TDD (540) Southside 1008 South Main Street Danville, VA (434) (434) FAX: (434) ii Tax Rates 2002

3 Contents Tables... Introduction... v vii Section 1. Summary of Legislative Changes in Local Taxation, Real Property Tax, Real Property Tax Relief Plans and Housing Grants for the Elderly and Disabled, Land Use Value Assessments for Agricultural, Horticultural, Forestal, and Open Space Real Estate, Agricultural and Forestal Districts, Property Tax Exemptions for Certain Rehabilitated Real Estate and Other Exemptions, Service Charges on Tax-Exempt Property, Merchants Capital Tax, Tangible Personal Property Tax, Machinery and Tools Property Tax, Utility License Tax, Cable Television System Tax, Consumers Utility Tax, Emergency Telephone System Tax, Business, Professional, and Occupational License Tax, Motor Vehicle License Local Decal Tax, Excise Taxes on Meals, Transient Occupancy, Cigarettes, Tobacco, Admissions, and Motor Fuels, Taxes on Natural Resources, Legal Document Taxes, Miscellaneous Taxes, Refuse and Recycling Collection Fees, Residential Water and Sewer Connection and Usage Fees, Impact Fees, Public Rights-of-Way Use Fees, Miscellaneous Fees, Appendixes A. Facsimile of 2004 Tax Rates Questionnaire B. List of Respondents and Non-Respondents to 2004 Tax Rates Questionnaire iii

4 iv Tax Rates 2004

5 Tables 2.1 Real Property Tax, Real Property Effective True Tax Rate, Real Property Owner Tax Relief Plans for the Elderly and Disabled, Summary of Real Property Renter Tax Relief Plans and Housing Grants for the Elderly and Disabled, Land Use Value Assessments for Agricultural, Horticultural, Forestal, and Open Space Real Estate, Agricultural and Forestal Districts, Property Tax Exemptions for Certain Rehabilitated Real Estate, Property Tax Exemptions for Pollution Control, Recycling, Solar Energy, and Energy Conservation Equipment, Service Charges on Tax-exempt Property, Merchants Capital Tax, Basic Features, Merchants Capital Tax Provisions About Taxation of Inventories, Rental Vehicles, and Rental Property, Tangible Personal Property Tax for Automobiles and Trucks of Less than Two Tons, Tangible Personal Property Tax on Motor Vehicles, Payment and Assessment Schedules, Tangible Personal Property Tax Rates for Large Trucks Two Tons and Over, Tangible Personal Property Taxes Related to Business Use for Heavy Tools and Machinery, Computer Hardware, and Generating Equipment, Tangible Personal Property Taxes Related to Business Use for R&D and Furniture & Fixtures, Tangible Personal Property Taxes for Farm, Livestock, & Household Property, Tangible Personal Property Taxes for Boats & Aircraft, Tangible Personal Property Taxes for Antique Motor Vehicles, Recreational Vehicles, and Mobile Homes, Machinery and Tools Property Tax, Machinery and Tools Tax: Semiconductor and Forestry Harvest Equipment, Utility License Tax, Cable Television System Tax, Utility Consumers Monthly Tax on Electricity, Utility Consumers Monthly Tax on Telephone, Utility Consumers Monthly Tax on Gas, Utility Consumers Monthly Tax on Water, Emergency Telephone System Tax, BPOL Due Dates and Other Provisions, Specific BPOL Classification Fees and Tax Rates, Taxes and Fees on Peddlers and Itinerant Merchants, Motor Vehicle License Local Decal Tax, Meals, Transient Occupancy, Cigarette, Admissions, and Motor Vehicle Fuel Excise Taxes, Natural Resource Taxes, Legal Document Taxes, Tables v

6 Tables (continued) 20.1 Miscellaneous Taxes, Refuse Collection Fees, Recycling Collection Fees, Miscellaneous Refuse Collection Fees, Residential Water and Sewer Connection Fees, User Fees for Residential Water and Sewer, Impact Fees For Road Improvement, Public Rights-of-Way Use Fees, Miscellaneous Fees, vi Tax Rates 2004

7 Introduction INTRODUCTION This is the twenty-third edition of Tax Rates in Virginia s Cities, Counties, and Selected Towns a comprehensive guide to local taxes in Virginia prepared by the University of Virginia s Weldon Cooper Center for Public Service. This study, which is based on information gathered in the spring, summer, and early fall of 2004, includes all of Virginia s 39 independent cities and 95 counties and 153 of the 189 incorporated towns. The study also provides information from the Virginia Department of Taxation s 2004 Legislative Summary and its assessment/sales ratio study for the real property tax in ORGANIZATION OF THE BOOK The study is separated into 25 sections. We have reprinted as Section 1 the Department of Taxation s information on 2004 state legislation affecting local taxation, which also is available on the department s website: < Web_PDFs/2004LegislativeSummary.pdf>. Sections 2 through 25 cover specific taxes and service charges. Most of the data came from a detailed questionnaire (see Appendix A for a facsimile of the document) sent to all cities, counties, and towns. Appendix B provides a listing of names and phone numbers of respondents and non-respondents to the questionnaire and the local government web address if one was provided. Web information is increasingly available for Virginia local governments. This year, 32 (82 percent) of the cities reported a web site. Among the counties, 71 (75 percent) reported a web site. Also, 53 (35 percent) of the 153 responding towns had a web site. Additional information on state and local government finance is available on the Cooper Center s VaStat website: < finance.php>. Most of the information at the site is for Virginia, but there are also interstate links. The Schmidt Enterprises, LLC link is particularly useful for finding information for other states. EXCLUDED ITEMS Although this report is comprehensive, a few taxes are excluded. Alcohol taxes are too complex to report briefly so they are omitted. The bank franchise tax is not discussed in this study because the tax is uniform among all localities. All the localities that impose the bank franchise tax do so at the maximum rate allowed by statute 80 percent of the state rate of taxation ( through of the Code of Virginia). Local rate uniformity exists because entitles banks to a credit against the state franchise tax equal to the total amount of local franchise tax paid. As a result, localities receive 80 cents of each $1 of possible state bank franchise tax revenue. This year, the study did ask whether a locality levied a bank tax. Of those localities that answered, 33 cities, 65 counties, and 104 towns answered affirmatively. In addition, this study does not cover the local option sales and use tax ( , , and ) because every city and county imposes it at 1 percent. Furthermore this study does not cover the various property taxes imposed on public service corporations because the nominal rate is the same as the nominal rate on locally assessed real property ( ). STYLE NOTES If a table shows, for a particular locality, a different tax than reported in the previous edition, this usually means that the tax has been changed. However, there is always the remote possibility that in one or both years the response was inaccurate or that we made an error. In the tables in this study, three dots (...) are used to show there was no response and N/A is used to indicate not applicable. Readers may use the phone list in Appendix B to call local officials in order to obtain clarification and additional detail. STUDY PERSONNEL John L. Knapp, Ph.D., Professor Emeritus and Senior Research Economist in the Business and Economics Section, was the project director. In this capacity he designed and edited the publication and was responsible for final approval of the entire content. Stephen C. Kulp, Research Specialist in the Business and Economics Section, was responsible for all day-to-day work on the project. He refined the new database, administered the survey, translated the results into tables, checked relevant code sections, and made appropriate changes in the text. William M. Shobe, the new Research Director for Business and Economics who joined the Cooper Center last September, read the full manuscript and provided valuable suggestions for improvement. Student research assistant Wendy E. Guerrero assisted Kulp with Introduction vii

8 mailing, follow-up, layout, and other aspects of the work. She also assisted Knapp with the editing. Her input was a major reason for the timely release of the study. The Cooper Center Publications Division aided in formatting the publication. Jayne E. Weber designed the cover and consulted on the layout and formatting of the book. She and David J. Borszich assisted with the proofreading. Cooper Center employee Albert W. Spengler, who authored this study for a number of years prior to 1991, laid the foundation for the study when it was his responsibility. The questionnaire was reviewed by William J. White, Department of Taxation; Ellen R. Davenport, Virginia Association of Counties; and Michael L. Edwards, Virginia Municipal League. The strong support for this publication by the two local government associations adds to its acceptance as a basic reference on Virginia local taxes. FINAL COMMENTS We are grateful to the many local officials throughout the Commonwealth who supplied the survey information presented in this study. We thank them for their willingness to provide information and their patience in answering followup questions. Excellent response rates of 100 percent for the cities and counties and 81 percent for the towns could not have been achieved without their cooperation. Please let us hear from you if you have corrections or suggestions for possible changes or additions to future editions. Our addresses and phone numbers are listed below. John L. Knapp Senior Economist jlk6a@virginia.edu (434) Stephen C. Kulp Research Specialist sck7x@virginia.edu (434) Charlottesville November 2004 viii Tax Rates 2004

9 Section 1 Summary of Legislative Changes in Local Taxation, 2004 This section summarizes the major changes in the Code of Virginia enacted by the 2004 session of the Virginia General Assembly for those taxes covered in this publication. The summary is taken from the Virginia Department of Taxation s 2004 Legislative Summary. The department s study also includes information on state taxes and new provisions governing tax collection and administration that are not reprinted in this publication. The full text of the 2004 Legislative Summary can be found on the web at < Web_PDFs/2004LegislativeSummary.pdf>. Additional information can be found in the Virginia Association of Counties 2004 Summary of State Legislation Affecting County Governments, found on the web at < Program.php >, and the Virginia Municipal League s 2004 Legislative Report downloadable at < This section provides a synopsis of enacted legislation. It is for informational purposes only. The listing is not a substitute for actual Department of Taxation regulations, state law, or local ordinances. GENERAL PROVISIONS Offers in Compromise Acceptance by Local Officials - Amended Effective Date: July 1, 2004 Code Section Added: House Bill 293 (Chapter 526) authorizes the commissioner of the revenue to compromise and settle any assessment of business, professional and occupational license (BPOL) taxes and business tangible personal property, merchants capital, and machinery and tools taxes (Local Business Taxes) prior to the exhaustion of all administrative or judicial reviews upon a determination that there is substantial doubt as to the taxpayer s liability. This bill also authorizes the treasurer to compromise and settle the amount of BPOL and Local Business Taxes due and payable upon a determination that collection of the entire amount due is in substantial doubt, and the best interests of the locality will be served by such compromise. Local Taxes Eligible for Appeal to the State Tax Commissioner - Expanded Effective Date: Tax years beginning on or after January 1, 2005 Code Sections Amended: and House Bill 464 (Chapter 534) expands the Department of Taxation s authority to hear local tax appeals to include assessments of the tangible personal property tax on airplanes, boats, campers, recreational vehicles and trailers (the local mobile property tax ). The Department would not be required to make a determination regarding the valuation or method of valuation for local mobile property tax assessments. The determination of value and valuation methodology would remain subject to local determinations. Localities would be prohibited from engaging in collection activity when an appeal of a local mobile property tax assessment is made to the commissioner of the revenue or the Department of Taxation. Collection activity would be allowed if the treasurer determines that collection would be jeopardized by delay or is advised that the taxpayer has not responded to a request for relevant information after a reasonable time. This bill also requires localities to provide taxpayers with detailed information at the time local mobile property tax assessments are issued with respect to how the assessment was determined and a description of the taxpayer s appeal rights. Written Opinions by State Tax Commissioner Before Appeal - New Effective Date: July 1, 2004 Code Section Amended: House Bill 295 (Chapter 527) authorizes the Tax Commissioner to issue written advisory opinions in specific cases, when formally requested by taxpayers and local tax officials, regarding the business tangible personal property tax, the machinery and tools tax and the merchants capital tax. 1

10 Virginia Regional Industrial Facility Authority: Appropriation of Taxes Generated at Facilities; Expands Eligible Planning Districts - Amended Effective Date: July 1, 2004 Code Sections Amended: and House Bill 240 (Chapter 42), House Bill 1393 (Chapter 640) and Senate Bill 546 (Chapter 603) grant localities that contain a facility established under the Virginia Regional Industrial Facilities Act the authority to direct all local tax revenues generated by the facility back to the Regional Industrial Facilities Authority. All local tax revenues received by the Authority may be used for payment of debt service on bonds and other obligations of the Authority with respect to the facility. This bill also expands this authority to include Planning Districts 1 and 2. Property of Nonprofit Groups Exempt from Taxation - Amended Effective Date: January 1, 2005 Code Sections Amended: and House Bill 1076 (Chapter 557) clarifies the process localities must follow in determining whether real or personal property of certain charitable and other related organizations may be exempted from local property taxes. It creates procedures to be used in exempting such property by designation and in exempting property by classification. Fee for Electronic Access to Public Records - New Effective Date: July 1, 2004 Code Section Amended: House Bill 465 (Chapter 223) allows local treasurers who provide electronic access to public records to charge a fee to cover the operational expenses of providing the electronic access. The fee would be assessed based upon a subscription, not to exceed $100 per month, or a cost per page, not to exceed $1 for the first page and 25 cents for each additional page. TANGIBLE PERSONAL PROPERTY TAX Personal Property Tax Relief (Car Tax) Program - Capped Effective Date: Tax years beginning in 2006 and each tax year thereafter. Code Sections Amended: , , , , , , and Code Sections Repealed: through , , and Senate Bill 5005 (Chapter 1, 2004 Special Session I) changes the personal property tax relief program for motor vehicles. Beginning in 2006, the state will distribute $950 million annually to localities as reimbursement for the personal property tax relief provided by each locality. Each locality s share of the state reimbursement will be based upon its share of the state reimbursements for tax year 2005, and will not change after Each locality receiving a state reimbursement must reduce its tax rate on the first $20,000 value of qualifying motor vehicles so that the tax revenue plus the state reimbursement will approximately equal the revenue that would have been received without a rate reduction. Under current law, the state reimburses localities for 100 percent of the tax imposed on qualifying motor vehicles valued at less than $1,000, and 70 percent of the amount of tax imposed on the first $20,000 value of other qualifying motor vehicles. Revised Reimbursement Rules for the Personal Property Tax Relief Act of 1998 Amended Effective Date: July 1, 2004 Code Section Amended: House Bill 926 (Chapter 547) authorizes treasurers to apply to the Commonwealth for payment of the Personal Property Tax Relief Act of 1998 (PPTRA) reimbursement amount regarding a qualifying vehicle even though the vehicle owner has not paid the entire unreimbursed portion of the personal property tax levy, if the taxpayer has been billed and has made a partial payment that is no more than $5 less than the actual amount due; the treasurer has determined that there is no reason to believe the erroneous payment was made in bad faith; and the treasurer has elected not to pursue collection of the balance. 2 Tax Rates 2004

11 Increased Number of Motor Vehicles Eligible for Special Classification - Amended Effective Date: July 1, 2004 Code Section Amended: For households containing both a member and an auxiliary member of a volunteer rescue squad or fire department, House Bill 143 (Chapter 4) and Senate Bill 349 (Chapter 591) increase from one to two the number of motor vehicles that are eligible for inclusion in the special classifications of tangible personal property for motor vehicles owned or leased by members and auxiliary members of volunteer rescue squads and fire departments that localities may tax at lower rates than applicable to the general class of tangible personal property in the locality. Exemption for Trailers Used for Farm Animals and Farm Products - Amended Effective Date: July 1, 2004 Code Sections Amended: and House Bill 1030 (Chapter 556) adds privately owned trailers that are primarily used by farmers in their farming operations for the transportation of farm animals or other farm products to the list of farm property that a locality may, by ordinance, exempt or tax at a rate different from tangible personal property taxation. In addition, under the classification for tangible personal property that may be taxed only at a different rate, this bill clarifies that the definition of privately owned trailers designed and used for the transportation of horses does not include trailers used by farmers in their farming operations. Taxation of Generating Equipment Owned by Certain Electric Suppliers - Amended Effective Date: July 1, 2004 Code Section Amended: Senate Bill 366 (Chapter 504) clarifies that generating equipment owned by electric suppliers that are not public service companies (i.e., independent power producers and cogenerators) is subject to local property taxation at a special locally determined rate that cannot exceed the real estate tax rate imposed by the locality. Generating equipment owned by public service companies will continue to be taxed at the local real estate tax rate. Annual Report Filing by Utilities - Amended Effective Date: Tax years beginning on or after January 1, 2004 Code Section Amended: Senate Bill 120 (Chapter 661) provides that the only property leased by suppliers of electricity that is reported to the State Corporation Commission, rather than the locality in which situated, are assets directly associated with production facilities, not including real estate or vehicles. REAL ESTATE TAX Exemptions for Elderly or Disabled Persons in the City of Charlottesville and the County of Goochland- Amended Effective Date: July 1, 2004 Code Section Amended: House Bill 154 (Chapter 5) adds the City of Charlottesville while House Bill 403 (Chapter 6) and Senate Bill 122 (Chapter 494) add the County of Goochland to the cities and counties authorized to observe a $52,000 limit on total income and a $195,000 limit on combined net financial worth when qualifying for the real estate tax exemption and deferral program for the elderly or disabled. Exemptions for Elderly or Disabled Persons in the Northern Virginia Planning District - Amended Effective Date: July 1, 2004 Code Section Amended: Senate Bill 361 (Chapter 503) authorizes localities in the Northern Virginia Planning District to increase from $62,000 to $72,000 the maximum income limitation for purposes of obtaining an exemption or deferral of real property taxes for qualified elderly or permanently disabled persons. These same localities would also be authorized to increase the maximum combined financial worth limitation from $240,000 to $340,000. Alternative Payment Schedules for the Elderly and Handicapped in Prince William County - New Effective Date: July 1, 2004 Code Section Added: House Bill 928 (Chapter 548) authorizes Prince William County to provide by ordinance alternative due dates for the payment of property taxes by taxpayers aged 65 and older and for permanently or totally disabled taxpayers. This bill also authorizes Prince William County to provide by ordinance for these taxpayers to make installment payments of real property taxes without penalty and interest. Summary of Legislative Changes in Local Taxation 3

12 Increase of Statewide Income and Net Worth Limits for Elderly or Disabled to Qualify for Exemption or Deferral of Real Estate Tax - Amended Effective Date: July 1, 2004 Code Section Amended: House Bill 94 (Chapter 77) modifies the income and net worth limitations for determining whether persons sixty-five years or older, or those who are permanently and totally disabled, qualify for the exemption or deferral of local real property taxes. This bill increases the net worth limitation for determining whether these persons qualify from $100,000 to $200,000 and increases the amount of income that may be excluded in determining the total combined income limitation from $7,500 to $10,000. In addition, this bill increases the amount of income of a non spouse relative living in the dwelling that may be excluded in determining the total combined income limitation from $8,500 to $10,000. Finally, this bill increases the amount of assets from $5,000 to $10,000 that a taxpayer can transfer to a relative who lives with and provides care to the taxpayer without the relative s income being counted towards the taxpayer s income limit. Increase of Statewide Acreage Excluded when Calculating Net Worth of Elderly or Disabled Amended Effective Date: July 1, 2004 Code Section Amended: House Bill 97 (Chapter 78) increases the net worth limitation when determining whether taxpayers aged sixty-five years or older, or who are permanently and totally disabled, qualify for the exemption or deferral of local real property taxes by increasing the number of acres excluded from the net worth calculation from 1 acre to 10 acres. Collection Proceedings For Delinquent Real Estate Taxes - New Effective Date: July 1, 2004 Code Section Amended: Administrative Rule Changes Regarding Sale of Property for Delinquent Taxes - Amended Effective Date: July 1, 2004 Code Sections Amended: , , and House Bill 1456 (Chapter 968) facilitates the ability of localities to abate nuisances and dispose of tax delinquent properties, including (i) expanding those instances in which an unpaid charge may constitute a lien on property; (ii) decreasing the time-period that a locality must wait prior to taking action to sell certain tax delinquent properties; (iii) expanding the ability of localities to declare a property as abandoned; (iv) expanding instances in which a locality may petition for the conveyance of a deed in lieu of a sale at public auction for certain parcels; and (v) making corporate officers personally liable for taxes and nuisance abatement costs that remain unpaid after a judicial sale. Establishing a Department of Real Estate Assessment in Powhatan County - New Effective Date: July 1, 2004 Code Section Amended: House Bill 1461 (Chapter 576) authorizes the County of Powhatan to establish, by resolution, its own department of real estate assessment. It also authorizes the county to enter into an agreement with any contiguous county or city for the establishment of a joint department of real estate assessment. Nonjudicial Sale of Tax Delinquent Property by Local Treasurers - Amended Effective Date: July 1, 2004 Code Section Added: House Bill 925 (Chapter 100) permits the local treasurers to sell tax delinquent unimproved real estate in a nonjudicial sale if it is assessed at less than $10,000, and it is less than 4,000 square feet or it is not a buildable lot. House Bill 1453 (Chapter 645) declares that anyone who purchases tax-delinquent real estate after judicial sale proceedings have begun, and after a Lis Pendens (notice of pending suit) has been recorded, is not a necessary party to the lawsuit to sell the property for delinquent taxes. The purchaser must intervene in the case and file a claim with the court. Failure of such a party to file will bar the claim. 4 Tax Rates 2004

13 MISCELLANEOUS TAXES Consumer Utility Tax Exemption for Churches or Religious Bodies - New Effective Date: July 1, 2004 Code Section Amended: and House Bill 743 (Chapter 8) and Senate Bill 71 (Chapter 159) allow any county, city or town to exempt from the local consumer utility tax any church or religious body, or the residences of their ministries. Imposition of Telecommunications Consumer Utility Tax in the Towns of Herndon and Vienna - Amended Effective Date: July 1, 2004 Code Section Amended: House Bill 372 (Chapter 43) and Senate Bill 316 (Chapter 172) authorize the Towns of Herndon and Vienna to impose a consumer utility tax on telegraph and telephone companies by adopting an ordinance on or after July 1, This bill also provides that at such time as an ordinance is enacted by either of the towns, Fairfax County may no longer impose a consumer utility tax on telegraph and telephone companies within the limits of the town imposing the ordinance while the town ordinance remains in effect. Imposition of Telecommunications Consumer Utility Tax in the Towns of Vienna and Clifton - Amended Effective Date: July 1, 2004 Code Section Amended: Senate Bill 627 (Chapter 516) authorizes the Towns of Vienna and Clifton to impose a consumer utility tax on telegraph and telephone companies by adopting an ordinance on or after July 1, The bill also provides that at such time as an ordinance is enacted by either of the towns, Fairfax County may no longer impose a consumer utility tax on telegraph and telephone companies within the limits of the town while the town ordinance is in effect. Imposition of Telecommunications Consumer Utility Tax in the Town of Iron Gate - Amended Effective Date: July 1, 2004 Code Section Amended: Senate Bill 14 (Chapter 489) authorizes the Town of Iron Gate to impose a consumer utility tax on telegraph and telephone companies by adopting an ordinance on or after July 1, The bill also provides that when this ordinance is enacted by the Town of Iron Gate, Alleghany County may no longer impose a consumer utility tax on telegraph and telephone companies within the town limits of Iron Gate, for as long as the ordinance is in effect. Transient Occupancy Tax Floyd County Allowed to Impose Additional Tax Amended Effective Date: July 1, 2004 Code Section Amended: House Bill 739 (Chapter 7) authorizes Floyd County to impose the transient occupancy tax at a rate not to exceed 5 percent. Any revenue generated over 2 percent must be spent for promoting tourism, travel or business that generate tourism in the county. Floyd County currently does not impose any transient occupancy tax. Chesterfield, Hanover, and Henrico Counties Authorized to Impose Additional Tax Amended Effective Date: July 1, 2004 Code Section Amended: House Bill 741 (Chapter 50) authorizes Chesterfield, Hanover, and Henrico counties to impose an additional transient occupancy tax not to exceed 1 percent. The revenues collected from the additional tax shall be designated and spent for the development and improvement of the Virginia Performing Arts Foundation s facilities in Richmond, for promoting the use of the Richmond Centre and for promoting tourism, travel or business that generates tourism and travel in the Richmond metropolitan area. These same localities are already Summary of Legislative Changes in Local Taxation 5

14 authorized to impose an additional transient occupancy tax of up to 6 percent to promote other facilities and tourism in the Richmond area. Fairfax County Authorized to Impose Additional Tax Amended Effective Date: July 1, 2004 Code Section Added: House Bill 1001 (Chapter 9) authorizes Fairfax County to impose an additional 2 percent transient occupancy tax, provided no more than 75 percent of the revenue is appropriated by Fairfax County to be used in the county to promote tourism, and the remainder of the revenue is appropriated to a nonprofit convention and visitor s bureau located in the county. Fairfax County currently imposes a 2 percent transient occupancy tax. overnight guest room. The revenues generated from this tax must be spent for advertising the Greater Williamsburg area as an overnight tourism destination by the members of the Williamsburg Area Destination Marketing Committee. This bill also creates guidelines for the establishment of the Williamsburg Area Destination Marketing Committee. Localities Identified by Name Rather than Population Within Legislation - New Effective Date: July 1, 2004 Code Sections Amended: , , , and Senate Bill 684 (Chapter 610) changes the system for referencing the localities entitled to impose the local transient occupancy tax and the local meals taxes by naming the affected localities, instead of using population classifications. Rockbridge County and the Cities of Lexington and Buena Vista Authorized to Impose Additional Tax Amended Effective Date: July 1, 2004 Code Section Added: Senate Bill 517 (Chapter 598) authorizes Rockbridge County and the cities of Lexington and Buena Vista to impose an additional 2 percent transient occupancy tax. Revenues generated from the imposition of this tax will be used to pay down the principal and interest on promissory notes between the Virginia Horse Center Foundation or the Virginia Equine Center Foundation and the Rockbridge Industrial Development Authority executed prior to January 1, James City and York Counties Authorized to Impose an Additional Tax - Amended Effective Date: July 1, 2004 Code Section Amended: Senate Bill 652 (Chapter 828) authorizes the counties of James City and York to impose an additional transient occupancy tax not to exceed $2 per night for the occupancy of any Coal and Gas Road Improvement Tax Direct Revenue Distribution to Local Public Service Authority - New Effective Date: July 1, 2004 Code Section Amended: House Bill 1426 (Chapter 871) and Senate Bill 642 (Chapter 893) require that any revenues generated by the coal and gas road improvement tax and designated for water systems and/or sewer systems to be distributed directly to the local public service authority rather than the local governing body. Appropriation Flexibility and Direct Revenue Distribution to Local Public Service Authority - New Effective Date: July 1, 2004 Code Sections Amended: Senate Bill 642 (Chapter 893) authorizes localities that comprise the Virginia Coalfield Economic Development Authority to use a portion of the local coal and gas road improvement tax that is currently allocated for construction of new or enhanced water systems and lines for the construction of new or enhanced sewer lines as well. 6 Tax Rates 2004

15 Section 2 Real Property Tax, 2004 The Code of Virginia, through , authorizes localities in Virginia to levy taxes on real property. There is no upper limit on the tax rate that may be imposed. Also, provides that all general reassessments or annual assessments shall be at 100 percent of fair market value. ASSESSMENTS AND APPEALS Section requires cities to have a general reassessment of real estate every two years. However, any city with a total population of 30,000 or less may elect by majority vote of its council to conduct its general reassessments at four-year intervals. Counties are required to have a general reassessment every four years ( ). There is an exception for counties with a total population of 50,000 or less. These counties may elect to reassess at either five-year or six-year intervals ( ). However, nothing in these sections affects the power of cities and counties to use the annual or biennial assessment method in lieu of general assessments. The table below summarizes the reassessment periods chosen by the cities and counties. Period Cities Counties 1 year years years years years years years years years years Four-fifths of the cities reassess at 1 or 2 year intervals. In contrast, only one-fifth of the counties reassess that frequently. Any building which has incurred a $500 or more increase in value due to repairs or additions must be assessed as if it were new ( ). Similarily, the Code permits the abatement of local real estate taxes on damaged buildings if they are rendered unusable for at least 30 days of the calendar year ( ). It is possible to appeal an assessment by means of formal appeals and judicial appeals. In 2003, formal (administrative) appeals were begun in 50 localities and judicial appeals in 19. The number of appeals in a locality ranged from one administrative appeal in the City of Lexington to over 2,000 reported in the City of Richmond and Fairfax County and over 6,000 reported in Gloucester. Judicial appeals were far less numerous, with most localities having one or two, though Chesterfield reported 56 and Rockingham 150. DEFERRAL PROGRAMS Localities are permitted to institute deferral for a portion of the real estate tax by of the Code of Virginia if the amount of tax on a property exceeds 105 percent of the tax in the previous year. The locality can defer the tax on that portion of the tax exceeding 105 percent. The deferral applies potentially to every property owner, not just the elderly and disabled. (For deferrals limited to the elderly and disabled see Section 3 of this study.) Only three cities reported offering the deferral in the 2004 survey: Chesapeake, Virginia Beach, and Waynesboro. How these programs turn out will be of interest because in the past deferral programs were either abandoned or rejected. Loudoun County had a deferral program in place in the 1990s but terminated it because the program was administratively complex, cumbersome and required staff time in disproportion to the benefit received by the taxpayer. 1 The cities of Alexandria, Falls Church, and Fairfax and the counties of Fairfax and Henrico have considered deferral but have not adopted it. Administrative problems appear to be the major reason deferral has not been adopted. According to Henrico staff, The administrative procedures for tracing the properties and recovering the relevant taxes upon either the death of the owner or transfer of the property itself would be both cumbersome and time consuming and could not be accomplished with existing staffing levels or existing computer systems. 2 REAL PROPERTY TAX STATISTICS IN 2004 Table 2.1 includes information on nominal real estate tax rates, assessment frequency, whether the locality employs an assessor, effective dates, tax due dates, and whether proration is used. 1 City of Alexandria, Budget Memo #46: Review of Other Jurisdictions Experience with a Real Estate Tax Deferral Program for the General Population (Councilman Speck s Request), 4/25/ Budget Memo #46. 7

16 The nominal tax rates were reported to the Cooper Center by all cities and counties and the 143 respondent towns that levy a real property tax. The unweighted mean of the nominal rate for cities was $1.00 per $100 of assessed value. The median was $1.00 and the first and third quartiles were $0.81 and $1.21, respectively. The unweighted mean of the nominal rate for counties was $0.70 per $100 of assessed value. The median was $0.67 and the first and third quartiles were $0.59 and $0.78, respectively. The unweighted mean of the nominal rate for cities and counties combined was $0.80. The median was $0.72 and the first and third quartiles were $0.61 and $0.94, respectively. The unweighted mean of the nominal rate for towns was $0.20. The median rate was $0.18 and the first and third quartiles were $0.11 and $0.25, respectively. In Virginia, residents of incorporated towns that levy real estate taxes also pay a county real estate tax. In 1994, a total of 25 cities reported employing a fulltime property assessor, while 11 did not. Many counties lacked an assessor. Fifty-nine counties were without fulltime assessors while only 36 reported having them. This reflects the fact that many counties reassess property infrequently. No towns had assessors, since towns rely on assessed values established by their host counties. Tax due dates vary among localities. Generally, if these taxes are paid annually, they are due by December 5. If paid semiannually, they are due by June 5 and December 5. However, some localities may have different due dates, as provided in Most cities have semiannual tax due dates with payments required in June and December. Of the 39 cities, 5 require taxes due annually, 28 semiannually, and 6 quarterly. Among the counties, 43 have annual tax due dates, while 52 have semiannual requirements. Of the towns responding to this question, 114 report annual due dates, and 29 require semiannual payments. A locality is permitted to prorate the amount to be taxed. Any county, city, or town electing to prorate new buildings which are substantially complete prior to November 1 must do so at the time the building becomes substantially complete or fit to live in. Localities vary about prorating taxes. Of the cities, 25 reported prorating taxes while 14 did not prorate. Among counties, 56 prorated their taxes while 39 did not. Reports from the towns that answered this question indicate that 31 prorated their taxes while 112 did not. REAL PROPERTY EFFECTIVE TAX RATE The effective rate is based on the market value of property. The nominal rate is based on the property s assessed value. The effective rate is usually higher because of infrequent reassessments and the tendency of public assessors to provide conservative valuations. Table 2.2 shows city and county average effective tax rates in the year 2001, the most recent year for which the Virginia Department of Taxation has conducted an assessment/sales ratio study. The department makes its computation in a way that is designed to control for the variance in assessment procedures. Therefore, when comparing tax rates among the localities, the reader may wish to consult both data series (Tables 2.1 and 2.2), despite the fact that different years are involved. The Virginia Department of Taxation s assessment/sales ratio study compares the locally assessed value of property to its actual sales price for a sample of parcels sold in the study year. The resulting ratio, the assessment/sales ratio, or median ratio, is then multiplied by the average nominal tax rate per $100 of assessed value to determine the effective tax rate per $100 of true value. 3 It should also be pointed out that the Virginia Department of Taxation does not use the locally reported nominal tax rate in its computations. Instead, it calculates the nominal rate by dividing the real estate levies by the local real estate taxable value, as reported in the local land book. This method of computing the nominal tax rate takes additional district levies into account. 4 The real property tax rates reported in Table 2.2 are a more accurate reflection of the differences among localities in tax rates on real property than those in Table 2.1 because they control for variations in assessment frequency and technique among localities. Table 2.2 also shows the latest reassessment in effect when the median ratio study was conducted, the number of sales used in the study, the median ratio, and the coefficient of dispersion. The coefficient of dispersion measures how closely the individual ratios of each locality are arrayed around the median assessment/sales ratio. The formula for the coefficient of dispersion (CD) is: CD = ( ( Xi Xm) ) X m / n 100 where X i represents the assessment/sales ratio for the ith sale in a sample of size n, and X m represents the median ratio of the sample. 5 If there were no dispersion, the CD would equal zero. 3 The assessment/sales ratio data are from To compare the local nominal tax rate for that year, consult either Section 3, Tax Rates 2001, published by the Cooper Center, or the Virginia Department of Taxation s Virginia Local Tax Rates: Tax Year Virginia Department of Taxation, The 2001 Assessment/Sales Ratio Study (Richmond, March 2003) p. 34. The study can be found at < 5 Virginia Department of Taxation, 2001 Assessment/Sales Ratio Study, p Tax Rates 2004

17 The following table summarizes the coefficient of dispersion for the cities and counties shown in Table 2.2. Coefficient of Dispersion (%) Cities Counties Total There is no universal standard for how much dispersion is tolerable, but an upper limit of under 20 percent is subscribed to by many practitioners. 6 By that standard, all but four of the cities had an acceptable CD. However, a number of counties did not meet that standard. All but four of the localities that assessed annually or biennially had an acceptable CD. The unweighted mean of the average effective rate was $0.92 per $100 of true value for cities. The median was $0.93 and the first and third quartiles were $0.74 and $1.06, respectively. The unweighted mean of the average effective rate was $0.60 per $100 of true value for counties. The median was $0.57 and the first and third quartiles were $0.48 and $0.67, respectively. The unweighted mean for all Virginia cities and counties was $0.69, the median was $0.63, and the first and third quartiles were $0.51 and $0.83, respectively. The weighted mean, $0.80, was higher than Virginia s unweighted mean of $0.69, reflecting the higher rates of the larger localities. 6 John L. Knapp, Virginia Issues: The Real Property Tax (Charlottesville: Tayloe Murphy Institute, 1974), pp Real Property Tax 9

18 Table 2.1 Real Property Tax, 2004 Tax Rate per $100 Employs Effective of Assessed Value Frequency of Full Time Date of Last Tax Prorate Locality Basic Special Assessment Assessor Reassessment Due Date(s) Tax Cities (Note: All cities responded to the survey.) Alexandria No Every year Yes 1/04 6/15; 11/15 Yes Bedford 0.82 No Every four years No 7/02 3/31; 6/5; 9/30; 12/31 Yes Bristol 0.98 No Every four years No 1/01 12/5 No Buena Vista 0.80 No Every two years No 7/04 6/5; 12/5 Yes Charlottesville 1.09 No Every year Yes 1/03 6/5; 12/5 No Chesapeake 1.26 Yes a Every year Yes 1/04 9/30; 12/31; 3/31; 6/5 No Colonial Heights 1.20 No Every two years Yes 1/04 5/15; 11/15 Yes Covington 0.66 No Every four years No 7/03 6/5; 12/5 No Danville 0.80 No Every two years Yes 7/00 6/5; 12/5 No Emporia 0.84 No Every two years No 1/04 12/5 Yes Fairfax 0.90 Yes b Every year Yes 1/04 6/5; 12/5 Yes Falls Church 1.08 No Every year Yes 1/04 6/5; 12/5 Yes Franklin 0.90 Yes c Every two years No 7/04 6/5; 12/5 Yes Fredericksburg 0.89 Yes d Every four years No 7/03 5/15; 11/15 Yes Galax 0.70 No Every four years No 1/04 12/5 No Hampton 1.25 Yes e Every year Yes 7/04 6/5; 12/5 Yes Harrisonburg 0.62 Yes f Every two years Yes 1/03 6/5; 12/5 Yes Hopewell 1.20 No Every other year Yes 1/03 6/15; 12/5 Yes Lexington 0.64 No Every three years No 7/03 6/5; 12/5 Yes Lynchburg 1.11 No Every two years Yes 7/03 1/15; 3/15; 5/15; 11/15 Yes Manassas 1.15 Yes g Every year Yes 1/04 6/5; 12/5 Yes Manassas Park 1.33 No Every year Yes 1/04 6/5; 12/5 Yes Martinsville 0.94 No Every two years Yes 7/03 6/5; 12/5 No Newport News 1.27 No Every year Yes 7/04 6/5; 12/5 Yes Norfolk 1.40 No Every year Yes 7/03 Quarterly No Norton 0.70 No Every four years No 1/00 12/5 No Petersburg 1.38 No Every year Yes 7/03 Quarterly Yes Poquoson 1.06 No Every two years Yes 7/04 6/5; 12/5 Yes Portsmouth 1.42 No Every year Yes 7/02 3/31; 6/30; 9/30; 12/31; Yes Radford 0.70 No Every four years No 1/04 6/5; 12/5 Yes Richmond 1.38 Yes h Every year Yes 1/04 6/15 No Roanoke 1.21 Yes i Every year Yes 1/04 4/5; 10/5 Yes Salem 1.18 No Every two years Yes 7/03 6/5; 12/5 No Staunton 1.00 Yes j Every two years Yes 1/03 75% on 6/20; 25% on 12/5 No Suffolk 1.08 Yes k Every year Yes 7/02 6/5; 12/5 Yes Virginia Beach 1.22 Yes l Every year Yes 7/03 6/5; 12/5 Yes Waynesboro 0.85 No Every two years Yes 1/03 7/31; 12/5 No Williamsburg 0.54 No Every year Yes 7/03 6/1; 12/1 No Winchester 0.63 Yes m Every two years Yes 1/03 6/5; 12/5 Yes Tax rates for cities: Unweighted mean 1.00 Median 1.00 First quartile 0.81 Third quartile 1.21 a City of Chesapeake levies: $0.02 if property is located within mosquito control borough. b City of Fairfax levies: Downtown Revitalization Tax Zone, $ c City of Franklin levies: Downtown Service District, $1.14. d City of Fredericksburg levies: Fall Hill for improvement, $0.06; Celebrate Virginia for additional services, $0.05; Central Park for improvement, $0.12. e City of Hampton levies: Business Improvement District tax at Coliseum Central, $0.07; Downtown Hampton, $0.20. f City of Harrisonburg levies: Central Business District, $0.62. g City of Manassas levies: Owens Brooke for upkeep of private streets, $ h City of Richmond levies: Downtown General Special Service Assessment District $0.05; Riverfront Canal Properties, $0.12; Riverfront Predevelopment, $1.90; Riverfront Manufacturing, $0.35; Riverfront Overlay $ i City of Roanoke levies: Downtown Special Tax District, $0.10; Williamson Road Special Tax District, $0.10. j City of Staunton levies: Downtown Square District, $0.18. k City of Suffolk levies: Suffolk Taxing District, $0.016; Rt. 17 Taxing District, $0.026; Mosquito Taxing District, $ l City of Virginia Beach levies: Sandbridge Special District, $1.34; Central Business District, $1.79. m City of Winchester levies: Downtown Special Assessment for local improvement, Primary District, $0.23 and Secondary District, $ Tax Rates 2004

19 Table 2.1 Real Property Tax, 2004 (continued) Tax Rate per $100 Employs Effective of Assessed Value Frequency of Full Time Date of Last Tax Prorate Locality Basic Special Assessment Assessor Reassessment Due Date(s) Tax Counties (Note: All counties responded to the survey.) Accomack 0.57 Yes n Every year Yes 1/04 6/5; 12/5 No Albemarle 0.76 No Every two years Yes 1/03 6/5; 12/5 Yes Alleghany 0.66 No Every six years No 1/01 12/5 No Amelia 0.52 No Every six years No 1/00 12/5 No Amherst 0.61 No Every six years No 1/02 6/5; 12/5 Yes Appomattox 0.66 No Every six years Yes 1/02 6/5; 12/5 No Arlington Yes o Every year Yes 1/04 6/15; 10/5 Yes Augusta 0.58 No Every four years Yes 1/01 6/5; 12/5 Yes Bath 0.50 No Every four years No 1/00 6/5; 12/5 No Bedford 0.65 No Every four years No 1/03 6/5; 12/5 Yes Bland 0.69 No Every six years No 1/02 12/5 No Botetourt 0.70 No Every four years No 1/02 12/5 Yes Brunswick 0.60 No Every six years No 1/00 12/5 No Buchanan 0.49 No Every six years No 1/01 12/5 No Buckingham 0.58 No Every 4 to 6 years No 1/02 6/5; 12/5 Yes Campbell 0.52 No Every four years No 1/03 12/5 Yes Caroline No Every four years No 1/02 6/5; 12/5 Yes Carroll 0.59 No Every six years Yes 1/04 12/5 Yes Charles City 0.82 No Every four years No 1/01 6/5; 12/5 No Charlotte 0.62 No Every 4 to 6 years No 1/02 12/5 No Chesterfield 1.07 No Every year Yes 1/03 6/5; 12/5 Yes Clarke 0.74 No Every four years Yes 1/02 6/5; 12/5 Yes Craig 0.66 No Every six years No 1/00 6/5; 12/5 No Culpeper 0.89 No Every four years Yes 1/03 12/5 Yes Cumberland 0.76 No Every four years No 1/02 12/5 Yes Dickenson 0.60 No Every six years No 1/00 6/5; 12/5 No Dinwiddie 0.77 No Every four years No 1/01 6/5,12/5 Yes Essex 0.70 No Every six years No 1/03 6/5; 12/5 No Fairfax 1.13 Yes p Every year Yes 1/04 7/28; 12/5 Yes Fauquier 0.99 No Every four years No 1/02 6/5; 12/5 Yes Floyd 0.64 No Every four years No 1/01 6/5; 12/5 Yes Fluvanna 0.68 No Every 3 to 4 years No 1/02 6/5; 12/5 Yes Franklin 0.53 No Every four years No 1/04 12/5 Yes Frederick 0.73 No Every four years Yes 1/01 6/5; 12/5 Yes Giles 0.72 No Every four years No 1/99 6/1; 12/5 No Gloucester 0.95 Yes q Every four years Yes 1/02 6/30; 12/5 Yes Goochland 0.70 Yes r Every four years Yes 1/01 6/5; 12/5 No Grayson 0.55 No Every four years Yes 1/02 12/5 No Greene 0.84 No Every two years Yes 1/03 6/5; 12/5 No Greensville 0.59 No Every six years No 1/02 12/5 No Halifax 0.42 No Every six years No 1/04 12/5 No Hanover 0.86 No Every year Yes 1/92 6/5; 12/5 Yes Henrico 0.94 Yes s Every year Yes 1/04 6/5; 12/5 Yes Henry 0.54 No Every four years Yes 1/01 12/5 No Highland 0.67 No Every six years No 1/00 12/5 Yes n Accomack County levies: District 2: Mosquito Control, $0.04; Fire, $0.05; EMT, $0.05. District 3: Fire, $0.04; EMT, $0.07. District 4: Fire, $0.04; EMT, $0.04. District 5: Fire, $0.04; EMT, $0.04. o Arlington County levies: Rosslyn BID (B) District, $0.049; 2nd Road North (C) District, $0.478; Chain Bridge Rd Sanitation District, $ p Fairfax County levies: Hunter Mill Service Districts 5,5A: $ Dranesville Service Districts 1A,1A1 to 1A9,1A11,1A12,1A16: $ Service Districts 3,4,6,7: $ Sully Service District 5: $ Lee Service District 1A: $0.02. Dranesville Service District 5: $ Ninety-eight sanitary districts for Gypsy Moth control, $ Ninety-eight sanitary districts base rate, $1.16. State Route 28 Transportation Improvement, $0.20; Lake Bancroft Watershed, $0.13. Pest Infestation, $ Thirty sanitary districts for leaf collection, $0.01. q Gloucester County levies: MSQ District for mosquito control, $0.02; Gloucester Sanitary District, $0.02; Gloucester Point Sanitary District, $0.02. r Goochland County levies: James River Sanitary District, $0.18; Tuckahoe Creek Service District, $0.50. s Henrico County levies: Sanitary District 2, $0.007; Sanitary District 23, $0.03; Sanitary District 12, $0.02; Sanitary District 3, $0.02; Sanitary District 3,1: $ Real Property Tax 11