Commission on State and Local Government
Responsibility and Taxing Authority
September 22, 1997, Emporia
During the commission's fourth 1997 meeting, its
members heard about real property tax issues and county taxing
authority. Representatives from the Virginia Farm Bureau
Federation and the Virginia Association of Counties (VACo), as well
as Delegate Mitch Van Yahres, addressed the commission.
Virginia Farm Bureau Federation
A Farm Bureau representative presented an overview of
the bureau's position and briefly summarized what other states
have been doing recently regarding real property tax reform. In
1997, 14 states examined property tax reform, with proposals
including capping property taxes or assessments, reducing
property taxes or assessments, implementing homestead exemptions,
and creating alternative methods for funding education. Not
all were clear on how property tax cuts would be paid for,
although some suggested replacing lost revenues with increases in
income and sales taxes or with increased revenue projections.
It was suggested that all taxes need to be re-examined
because over the years the United States has changed from
an agrarian to an industrial and now to a more
service-oriented society, which produces and consumes more services than
manufactured goods. Therefore, tax structures need to be revisited
in order to ensure an equitable tax system.
Farmers are especially concerned about the real property
tax and local government's reliance on the tax to fund
education and other services. They also believe that the tax burden is
not equally divided among taxpayers and that farmers pay a
disproportionately large share of the taxes for the amount of
services they require. While land use assessment is available
to farmers in 87 localities, it is not available to all farmers.
Some of the localities that currently have the program are
considering eliminating land use assessment in order to raise
additional revenues. The fear is that unless other alternatives and a
more equitable tax structure at the local level are considered and
implemented, farmers as well as homeowners will be taxed off
The two options mentioned for changing the reliance
on real property taxes were (i) allowing localities to impose a
local income tax and (ii) levying the sales tax on more services.
House Bill 1651 (1997)
Delegate Mitch Van Yahres next spoke to the
commission members about a bill he introduced during the 1997
Session, HB1651, which offered another revenue raising option to
localities. The legislation allowed any county or city to levy
a local income tax at the rate of one percent in addition to
the applicable state income tax rate. Any county or city opting
for the tax would be required to reduce the real property tax rate
or the tangible personal property tax rate to offset the amount
of local income tax revenues collected. The income tax is
considered to be a more progressive tax and therefore more
equitable than some of the other taxes, such as the sales tax and
real estate tax.
House Bill 2399 (1997)
Finally, VACo representatives presented HB2399, which
had been referred to the commission from another subcommittee.
The bill, also introduced in the 1997 Session, would give
counties the same taxing authority that cities and towns
currently enjoy. Many view the current disparity between the
counties' taxing authority and the cities' and towns' taxing authority
Concern was expressed about giving the counties equal
taxing authority, especially in the case of meals taxes, in which
a local referendum is required before the tax may be levied.
That requirement would no longer exist if counties had the
same taxing authority as cities and towns. No position was taken
by the commission on this matter.
The commission will next meet on November 20, 1997,
in Herndon at the Dulles Airport Hilton. The topics for that
meeting will be the earned income tax credit and the recent
changes in the federal tax laws.
Ms. Eva Tieg, Chair
Legislative Services contact: Joan E. Putney