HJR 532

Commission on State and Local Government
Responsibility and Taxing Authority

August 12, 1997, Charlottesville

The Local Government Official's Conference in Charlottesville was the site of the August 12th meeting of the Commission on State and Local Government Responsibility and Taxing Authority. The commission members were briefed by representatives from four localities regarding the current economic conditions in each locality. Assessment practices and procedures around the Commonwealth were explained by a revenue commissioners' representative, and a treasurers' representative discussed the tax collection process.

Local Government Revenue Briefings

The four localities represented during the meeting were the City of Staunton, the Town of Pulaski and the Counties of Henrico and Rockingham. Common themes among the localities' spokespersons included a plea to the commission not to diminish the current taxing authority the localities have, but instead to give them as much flexibility as possible. Also, it was suggested that the state take more financial responsibility for the educational Standards of Quality requirements that it promulgates.

The populations of the four localities range in size from 10,000 in the Town of Pulaski to 245,000 in Henrico County, with general fund budgets of $5.7 million and $439 million, respectively. The City of Staunton and the Town of Pulaski are having more difficulty financially than the two counties are. Staunton has even been pursuing reversion to town status because of future financial obligations, particularly in the education and social service areas. Henrico County, on the other hand, is doing well. Three of the four localities mentioned the fact that their debt service has increased over the past few years, which takes away funds from other needs.

Overall, localities throughout the Commonwealth are concerned about the future. They see a need for more means to raise revenues, not less, and greater contribution from the state in areas in which the localities have little control or input.

Assessment and Collection Procedures

The representative of the Commissioners of the Revenue Association explained the assessment methods for personal property tax and machinery and tools tax. The bottom line regarding assessment methods is that there are varying values, pricing guides and assessment ratios utilized throughout the Commonwealth. Uniformity is lacking, as it was with the BPOL tax prior to its reform. The Commissioners of the Revenue Association will work on recommendations regarding uniformity in this area for presentation to the commission by December.

The collection process is somewhat more uniform in that most localities collect the taxes once a year in December. Only 21 out of 121 localities collect the personal property tax more often than annually. Legislation was passed during the 1997 Session that permits localities to offer taxpayers the option of paying the tax monthly, bimonthly, quarterly, semiannually or in a lump sum, provided the tax is paid in full by the final due date. The law took effect July 1, so it is too soon to know how many localities will allow the divided payments.

Future Meetings

The commission adopted a tentative schedule for the remainder of the year in order to cover all of the issues that have been brought to its attention. In September, the topic of discussion will be real estate taxes and issues the Farm Bureau has in this regard. The earned income tax credit will be examined in October, followed in November by the proposed federal tax law changes and their effect on Virginia income taxes. Finally, a public hearing or hearings will be held in December to allow interested parties to comment on all of the issues the commission will have examined by that time.