Understanding the Spins

What you need to know about real estate taxes:

Beware of smoking mirrors! They can confuse you! Mirrors can make you look much wealthier than what you really have in the bank or in your pockets. Yes, Virginia Beach has many wealthy people and that may compound the tax issue homeowners face today. The purpose of the below text is to educate you on the real estate tax issue.

Virginia Beach

First, the real estate tax rate today is $1.1964 per $100 assessment of your property. The previous year tax rate was $1.21. City Council voted last year (May 2004) to reduce the tax rate by 2 cents, but if you noticed, your real estate taxes went up significantly because the dollar value of your assessment outstripped the little tax rate cut that City Council voted on. And, recall government advertised that they voted for a reduced tax rate.
If City Council did nothing to the tax rate in May when they vote, the State Statute tax rate would automatically be implemented (by State law) at the $1.0037. As explained at last month’s civic league meeting, the State Statute mandates that next fiscal year tax rate be $1.0037. The Statute also provides another paragraph (some people call it a loophole) that outlines what City Council must do to increase the tax rate from the State Statute mandated rate, that is, Council must hold a public hearing and conduct a public vote. For the past ten years, our City Council has been increasing the tax rate above the State Statute mandated rate, and consequently for some of us, our taxes have gone through the roof, while Council advertises that they have voted for a reduced tax rate.
Now, listen and see the smoking mirrors! The figures below are factual and undisputable. Also note that the CPI for 2004 was 2.4% but our cost of Virginia Beach government went up much more.

2005:
Assessment increase: 22% (average) (many are 35% plus)
State Statute Tax Rate (paragraph a): $1.0037
Current Tax Rate (voted on last May): $1.1964
City Council Tax Rate: Gets voted on this May
(Mayor Oberndorf recommended at least a 10 cent reduction – see Friday March 11, 2005 Virginian-Pilot)
(As you can see, at least a 19 cent reduction is appropriate and more correct.)

2004:
Assessment increase in 2004: 11.7% (average)
State Statute mandated tax rate: $1.05
Tax Rate: $1.22
City Council Tax Rate: $1.1964
(As you can see, at least a 17 cent reduction was appropriate; instead, Council voted a 3 cent reduction)

Consumer price Index (CPI): 2.4% (means price increases on products you purchase)

You can now understand that our government is costing us more than the price increases for products we purchase. To complicate this tax issue, hotels in Virginia Beach pay only 2% of the tax revenue, meaning that the homeowners are shouldering most of the tax burden. More than ever, you must call the Mayor and all the City Council members that the tax rate must be reduced to $1 as set by the State Statute.

What you need to know about real estate assessments:

The purpose of showing you the below State Code is you can read that indeed your real estate tax rate does go down by this Statute (paragraph A) if assessments exceed 1% so that your taxes for the following year will only increase by 1%. The Code provides City Councils the means to increase the tax rate as outlined in paragraphs B and C. The importance of your attendance and comments to these meetings are crucial for City Council to understand whether the homeowner can endure further increases in taxes. Assessments are based on market value beyond the control of City Council. The real estate taxes are based on assessments and the tax rate, which is controlled by City Council.

VIRGINIA CODE: § 58.1-3321: Effect on rate when assessment results in tax increase; public hearings.

A. When any annual assessment, biennial assessment or general reassessment of real property by a county, city or town would result in an increase of 1 percent or more in the total real property tax levied, such county, city, or town shall reduce its rate of levy for the forthcoming tax year so as to cause such rate of levy to produce no more than 101 percent of the previous year's real property tax levies, unless subsection B of this section is complied with, which rate shall be determined by multiplying the previous year's total real property tax levies by 101 percent and dividing the product by the forthcoming tax year's total real property assessed value. An additional assessment or reassessment due to the construction of new or other improvements, including those improvements and changes set forth in § 58.1-3285, to the property shall not be an annual assessment or general reassessment within the meaning of this section, nor shall the assessed value of such improvements be included in calculating the new tax levy for purposes of this section. Special levies shall not be included in any calculations provided for under this section.

B. The governing body of a county, city, or town may, after conducting a public hearing, which shall not be held at the same time as the annual budget hearing, increase the rate above the reduced rate required in subsection A above if any such increase is deemed to be necessary by such governing body.
Notice of the public hearing shall be given at least seven days before the date of such hearing by the publication of a notice in at least one newspaper of general circulation in such county or city. Such notice shall be at least the size of one-eighth page of a standard size or a tabloid size newspaper, and the headline in the advertisement shall be in a type no smaller than 18-point. The notice shall not be placed in that portion, if any, of the newspaper reserved for legal notices and classified advertisements. The notice shall be in the following form and contain the following information, in addition to such other information as the local governing body may elect to include:

NOTICE OF PROPOSED REAL PROPERTY TAX INCREASE

The (name of the county, city or town) proposes to increase property tax levies.
1. Assessment Increase: Total assessed value of real property, excluding additional assessments due to new construction or improvements to property, exceeds last year's total assessed value of real property by . . . ./t . percent.
2. Lowered Rate Necessary to Offset Increased Assessment: The tax rate which would levy the same amount of real estate tax as last year, when multiplied by the new total assessed value of real estate with the exclusions mentioned above, would be $. . . . per $100 of assessed value. This rate will be known as the "lowered tax rate."
3. Effective Rate Increase: The (name of the county, city or town) proposes to adopt a tax rate of $. . . . per $100 of assessed value. The difference between the lowered tax rate and the proposed rate would be $./t . . . per $100, or . . . . percent. This difference will be known as the "effective tax rate increase."
Individual property taxes may, however, increase at a percentage greater than or less than the above percentage.
4. Proposed Total Budget Increase: Based on the proposed real property tax rate and changes in other revenues, the total budget of (name of county, city or town) will exceed last year's by . . . . percent.
A public hearing on the increase will be held on (date and time) at (meeting place).
C. All hearings shall be open to the public. The governing body shall permit persons desiring to be heard an opportunity to present oral testimony within such reasonable time limits as shall be determined by the governing body.

California Proposition 13: Background