The Northern Virginia Daily's Political Depot

A service for our readers outside the Northern Shenandoah Valley... a sampling of The Daily's political coverage, plus unofficial, 'reporter's notebook' stuff. And occasional dry humor...

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Location: Strasburg, Virginia

Thursday, December 08, 2005

The high road: Car tax bills to rise; A1

New statewide reimbursement cap means residents will be paying more

By Garren Shipley
(Daily Staff Writer)

Your car tax bill is going up. Maybe a lot.

Starting in January, the state won’t be picking up the 70 percent of car tax bills that it had been as part of Gov. Jim Gilmore’s stalled effort to end the levy.

That means car owners will likely be paying more next year, regardless of what local governments do with their rates.
Governments around Virginia are changing their laws now in anticipation of the $950 million statewide cap for reimbursement.

The Frederick County Board of Supervisors is set to vote on its changes Wednesday, ac-cording to Treasurer Bill Orndoff.

The new bill “parallels what the taxpayers are very used to now,” he said, with the exception that the percentage of the bill covered by the state will change — and not for the better.

Shenandoah County is adopting many of the same changes, said Treasurer Cindy George. A public hearing is set for Dec. 20.

“The taxpayer isn’t going to see anything any different other than the percentage that’s covered by the state,” she said.

As of now, that looks to be about 62 percent for Shenandoah County residents, George said, but that could change well into next year.

The new law sets a deadline of March 31 for the Auditor of Public Accounts to complete the calculations and tell local governments what they’ll be receiving.

Legislators voted to divide up the $950 million among the cities, counties and towns in the state based on the percentage of relief they got in 2005.

That means a higher bill.

For example, a 2001 Honda Civic assessed at $11,600 in 2005 incurred a $99.53 bill at the county’s current rate of $2.86 per $100 of assessed value.

While the value of that car is likely to decrease before the 2006 tax bills are issued, at 62 percent reimbursement, the owner of an $11,600 vehicle would pay $126.07 — an increase of 27 percent. For a $20,000 car, the bill in Shenandoah County would increase from $171.60 to $217.36.

Residents of places like Winchester, where the City Council voted earlier this year to double the effective rate of the tax to pay for renovations at John Handley High School, will see their bills more than double before depreciation.

That’s the general rule around the commonwealth, Orndoff said. More cars or more expensive cars mean higher bills for everyone.

“In growing localities where the population [and the number of cars] is increasing, the share of state relief will continue to go down,” he said.

Legislators gave local governments a lot of flexibility with the car tax relief that’s left.
It all started in 2004, when the General Assembly was faced with what members were told would be a major budget shortfall.

Members eventually passed a $1.5 billion tax hike and moved to cap car tax relief at $950 million per year starting in 2006.

“Legislators didn’t have a choice,” Orndoff said. The car tax relief had turned into a major draw on the treasury.

The bill “had grown far more than they ever expected it to from the original plan,” he said.

Virginia’s financial fortunes have since taken a major turn for the better.

In fact, the commonwealth is likely to be sitting on more than $860 million in surplus at the end of the fiscal year — just $20 million shy of the entire cost of the car tax abatement program in fiscal 2004.

But don’t look for any major effort to try to put a final stake through the car tax’s heart.

The Republican side of the House of Delegates is the home to the most vocal and active group of tax cutters in the General Assembly, and there’s no plan in that camp to try to reverse the trend.

“We don’t have anything planned for the car tax,” said Del. Clay Athey, R-Front Royal, the chairman of the House Republican Caucus policy committee.

On the Senate side, leaders have warned against adding major new expenditures to the “base budget,” which includes the $950 million set aside for car tax relief.

The General Assembly reconvenes in January.