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Location: Strasburg, Virginia

Tuesday, May 16, 2006

Car taxes up as state relief down; A1

By Garren Shipley
(Daily Staff Writer)

Supervisors didn’t change the rate, but car tax bills are up in Shenandoah County this year. And lots of other places across the commonwealth.

It all starts — and ends — in Richmond.

Former Gov. Jim Gilmore’s “no car tax” plan started off in the late 1990s as an open-ended pro-mise to local governments. Given enough time, the state would eventually take over the car tax bills for personal vehicles worth less than $20,000.

But to balance the budget in 2004, legislators changed the car tax relief program from an open-ended reimbursement to local governments to a fixed pot of money — $950 million.

State officials project the total amount of claims for reimbursement will go over the $950 million the year, leaving less money for each taxpayer.

The result is higher bills, even in some cases when vehicles depreciated by more than $1,000.
For example, a 2001 Honda Accord garaged in Shenandoah County valued at $11,600 in 2005 incurred an annual bill of $99.54.

This year, the same car was worth $10,200, but came with a $134.20 bill.

After the numbers were crunched, drivers in Shenandoah County got only 54 percent of their bills picked up by the state, according to Treasurer Cindy George.

Even so, there haven’t been many complaints to date.

“Just a little confusion, if they had the same vehicle why their bill was more. Once we ex-plained it to them, there hasn’t been any complaints,” she said.

George said she tells callers that “we got a piece of the pie, and that was our piece of the pie, and we had to pass that on,” she said.

Other jurisdictions are in the same boat.

Clarke County’s relief rate dropped to 55 percent, while Frederick County’s fell to 57 percent. Officials in Warren County on Monday said they couldn’t answer the question about their relief rate.

Things aren’t as bad in Winchester just yet. The state’s northernmost city has an unusual billing arrangement, and taxpayers are just now getting their bills for tax year 2005.

Legislators took Winchester’s special situation into account, and both versions of the budget contain language that essentially lets the city stay a year behind — continuing the 70 percent level of state help while everyone else’s aid declines.

But that’s not to say bills aren’t going up. The Winchester City Council approved a tax increase last year of $1 per $100 of assessed value, essentially doubling the effective rate of taxation in an effort to pay for the $50 million-plus renovation of John Handley High School.

“We haven’t had an increase in 14 years,” Winchester Treasurer Mark Garber said. But there’s no denying that another shoe is about to drop.

“When the reimbursement rate changes, yeah, it’s going to compound that,” he said. “It’s the state changing the rules on us again. Everyone’s going to be affected by this.”

Some more help might be on the way from Richmond, though, in the form of a $50 million change to 2006-08 state budget.

Republicans in the House of Delegates have included the money — which they say is enough to hold everyone’s reimbursement rate at 70 percent this year — in their version of the state budget.

The GOP-controlled Senate hasn’t acted on the bill yet, but neither of the budgets approved by the upper chamber contained any more car tax funding.

If legislators do approve more car tax cash, it will be tough to sort out for some local governments, according to Frederick County Treasurer Bill Orndoff.

A number of governments in the Northern Shenandoah Valley send out two bills, one in the spring and one in the winter.

The first bill usually goes out after the General Assembly has set the rules for the year.

Legislators still aren’t finished with a budget, and the first payments are due in some jurisdictions as soon as June 5.

Difficult or not, if legislators approve the relief, it will find its way back to taxpayers.

“If there’s extra money, certainly the taxpayers are entitled to it,” Orndoff said. “If that’s what the General Assembly tries to do, we’ll find a way to get it done.”