2000 Tax Rates Virginia's Cities, Counties, and Selected Towns

Transcription

1 2000 Tax Rates Virginia's Cities, Counties, and Selected Towns 19 th Annual Edition John L. Knapp Project Director In Cooperation with Virginia Association of Counties Virginia Municipal League WELDON COOPER CENTER FOR PUBLIC SERVICE University of Virginia Copyright 2000 by the Rector and Visitors of the University of Virginia First Reproduction, December 2000

2 WELDON COOPER CENTER FOR PUBLIC SERVICE University of Virginia 918 Emmet Street North, Suite 300 Charlottesville, VA (804) FAX: (804) TDD: (804) 982-HEAR Web Site: Richmond 700 East Franklin Street, Suite 700 Richmond, VA (804) FAX: (804) TDD: (804) 982-HEAR Southwest College Avenue Wise, VA (540) FAX: (540) TDD (540) Southside 1008 South Main Street Danville, VA (804) (804) FAX: (804)

3 iii Contents Tables... Introduction... v vii Section 1. Data on Virginia s Local Government Tax Structure Year 2000 Legislative Changes Affecting Local Taxation Real Property Tax, Real Property Tax Relief Plans and Housing Grants for the Elderly and Disabled, Land Use Value Assessments for Agricultural, Horticultural, Forestal and Open Space Real Estate, Agricultural and Forestal Districts, Property Tax Exemptions for Certain Rehabilitated Real Estate and Other Exemptions, Service Charges on Tax-Exempt Property, Merchants Capital Taxes, Tangible Personal Property Tax, Machinery and Tools Property Tax, Utility License Taxes, Cable Television System Taxes, Utility Consumers Taxes, Emergency Telephone System Tax, Business, Professional, and Occupational License Taxes, Motor Vehicle License Taxes, Excise Taxes on Meals, Transient Occupancy, Cigarettes, Tobacco, Admissions, and Motor Fuels, Taxes on Natural Resources, Legal Document Taxes, Miscellaneous Taxes, Refuse and Recycling Collection Charges, Water and Sewer Connection Fees, Impact Fees, Tourism Promotion Funding, Public Rights-Of-Way User Fees, Miscellaneous Fees,

4 iv Contents (continued) Appendixes A. Facsimile of Survey Questionnaire B. List of Respondents and Non-Respondents to 2000 Tax Rates Questionnaire

5 v Tables Tables 1.1 Local Government Percentage Distribution of Tax Revenue, FY City Government Percentage Distribution of Tax Revenue, FY County Government Percentage Distribution of Tax Revenue, FY Town Government Percentage Distribution of Tax Revenue, FY Growth of Virginia Local Government Tax Revenue by Major Source, Real Property Tax, Real Property Effective True Tax Rate, Real Property Owner Tax Relief Plans for the Elderly and Disabled, Summary of Real Property Renter Tax Relief Plans and Housing Grants for the Elderly and Disabled, Land Use Value Assessments for Agricultural, Horticultural, Forestal, and Open Space Real Estate, Agricultural and Forestal Districts, Property Tax Exemptions for Certain Rehabilitated Real Estate, Property Tax Exemptions for Pollution Control, Solar Energy and Energy Conservation Equipment, Service Charges on Tax-Exempt Property, Merchants' Capital Tax, Tangible Personal Property Tax for Automobiles and Trucks of Less Than Two Tons, Tangible Personal Property Tax Rates for Large Trucks Two Tons and Over, Tangible Personal Property Tax on Motor Vehicles, Payment and Assessment Schedules, Taxes on Personal Property Other Than Motor Vehicles, Machinery and Tools Property Tax, Utility License Taxes, Cable Television System Taxes, Utility Consumers' Taxes on Electricity, Telephone, Gas, and Water, Emergency Telephone System Tax,

6 vi Tables (continued) 16.1 BPOL Due Dates and Other Provisions, Specific BPOL Classification Fees and Tax Rates, Taxes and Fees on Peddlers and Itinerant Merchants, Motor Vehicle License Taxes, Restaurant, Transient Occupancy, Cigarette, Admissions, and Motor Vehicle Fuel Excise Taxes, Natural Resource Taxes, Legal Document Taxes, Miscellaneous Taxes, Refuse Collection Charges, Recycling Collection Charges, Miscellaneous Refuse Collections Fees, Water and Sewer Connection Fees, Impact Fees, Tourism Promotion Funding, Public Rights-of-Way User Fees, Miscellaneous Fees,

7 Introduction This is the nineteenth edition of Tax Rates in Virginia s Cities, Counties, and Selected Towns a comprehensive guide to local taxes in Virginia prepared by the University of Virginia s Weldon Cooper Center for Public Service. This study, which is based on information gathered in the spring and summer of 2000, includes all of Virginia s 40 cities and 95 counties and 150 of the state s 189 incorporated towns. The study also provides information from the Virginia Department of Taxation's 2000 legislative summary and its assessment/sales ratio study for the real property tax in Each year we make incremental improvements in this publication. This year we converted from the FileMaker Pro database program to the Microsoft Access program. Although this change does not change the appearance of the program, it will make our database more useful to others since the Access program is more widely used. Although the content is very similar to that of the previous edition, all sections and tables have been renumbered. In several instances we have made changes in table format so that some items may be in a different table than previously. Also, we have added a new table based on survey data, Table 26.1: Public Rights-of-Way User Fees. The study is separated into twenty-seven sections. The first section contains a summary of local tax sources and some historical analysis. Section 2 provides information on newly enacted changes in the Virginia Code affecting local governments. Sections 3 though 27 cover specific taxes and service charges. Most of the data came from a detailed questionnaire (see Appendix A for a facsimile of the document) sent to all cities, counties, and towns. Appendix B provides a listing of names and phone numbers of respondents and nonrespondents to the questionnaire. The 1999 edition contained an Appendix C showing selected web addresses for state and local government fiscal topics. That section has been dropped because good current information is on the Cooper Center s VaStat web site. Go to the Government Finance/Taxation section at: Most of the information at the site is for Virginia, but there are also interstate links. The Schmidt Enterprises, LLC link is particularly helpful.

8 Although this report is comprehensive, a few taxes are not included. Alcohol taxes are too complex to report briefly. The bank franchise tax is not discussed in this study because the tax is uniform among all localities. All the localities that impose the bank franchise tax do so at the maximum rate allowed by statute 80 percent of the state rate of taxation ( through of the Code). The reason for this is , entitling banks to a credit upon the state franchise tax equal to the total amount of local franchise tax paid. As a result, localities receive 80 of each $1 of possible state bank franchise tax revenue. In addition, this study does not cover the local option sales tax ( , , and ), because every city and county imposes it at 1 percent, nor does this study cover the various property taxes imposed on public service corporations. If a table shows for a particular locality a different tax than reported in the previous edition, this usually means that the tax has been changed. However, there is always the possibility that in one or both years the response was inaccurate. In the tables in this study three dots (...) are used to show there was no response and "N/A is used to indicate "not applicable." The dots are also employed when a respondent left a blank space. Readers are encouraged to use the phone list in Appendix B to obtain clarification and additional detail. John L. Knapp, Professor and Research Director of the Business and Economics Section, was the project director. In this capacity he designed the publication and was responsible for final approval of the entire content. Stephen C. Kulp was responsible for all day-to-day work on the project. He designed the new database, administered the survey, and translated the results into tables, checked relevant code sections, and made appropriate changes in the text. Student research assistants Catherine Elaine Barchers, Katherine Forrest Wagoner, and Michael Everett Welser assisted Steve Kulp with mailing, follow-up, and other aspects of the work. Susan E. Wormington of the Cooper s Center Publications and Communications Division designed the cover. Albert W. Spengler, who authored this study for a number of years before I took over in 1991, did much of the groundwork on the study when it was his responsibility. Three employees of the Virginia Department of Taxation provided special assistance. Janice Cole, Customer Services, provided information on local cigarette taxes. Carol Donaldson, Office of Tax Policy, furnished an electronic version of 1999 Legislative Summary that formed the basis for Section 1 in the study. Sarah L. Ryder, Office of Tax Policy, reviewed the questionnaire and offered helpful suggestions. The questionnaire was also re-

9 viewed by James D. Campbell, Executive Director, Virginia Association of Counties, and by Betty Long, Deputy Director, Virginia Municipal League. The strong support for this publication by the two local government associations adds to its acceptance as a basic reference on Virginia local taxes. I am grateful to the many local officials throughout the Commonwealth who supplied the survey information presented in this study. I thank them for their willingness to provide information and their patience in answering follow- up questions. Excellent response rates of 100 percent for the cities and counties and 79 percent for the towns could not have been achieved without their cooperation. Please let me hear from you if you have corrections or suggestions for possible changes or additions to future editions. John L. Knapp Project Director Jlk6a@virginia.edu Charlottesville December 2000

10 iv Tax Rates 2006

11 1 Section 1 Data on Virginia s Local Government Tax Structure The emphasis of this publication is on tax rates and tax provisions, not tax revenues. Nonetheless, without information on revenues, it is impossible to get a good grasp of the relative importance of the various sources. Tax revenue data are available from the Auditor of Public Accounts Comparative Report of Local Government Revenues and Expenditures, Year Ended June 30, Table 1.1 shows the distribution of tax revenue for cities, counties, and the thirty-one large towns for which information is gathered. Fiscal Year 1999 Data The real property tax stands out as the single most important source of tax revenue, accounting for 39.1 percent of city revenue, 46.2 percent of county revenue, and 22.3 percent of town revenue (Table 1.1). Second in importance for cities and counties is the personal property tax, accounting for 13.5 percent of city tax revenue and 21.1 percent of county revenue. For towns the share is 8.4 percent. The personal property tax includes motor vehicles as well as other types of personal and business property. The tax on personal motor vehicles is being reduced so that when a multi-year phase-in is completed, the so-called car tax will apply only to values exceeding $20,000. When the tax relief plan is completed, the share of personal property taxes will be much lower than measured in FY The local sales and use tax, a uniform 1 percent in cities and counties with town and county sharing, is 13.1 percent of city tax revenue, 8.3 percent of county tax revenue, and 9.7 percent of town tax revenue. Other relatively important sources of tax revenue for cities are business license taxes, restaurant taxes, consumer utility taxes, and the machinery and tools tax on manufacturers. For counties the other major taxes are those on public service corporation property, consumer utility changes, and machinery and tools. For towns the other major tax sources are restaurant meals, business licenses, and consumer utilities. So far, this analysis has been limited to averages for cities, counties, and towns. Averages obscure the large variety among localities. This diversity is caused by three factors: (1) differences in the size of local tax bases; (2) differ-

12 2 ences in tax instruments available to localities; and (3) differences in local tax rates and provisions. To illustrate the first factor, if two localities A and B are the same population size, but locality A has much higher real property values than locality B, then even if they employ the same effective rate, their tax collections will differ. In reference to the second factor, although many of the tax instruments are available to all localities, there are restrictions on some. For example, unlike cities, many counties must hold a referendum before they can impose a meals tax. Furthermore, a county cannot impose a business, professional, and occupational license tax on a firm located in an incorporated town within the county if the town already imposes the tax. The third factor is illustrated by the fact that not all localities impose the same rate even when permitted. The diversity of local taxation is illustrated by tables 1.2 through 1.4 for cities, counties, and towns, respectively. The tables show for each source of tax revenue the locality with the highest share of tax revenue from that source and the locality with the lowest share. Some examples highlight the differences. The meals tax accounts for only 1 percent of tax revenue in the City of Manassas Park but 21.4 percent in Williamsburg with its strong tourist business. Poquoson, a small city on the Chesapeake Bay with relatively affluent residents, receives 64.1 percent of its tax revenue from the real property tax (Table 1.2). In contrast, the small city of Covington in the Alleghany Highlands receives only 18.4 percent of its tax revenue from that source. Surry County, home of a Virginia Power nuclear generating plant, receives 71.9 percent of its tax revenue from the tax on public service corporations (Table 1.3). On the other hand, three counties receive only 1.8 percent of their revenue from that source. Levies on coal, oil, and gas account for 35.1 percent of tax revenue in coal-rich Dickenson County, but there are eighty-nine counties that receive no revenue from that source. Historical Data The Comparative Report is the source for the following brief historical. The data reported in Table 1.5 cover the seven major categories of local taxation reported for the last ten years by the Auditor of Public Accounts. In the early years the Auditor did not collect as much detail as now so a historical analysis cannot provide the same level of detail available beginning in FY Table 1.5 shows the average annual growth rate for the ten-year period as well as year-by-year growth rates. Over the full period of years the average annual growth rate of the grand total of taxes collected by all cities and counties and the larger incorporated towns was 5.3 percent. This reflected growth in tax base and changes in tax rates and tax structure. The trend rate for all local governments is heavily weighted by the larger jurisdictions. Data for individual jurisdictions showed a large amount of variation depending on conditions in

13 3 the local economy and population change. The average annual growth rate of revenue from the real property tax, the most important single source, was 4.4 percent. The most rapid average annual growth was in other general property taxes, a category composed of taxes on machinery and tools and merchants capital and revenue from property tax penalties and interest. Tax revenue from the personal property tax was a close second in average annual growth. The 7.3 percent increase was fueled by strong motor vehicle unit sales, more expensive new vehicles, and fundamental changes in the used car market that resulted in higher priced, younger, and better quality vehicles. The poor showing of this tax in FY 1999 was due to the implementation of the car tax relief law; FY 1999 was the first year of state aid to localities to compensate them for loss of car tax revenue. If the $72 million distributed to localities is added to tax collections, then they increased by 4.3 percent in FY 1999, and the average annual growth rate for the entire period was 7.6 percent. The 1 percent local option sales and use tax provided revenue growth of 4.9 percent annually. The average rate would have been higher had there not been poor years associated with the recession. Other local tax revenue, a catchall category including such important taxes as those on business licenses, motor vehicles, lodgings, and restaurant meals, grew at an annual average rate of 6.6 percent.

14 4 Table 1.1 Local Government Percentage Distribution of Tax Revenue, Fiscal Year 1999 Percent of Total Tax Revenue Tax Cities Counties Towns * Grand Total Real property Public service corporation property Personal property, general Personal property, mobile homes Machinery and tools Merchants' capital Local sales and use Consumer utility Business license Franchise license Motor vehicle license Bank stock Recordation and wills Tobacco 0.7 φ Admission 0.2 φ Hotel and motel lodging Restaurant meals Coal, oil, and gas Emergency telephone service Other local taxes Total Source: Virginia Auditor of Public Accounts, Comparative Report of Local Government Revenues and Expenditures, Year Ended June 30, 1999, Tables B and B-2 * Limited to 31 large towns reported by the Auditor of Public Accounts φ Less than 0.1 percent. Excludes penalties and interest on general property taxes that are included in total general property taxes by the Auditor of Public Accounts.

15 5 Table 1.2 City Government Percentage Distribution of Tax Revenue, Fiscal Year 1999 Minimum % Maximum % Tax Average % Median % Value Locality* Value Locality* Real property Covington 64.1 Poquoson Public service corp. property Bristol 4.5 Norton Personal property, general Williamsburg 21.7 Buena Vista Per. property, mobile homes (24) 2.3 Petersburg Machinery and tools Poquoson 37.1 Covington Merchants capital Local sales and use Poquoson 27.8 Norton Consumer utility Bedford 12.8 Norfolk Business license Poquoson 13.5 Norton Franchise license Petersburg 4.6 Danville Motor vehicle license Williamsburg 2.4 Poquoson Bank stock Manassas Park 4.9 Clifton Forge Recordation and wills (3) 1.2 Poquoson Tobacco (17) 2.2 Portsmouth Admission (23) 1.2 Norfolk Hotel and motel lodging (6) 18.0 Williamsburg Restaurant meals Manassas Park 21.4 Williamsburg Coal, oil, and gas (38) 2.2 Norton Emergency tel. service (2) 1.8 (2) Other local taxes (27) 1.8 Petersburg Total Source: Virginia Auditor of Public Accounts, Comparative Report of Local Government Revenues and Expenditures, Year Ended June 30, 1999, Tables B and B-2 *The number of localities is shown when more than one locality has the same value. The merchants capital is not used by any city. Excludes penalties and interest on general property taxes that are included in total general property taxes by the Auditor of Public Accounts.

16 6 Table 1.3 County Government Percentage Distribution of Tax Revenue, Fiscal Year 1999 Minimum % Maximum % Tax Average % Median % Value Locality* Value Locality* Real property Surry 67.0 Rappahannock Public service corp. property (3) 71.9 Surry Personal property, general Bath 34.9 Lunenburg Personal property, mobile homes (14) 1.2 (2) Machinery and tools Highland 40.2 Alleghany Merchants' capital (44) 4.0 Montgomery Local sales and use Surry 23.7 Richmond Consumer utility (12) 11.8 Henry Business license (50) 9.7 Arlington Franchise license (6) 1.7 Roanoke Motor vehicle license (2) 5.6 Pittsylvania Bank stock (32) 2.2 Henrico Recordation and wills (2) 1.7 Hanover Tobacco φ (93) 0.2 Arlington Admission φ (93) 0.3 Dinwiddie Hotel and motel lodging (51) 3.6 Arlington Restaurant meals (64) 5.5 Rockbridge Coal, oil, and gas (89) 35.1 Dickenson Emergency telephone service (14) 3.2 Mecklenburg Other local taxes (81) 3.9 Buchanan Total Source: Virginia Auditor of Public Accounts, Comparative Report of Local Government Revenues and Expenditures, Year Ended June 30, 1999, Tables B and B-2 * The number of localities is shown when more than one locality has the same value. φ Less than 0.1 percent. Excludes penalties and interest on general property taxes that are included in total general property taxes by the Auditor of Public Accounts.

17 7 Table 1.4 Town Government Percentage Distribution of Tax Revenue, Fiscal Year 1999 * Minimum % Maximum % Tax Average % Median % Value Locality Value Locality Real property Vinton 54.1 Colonial Beach Public service corp. property Vinton 2.5 Pulaski Personal property, general (3) 16.4 Warrenton Personal property, mobile homes φ (20) 0.4 Wise Machinery and tools (8) 41.2 West Point Merchants' capital a Local sales and use West Point 30.7 Vinton Consumer utility (7) 23.1 Bridgewater Business license Strasburg 28.2 Farmville Franchise license Richlands 6.8 Blacksburg Motor vehicle license (2) 5.6 Front Royal Bank stock Herndon 14.5 Tazewell Recordation and wills a Tobacco (21) 4.6 (3) Admission a Hotel and motel lodging (13) 12.5 Chincoteague Restaurant meals Herndon 32.2 Ashland Coal, oil, and gas (28) 6.9 Wise Emergency telephone service (21) 3.2 Blacksburg Other local taxes (28) 0.7 Wytheville Total Source: Virginia Auditor of Public Accounts, Comparative Report of Local Government Revenues and Expenditures, Year Ended June 30, 1999, Tables B and B-2 * Limited to 31 large towns reported by the Auditor of Public Accounts The number of localities is shown when more than one locality has the same value. φ Less than 0.1 percent. a No towns report obtaining tax revenue through this means. Excludes penalties and interest on general property taxes that are included in total general property taxes by the Auditor of Public Accounts.

18 8 Table 1.5 Growth of Virginia Local Government* Tax Revenue by Major Source, Average Annual Growth Rate, Percent Change from Preceding Fiscal Year Source Total tax revenue Real property Pub. service corp. property Personal property Other gen. property taxes Local sales and use Consumer utility Other local taxes Source: Auditor of Public Accounts, Comparative Report of Local Government Revenues and Expenditures. Selected years. * Total for all local governments all cities and counties and selected large towns. Average annual growth rate based on least squares trend line. * Taxes on machinery and tools, merchants' capital, and property tax penalties and interest. Taxes on business licenses; franchise licenses; motor vehicle licenses, bank stock, recordation of wills, tobacco, admissions; hotel and motel rooms; restaurant food; coal, oil, and gas; emergency telephone service; and other miscellaneous taxes.

19 9 Section 2 Year 2000 Legislative Changes Affecting Local Taxation This section summarizes the major changes in the Code of Virginia enacted by the 2000 session of the Virginia General Assembly for those taxes covered in this publication. The summary is taken from the Virginia Department of Taxation's 2000 Legislative Summary with minor changes for length constraints. The department's study also includes information on state taxes and new provisions governing tax collection and administration that are not reprinted in this publication. Additional information can be found in the Virginia Association of Counties' 2000 State Legislation Affecting Counties and the Virginia Municipal League's 2000 Legislative Report. This section provides a synopsis of enacted legislation. It is for informational purposes only. The listing is not a substitute for actual Department of Taxation regulations, state law, or local ordinances. GENERAL PROVISIONS Prohibition from Imposing New Taxes on the Sale of Alcoholic Beverages New Effective Date: July 1, 2000 Code Section Amended: House Bill 416 (Chapter 450) and Senate Bill 346 (Chapter 381) clarify that localities are prohibited from imposing any tax on the sale of alcoholic beverages, except for (1) the local license tax authorized by ; (2) the local sales tax; and (3) the local food and beverage or meals tax. This legislation would also clarify that the authority of a locality to impose a Business, Professional, and Occupational License (BPOL) Tax on a business engaged in whole or part in the sale of alcoholic beverages is not affected if the BPOL Tax (1) is based on an annual or per event flat fee specifically authorized by general law, or (2) is an annual license or privilege tax, specifically authorized by general law, which includes alcoholic beverages in its taxable measure and treats alcoholic beverages the same as if they were nonalcoholic beverages. Payment of Taxes and Fees with Debit Cards - New Effective Date: July 1, 2000 Code Section Amended: House Bill 628 (Chapter 316) permits localities to accept payment of local taxes, fees, and other charges through the use of debit cards. The service charge for use of a credit or debit card

20 10 may not exceed the amount negotiated and agreed to in a contract with the county, city or town. Under current law, localities are authorized to accept the use of credit cards for the payment of local taxes, fees or other charges generated by the sale of utility services. Localities are authorized to add a charge of up to 4.5 percent of the amount of tax, penalty and interest paid, or six dollars, whichever is greater. Release of Owner Information to Owner s Associations New Effective Date: July 1, 2000 Code Section Amended: House Bill 1219 (Chapter 717) allows the Commissioner of the Revenue or other assessing official to provide to the representatives of a condominium unit owners association, a property owners association, a real estate cooperative association or the owner of property governed by such associations, the names and addresses of parties having a security interest in real property governed by any such associations. This information may be provided upon the receipt of a written request stating the reasons such information is needed. Withholding of Payment of Interest on Refunds New Effective Date: July 1, 2000 Code Sections Amended: and Senate Bill 198 (Chapter 507) allows localities to withhold the payment of interest on refunds in any of the following instances: (1) the amount of refund is ten dollars or less; or (2) the refund is a result of pro-ration related to the personal property tax. Notice of the Sitting of Boards of Equalization Amended Effective Date: July 1, 2000 Code Section Amended: Senate Bill 381 (Chapter 383) stipulates that notice of the sittings of boards of equalization be posted at each public library, voting precinct or both, in addition to being posted at the courthouse and in newspapers having general circulation in the city or county of jurisdiction. Under current law, notices of board of equalization sittings must be posted at each voting precinct, in addition to the postings at the courthouse and newspapers having general circulation in the city or county of jurisdiction. TANGIBLE PERSONAL PROPERTY TAX Tangible Personal Property Used to Provide Internet Services New Effective Date: July 1, 2000 Code Section Amended: House Bill 781 (Chapter 604) creates a separate classification of property for purposes of the local tangible personal property tax for tangible personal property used in the provision of Internet services. This legislation also authorizes localities to tax tangible personal property used in the provision of Internet services at lower rates than applied to the general class of tangible personal property within each locality. For the purposes of this legislation, Internet services are defined as a service that enables users to access content, informa-

21 11 tion, electronic mail, and the Internet as part of a package of services sold to customers. Privately-Owned Travel Trailers Used for Recreational Purposes Reclassified Effective Date: July 1, 2000 Code Section Amended: House Bill 598 (Chapter 409) includes privately-owned travel trailers used for recreational purposes in a separate class of tangible personal property for local property taxation purposes. As a result of this reclassification, localities are authorized to impose a tangible personal property tax on privately-owned travel trailers used for recreational purposes only at a rate of tax and rate of assessment which does not exceed that applicable to the general class of tangible personal property in the locality. Travel trailers are currently classified in the general class of tangible personal property, and localities are authorized to impose a tangible personal property tax on them at the same rate of tax and rate of assessment as imposed on property in the general class of tangible personal property. Privately-Owned Motor Homes Used for Recreational Purposes Reclassified Effective Date: July 1, 2000 Code Section Amended: Senate Bill 115 (Chapter 442) establishes a separate tangible personal property classification for privately-owned motor homes that are used for recreational purposes only. This legislation would provide that the rate of tax and the rate of assessment applicable to this class of property may not exceed the rate of tax and rate of assessment applicable to the general class of tangible personal property in the locality. Tangible Personal Property Employed in a Trade or Business Clarification Effective Date: July 1, 2000 Code Section Amended: House Bill 684 (Chapter 413) clarifies that localities may impose a tangible personal property tax on all tangible personal property employed in a trade or business, other than property described in (A)(1) through (A)(16) and (A)(18), at a rate of tax and a rate of assessment that does not exceed the rate of tax and rate of assessment imposed on the general class of tangible personal property in the locality. Tangible Personal Property Tax Payment Due Date - Extended Effective Date: July 1, 2000 Code Section Amended: House Bill 1247 (Chapter 433) includes the personal property tax among those local taxes for which the governing body may offer an extension of time for payment due to good cause. The extension granted may not exceed ninety days. The legislation also provides that local governing bodies can offer such extensions only by resolution. Finally, this legislation provides that all extensions granted prior to the effective date of the legislation are ratified. Habitat for Humanity Exempted Effective Date: July 1, 2000

22 12 Code Sections Amended: and Code Section Added: Senate Bill 95 (Chapter 441) exempts from tangible personal property and real estate taxation Habitat for Humanity and its local affiliates or subsidiaries. It classifies such organizations as charitable and benevolent organizations, whose real and personal property is exempt by classification. The legislation requires that a local resolution pass in support of such exemption prior to the granting of the exemption by the local governing body. Under current law, tangible personal property of Habitat for Humanity and its local affiliates is a separate classification of tangible personal property, which may be taxed at a rate not to exceed the general rate applied to tangible personal property. Motor Vehicles Property Tax Exemption Amended Effective Date: July 1, 2000 Code Section Amended: House Bill 1444 (Chapter 329) extends the current property tax exemption for motor vehicles owned by churches, religious associations or denominations operating exclusively on a non-profit basis and used predominately for church purposes, to motor vehicles leased by any of the above for the same purposes. Commercial Fishing Equipment Reclassified New Effective Date: July 1, 2000 Code Section Amended: House Bill 190 (Chapter 472) reclassifies tangible personal property used by a commercial fishing business in the water to catch or harvest seafood (including, but not limited to, crab pots, nets, tongs, and dredge equipment) as intangible personal property. This reclassification effectively exempts this property from taxation, as intangible personal property is segregated for state taxation only, and the Commonwealth currently applies a zero tax rate to it. Under current law, this property is taxed by localities as tangible personal property. The legislation specifically provides that fishing vessels and property permanently attached to such vessels continue to be taxed as tangible personal property. REAL ESTATE TAX Real Estate Reporting Requirement Amended Effective Date: July 1, 2000 Code Section Amended: House Bill 37 (Chapter 515) broadens the property uses exempt from the local real estate informational reporting requirement to include any property used exclusively as an owner-occupied property, not as a hotel, motel, or office over 12,000 square feet, and not engaged in a retail or wholesale business where merchandise for sale is displayed. Currently, property owners of incomeproducing properties must provide income and expense information to the local assessor. Abatement of Local Real Estate Taxes on Damaged Buildings Amended Effective Date: April 4, 2000 Code Section Amended:

23 13 House Bill 408 (Chapter 399) permits the abatement of local real estate taxes on damaged buildings in those instances in which the buildings are rendered unusable for 30 days or more during the calendar year. Under current law, the abatement is allowed when the building damage is not repaired during the calendar year in which it occurred. Clarification of Taxation of Real Estate Dedicated to Agricultural, Horticultural, Forest, or Open-Space Use - Amended Effective Date: July 1, 2000 Code Section Amended: House Bill 617 (Chapter 410) clarifies that when localities provide for the special assessment and taxation of real estate dedicated to agricultural, horticultural, forest, or open-space use on a sliding scale for real estate held for such uses for longer periods of time, they may establish lower assessments, not tax rates. Currently, localities may establish lower tax rates for real estate held for such uses for longer periods of time. Administration of Real Estate Taxes Amended Effective Date: July 1, 2000 Code Section Amended: Code Sections Added: and House Bill 1216 (Chapter 756) authorizes any city to adopt an ordinance making real estate, on which taxes are delinquent, eligible for a tax sale on December 31 following the first anniversary of the date the taxes became due. This legislation also provides that a person notified of a tax sale of real estate by publication may request a rehearing within 90 days of the entry of the confirmation of sale (the court order that allows the property to be sold). Finally, this legislation authorizes localities to adopt an ordinance allowing the locality to release tax liens in order to facilitate the sale of real estate in certain circumstances. Such liens would remain the personal obligation of the owner of the property at the times the liens were imposed. BUSINESS PROFESSIONAL AND OCCUPATIONAL LICENSE TAX Member of an Affiliated Group Amended Effective Date: July 1, 2000 Code Section Amended: and House Bill 1494 (Chapter 557) allows limited partnerships, limited liability partnerships, and limited liability companies to be members of an affiliated group for purposes of the Business, Professional, and Occupational License Tax and to exclude gross receipts or purchases from other members of the affiliated group from the taxable measure. Under current law, only corporations are eligible to be members of an affiliated group and to take advantage of this exclusion. MISCELLANEOUS TAXES Meals Tax Uniform Definition of Food Adopted New Effective Date: July 1, 2000 Code Sections Amended: and

24 14 House Bill 255 (Chapter 626) creates a uniform definition of food for local meals tax and food and beverage tax purposes. The local meals and food and beverage taxes cannot be imposed on food which meets the definition of food under the federal Food Stamp Program, with the exception of sandwiches, salad bar items sold from a salad bar, prepackaged single-serving salads consisting of vegetables, and non-factory sealed beverages. In addition, the legislation clarifies that alcoholic beverages sold in factory sealed containers and purchased for off-premises consumption shall not be subject to the local meals taxes. The legislation also directs the Commission on Virginia s State and Local Tax Structure for the 21 st Century to study the fiscal impact on the localities if they were required to compensate businesses for the collection of the local meals tax. Transient Occupancy Tax Gloucester and Stafford Counties Allowed to Impose Additional Tax - New Effective Date: July 1, 2000 Code Section Amended: House Bill 51 (Chapter 470) allows any county having a population of no less than 29,750 and no greater than 31,000, and no less than 60,000 and no greater than 62,500, to increase its transient occupancy tax to a rate not to exceed five percent of the amount charged for the occupancy of any room or space occupied. The revenues collected from that portion of the tax over the two percent rate must be designated and spent for tourism or tourism initiatives that attract travelers to the locality and generate tourism revenue in the locality. This legislation also provides that any transient occupancy tax in excess of two percent shall not apply to travel campgrounds in any county having a population of no less than 60,000 and no greater than 62,500. Consumer Utility Tax Imposition of Telecommunications Consumer Utility Tax in Towns Amended Effective Date: July 1, 2000 Code Section Amended: Senate Bill 233 (Chapter 375) authorizes a county to impose a telecommunication consumer utility tax on consumers located within a town that is located within the county unless the town currently imposes such a tax and either imposed such a tax prior to January 1, 2000 or is a separate school district. Additionally, this legislation prohibits a town from imposing such a tax if the county imposes such a tax on consumers located within the town limits. Towns that imposed such a tax prior to January 1, 2000 are not subject to this prohibition. E-911 Tax E-911 Surcharge Amended Effective Date: July 1, 2000 Code Sections Amended: , , , :2, and Code Sections Added: :4, , , , , , , and Code Sections Repealed: , , , , and

25 15 Senate Bill 148 (Chapter 1064) establishes a special non-reverting fund on the books of the Comptroller called the Wireless E-911 Fund. The source for the Wireless E-911 Fund will be a monthly surcharge of 75 cents collected by each mobile service provider from each customer. The Wireless E-911 Services Board will oversee the fund. The board will pay the operators of wireless E-911 systems for their operating costs using money from the Wireless Fund based on budget information submitted by the E- 911 system operators. This legislation also allows localities that have or will establish an enhanced 911 service to impose an E-911 tax on consumers of telephone services not to exceed a monthly fee of three dollars. Any tax amounts collected must be accounted for in a separate, special revenue fund or accounted for using a cost center and revenue accounting system acceptable to the Virginia Auditor of Public Accounts. TAX COLLECTION AND ADMIN. Process for Collection of Local Taxes and Fees Amended Effective Date: July 1, 2000 Code Sections Amended: , , and House Bill 751 (Chapter 453) clarifies that notices, summons, and other legal process issued by a treasurer are not required to be executed and returned in the same manner as civil process in the courts system. Currently, all process issued by a treasurer must be executed in the same manner as civil process in the courts system. The legislation also increases, to twenty dollars, the amount of unbilled and/or uncollected taxes, below which a treasurer is required to maintain separate official lists. The threshold under current law is five dollars. This legislation also authorizes localities to impose fees to cover the administrative costs of collecting delinquent charges owed to the localities. Recoverable costs would include attorney s or collection agency s fees. Currently, localities may impose these fees only regarding the collection of delinquent taxes. Administrative Costs of Collecting Delinquent Fees Amended Effective Date: July 1, 2000 Code Sections Amended: House Bill 751 (Chapter 453) and Senate Bill 558 (Chapter 389) authorize localities to impose fees to cover the administrative costs of collecting delinquent charges owed to localities. Recoverable costs include attorneys or collection agencies fees. Currently, localities may impose these fees only regarding the collection of delinquent taxes.

26 iv Tax Rates 2006

27 17 Section 3 Real Property Tax, 2000 Localities in Virginia are authorized by the Code of Virginia, through , to levy taxes on real property. There is no upper limit on the tax rate that may be imposed. Also, provides that all general reassessments or annual assessments shall be at 100 percent of fair market value. Section requires cities to have a general reassessment of real estate every two years. However, any city which has a total population of 30,000 or less may elect by majority vote of its council to conduct its general reassessments at four-year intervals. In 2000, 17 cities chose to assess every year, 12 every two years, and 11 used a four year interval. Counties are required to have a general reassessment every four years ( ). There is an exception for counties with a total population of 50,000 or less. These counties may elect to reassess at either five-year or six-year intervals ( ). However, nothing in these sections affects the power of cities and counties to use the annual or biennial assessment method in lieu of general assessments ( ). The tally for the frequency of reassessments in the counties is as follows: 11 assess annually, 7 biennially, 22 use a four year cycle, 4 assess every five years, 36 adopt a six year interval, 12 counties assess on a four to six year basis, 2 assess every five to six years, and 1 county opts to assess on a two to three year cycle. Generally, if these taxes are paid annually, they are due by December 5. If paid semi-annually, they are due by June 5 and December 5. However, some localities may have different due dates, as provided in Any county, city, or town electing to prorate new buildings which are substantially complete prior to November 1 must do so at the time the building becomes substantially complete or fit to live in. An amendment to authorizes any city to make real estate on which taxes are delinquent eligible for a tax sale on December 31 following the first anniversary of the date the taxes became due. Any building which has incurred a $500 or more increase in value due to repairs or additions shall be assessed as if it is new ( ). Contrarily, an amendment effective April 4, 2000 permits the abatement of local real estate taxes on damaged buildings if they are rendered unusable for at least 30 days of the calendar year ( ). The 2000 nominal tax rates presented in Table 3.1 are those reported to

28 18 the Cooper Center by all cities and counties and the 141 respondent towns that levy a real property tax. Also included in the table is information about the frequency of reassessment, the effective date of the most recent reassessment, the tax due dates, whether or not the locality employs a full-time assessor, and whether or not proration is used. The unweighted mean of the nominal rate for cities is $1.04 per $100 of assessed value. The median is $1.11 and the first and third quartiles are $0.83 and $1.22, respectively. The unweighted mean of the nominal rate for counties is $0.72 per $100 of assessed value. The median is $0.70 and the first and third quartiles are $0.60 and $0.78, respectively. The unweighted mean of the nominal rate for all cities and counties is $0.81. The median is $0.74 and the first and third quartiles are $0.62 and $0.99, respectively. The unweighted mean of the nominal rate for towns is $0.18. The median rate is $0.17 and the first and third quartiles are $0.12 and $0.23, respectively. In Virginia, residents of incorporated towns that levy real estate taxes also pay a county real estate tax. Tax due dates vary among localities. Most cities have semiannual tax due dates with payments required in June and December. Of the 40 cities, 5 require taxes due annually, 29 semiannually, and 6 quarterly. Among the counties, 55 have annual tax due dates, while 40 have semiannual requirements. Of the 141 towns responding to this question, 120 have annual due dates, and 21 require semiannual payments. Localities vary about prorating taxes. Of the cities, 19 report prorating taxes while 21 do not prorate. Among counties, 46 prorate their taxes while 49 do not. Reports from the towns that answered this question indicate that 24 prorate their taxes while 114 do not. Effective rates depend upon local assessment techniques and frequency of reassessments. Table 3.2 shows city and county 1998 average effective true tax rates, computed by the Virginia Department of Taxation in a way that is designed to control for the variance in assessment procedures. Therefore, when comparing tax rates among the localities, the reader may wish to consult both data series (Tables 3.1 and 3.2), despite the fact that different years are involved. The Virginia Department of Taxation's assessment/sales ratio study compares the locally assessed value of property to its actual sales price for a sample of parcels sold in the study year. The resulting ratio, the "assessment/sales ratio," or "median ratio," is then multiplied by the average nominal tax rate per $100 to determine an effective true tax rate per $100. It should also be pointed out that the Virginia Department of Taxation does not use the locally reported nominal tax rate in its computations. Instead, the Virginia Department of Taxation relies on an "average nominal rate," which is calculated by dividing the total real property tax

29 19 levy by the assessed value of taxable property. In a few cases, this "average nominal rate" may differ from the locally reported nominal rate. The real property tax rates reported in Table 3.2 are a more accurate reflection of the differences among localities in tax rates on real property than those in Table 3.1 because they control for variations in assessment techniques among localities. Table 3.2 also shows the latest reassessment in effect when the median ratio study was conducted, the number of sales used in the study, the median ratio, and the coefficient of dispersion. The coefficient of dispersion measures how closely the individual ratios of each locality are arrayed around the median assessment/sales ratio. The formula for the coefficient of dispersion (CD) is: CD = 0.5 Q Q 3 1 Median where Q3 and Q1 are the third and first quartile, respectively. If there were no dispersion the CD would equal zero. The unweighted mean of the average effective rate was $0.97 per $100 of true value for cities. The median was $1.00 and the first and third quartiles were $0.75 and $1.15, respectively. The unweighted mean of the average effective rate was $0.61 per $100 of estimated true value for counties. The median was $0.57 and the first and third quartiles were $0.49 and $0.67, respectively. The unweighted mean for all Virginia cities and counties was $0.72, the median was $0.63, and the first and third quartiles were $0.51 and $0.89, respectively. The weighted mean, $0.94, was higher than Virginia's unweighted mean of $0.72, reflecting the higher rates of the larger localities. The following table summarizes the coefficient of dispersion for the various cities and counties from Table 3.2. Coeff. of Cities & Dispersion Cities Counties Counties