January 25, 2007

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Call today in opposition of eliminating local personal property tax

Constitutional amendment to be heard Friday, Jan. 26, at 9 a.m. in House Privileges & Elections Committee

$1.1 billion in local revenue at risk

HJR 586 (Cole) amends the constitution to exempt most privately-owned motor vehicles from property taxes. The resolution, offered by Del. Mark Cole of Spotsylvania, specifically refers to non-business, privately-owned motor vehicles. A House Privileges & Elections subcommittee recommended that the amendment be reported at a Jan. 24 meeting; the amendment will be heard by the full House Privileges & Elections Committee at 9 a.m. Friday.

Local governments receive the majority of their personal property tax revenue from the state – $950 million per year statewide. Bills received by taxpayers show the amount of the state subsidy, and the balance that is due by the car owner.

In FY 2005, general personal property taxes (on vehicles used for nonbusiness and business purposes, boats, etc.) generated more than $1.1 billion for local governments. Personal property revenue has grown steadily over the years, as a result of increases in car values, the number of cars owned, and the population of the state.

HJR 586 would eliminate the authority of local governments to levy the personal property tax on most vehicles. There is no replacement source of revenue included in the amendment.

Here are some talking points:

1. Local governments depend on the revenue from the personal property tax – both from the state subsidy and the individual taxpayer. The revenue is a key part of local general funds, supporting critical local services, including public safety and education. In FY 2005, local governments spent $1.3 billion just on law enforcement and traffic control – slightly more than is generated by personal property taxation.

2. Elimination of the authority to tax this large group of motor vehicles will place increased pressure on real estate taxes. Local governments’ revenue options are extremely limited.

3. Local governments are in an unfortunate position in their reliance on the state to fund $950 million per year in “car taxes.” There simply are too many pressures on the state budget to guarantee that the state will continue to make these payments in perpetuity. Local governments need to retain their authority to tax personal property.

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