Local Governments Are In Better Fiscal Shape Than The State But
May Have To Rely More On Real Estate Tax, U.Va. Study Warns
January 15, 2002--
Virginia's severe financial crisis means that local governments
as well as the state face tough times ahead. But while state coffers
overflowed during the boom of the 1990s, now it is the localities
that are in better shape than state government, according to a new
study by the University of Virginia's Weldon Cooper Center for Public
far, local governments have weathered the current recession better
than in the previous recession, when a poor housing market diminished
real-property tax collections," said economist John L. Knapp.
"However, in the near future, Virginia’s local governments
will face difficult times, as the state reduces aid and as local
tax revenues reflect the slow growth of the economy.”
also warned that "if the so-called housing bubble were to burst,
this would cause a sharp drop in real-property tax revenue"
for local governments and add to their problems.
270-page study, "Tax Rates 2002," contains detailed information
on tax rates levied in all of Virginia's 95 counties and 39 cities
and in most of the incorporated towns. The study is based on a comprehensive
annual survey conducted by the Cooper Center.
the state has cut local aid, city and county officials have protested
that the unpopular job of raising taxes to maintain services may
fall unfairly on them alone, with their main option being the real
estate tax. Virginia's law providing car tax rebates makes it politically
difficult for local governments to increase tax rates on cars, Knapp
said. The state reimburses car owners on the basis of 1997 local
rates and no large jurisdictions have increased their rates since
then, he noted. In contrast, 19 counties, most of them rural, have
increased their rates.
dealing with tighter fiscal times, local governments will have few
revenue options other than the real estate tax, Knapp said. That
is because most available tax sources are already being used at
maximum permitted levels, he said. Although real estate is the single
most important source for most cities and counties, the tax counts
for only about 52 percent of local tax revenue statewide, he added.
study shows that Virginia’s median real estate tax rate of
73 cents per $100 of assessed value did not change between tax years
2001 and 2002.
estate tax rates rose in only six cities and in 26 counties. They
stayed the same in the majority of cities (25) and counties (41).
Rates were reduced in eight cities and 28 counties.
localities that increased rates have not reassessed real estate
for several years, Knapp pointed out. On the other hand, many localities
that reduced rates experienced large increases in assessments due
to strong housing markets or new general reassessments after several
years of no change.
2002 real estate tax rates ranged from a high of $1.42 per $100
of assessed value in Portsmouth to a low of 42 cents in Halifax
County. The new study is the 21st annual edition of "Tax Rates."
The book is for sale by the Cooper Center.
Ordering information is at:
interviews or additional information, John Knapp may be reached
at (434) 982-5604 and email@example.com.
Bob Brickhouse, (434) 924-6856