VIRGINIANS SAW MOSTLY STABLE REAL ESTATE TAX RATES IN 1994 AND SOME DECLINES IN PERSONAL PROPERTY TAX RATES CHARLOTTESVILLE, Va., Dec. 22 -- Virginia's local governments, faced with few prospects of growth in state aid and forced to be increasingly creative and efficient, generally managed to hold the line on tax increases on real estate and personal property during 1994, according to a study by the University of Virginia's Weldon Cooper Center for Public Service. The median real estate tax rate for cities in Virginia stayed the same this year, while the rate for counties fell slightly, according to the report, "1994 Tax Rates in Virginia's Cities, Counties and Selected Towns," by economist John L. Knapp. And the median personal property tax on motor vehicles, another important source of local revenue, fell from the previous year for both cities and counties. Knapp noted that the real estate and personal property taxes are the only two major local taxes with no state restrictions on rates. If Gov. George Allen's proposal for eventual elimination of the business, professional, and occupational license tax is adopted, real estate and personal property taxes are likely to have to be increased unless localities cut expenditures or are provided with new tax powers, Knapp said. The 1994 median tax rate on real estate was $1.10 per $100 of assessed value for cities and 66 cents for counties. This compares to median rates of $1.10 for cities and 67 cents for counties in 1993. Real estate tax rates rose in four cities and 25 counties. They stayed the same in the majority of cities (34) and counties (58). Rates were reduced in three cities and 12 counties. The 1994 real estate tax rates ranged from a high of $1.49 in Petersburg to a low of 33 cents in Halifax County. The next highest rates were $1.45 in the city of Richmond and $1.44 in the city of Manassas Park. The second and third lowest rates were 35 cents in Mecklenburg County and 41 cents in Cumberland County. Knapp cautioned that such comparisons are rough because of varying assessment ratios among localities. Although populous cities and counties reassess either annually or every two years, many smaller localities have general reassessments less frequently. When assessments don't keep up with rising market values, the assessment ratio goes down. Real property taxes are the most important source of local tax revenue and account for some 46 percent of city tax revenues and 56 percent of county tax revenues, Knapp said. The 320-page study, the 13th annual edition of the center's publication on tax rates across the state, contains information on 14 major tax categories and shows tax rates for all the state's 95 counties and 41 cities, plus 156 towns. It also has information on many special tax provisions such as tax relief programs for the elderly. Personal property taxes, which also are levied on pleasure boats, aircraft, and other types of tangible property, account for 13 percent of city tax revenues and 16 percent of county tax revenues. The study adjusts local personal property tax rates on motor vehicles to account for variations in the source of assessment, the value concept, and the local assessment ratio. The median adjusted rate for cities was $2.67 per $100 in 1994, compared to $2.83 in 1993, a 5.7 percent decrease. The median for counties was $2.20 per $100 in 1994, compared to $2.23 in 1993, a 1.3 percent decrease. The "Tax Rates" publication enjoys a wide audience composed of state and local government officials, taxpayer groups, property owners, economic and community development specialists, real estate agents and developers, newcomers to Virginia, businesses, chambers of commerce, candidates for elected office, and anyone who wants to know more about local taxation in Virginia. The publication is available from the University of Virginia Center for Public Service at (804) 982-5638. Cost is $20 plus tax and shipping. For additional information John Knapp may be reached at the above number. ### December 21, 1994 A chart is attached.