Several bills of interest to local government have been submitted and considered in the House Finance and Senate Finance and Appropriations Committees.
HB 639 (Sullivan) was requested by Arlington County and is intended to clear up confusion caused by legislation from 2023. The 2023 legislation required localities with annual or biennial assessments, or that conduct assessments in-house, to include information on the assessment notice regarding the “effective tax rate increase” – the amount by which the proposed rate exceeds the lowered rate that would offset increases in assessments. However, in some jurisdictions, the governing body has not yet proposed a tax rate when assessment notices are mailed, causing concerns among some localities as to how to comply with the law. A planned substitute for the bill will provide clarity by specifying that the notice must instead include the lowered rate necessary to offset the increases in assessments and generate the same amount of real estate tax as the previous year (when growth in overall total assessed value of real estate would result in an increase of one percent or more in the total real property tax levied). VACo supports this legislation as a clarification to enable localities to comply with the policy decision enacted last year, and spoke in favor of companion legislation, SB 677 (Durant), when it was heard in Senate Finance and Appropriations this week. SB 677 reported from committee and is on the Senate floor.
As introduced, HB 549 (Walker) would have required localities to send to each property owner a notice of the public hearing on the proposed tax rate (which is required when growth in the overall total assessed value of real estate would result in an increase of one percent or more in the total real property tax levied). This notice would have to contain certain information (the dollar and percentage amount of increase that the proposed tax rate would levy on the particular property relative to the previous year, the dollar amount of the tax levy on the property for the previous year and proposed levy for the current year, and the information required to be provided in the newspaper advertisement for the public hearing). This notice would be in addition to the assessment notice, and VACo had expressed opposition to requiring a separate mailing, noting that property owners already have ample information (between the assessment notice and the public hearing advertisement) to participate in the tax rate public hearing process. The patron offered an amendment in subcommittee to require this information to be included in the assessment notice (thus eliminating the requirement to send a separate mailing); with this amendment, the legislation is now similar in scope to the planned substitute for HB 639 (Sullivan), and the subcommittee plans to discuss the two bills together at its next meeting.
HB 574 (Thomas) is a request from the Virginia Mortgage Bankers Association. Under current law, recordation taxes are based on the greater of (i) the sales price of the property, or (ii) the “actual value of the property conveyed,” which has traditionally been interpreted to be the assessed value. The bill would codify that traditional interpretation by stipulating that “actual value” means the most recent assessed value. The bill was prompted by a temporary practice of including appraised values on deeds of trust, which were often higher than assessed values; this practice has been discontinued. This bill has been reported from House Finance and is headed to the House floor.
HB 705 (Webert), HB 1502 (Willett), and SB 194 (VanValkenburg), as introduced, would remove the 2025 sunset date on authority enacted in 2022 to allow localities to impose a tax rate on certain motor vehicles that is different from the rate applicable to general tangible personal property. This legislation was originally enacted to allow localities to address the spike in used car values during the pandemic. The Senate Finance and Appropriations Committee amended SB 194 to extend the sunset for two years (to 2027). The House bills have not yet been heard., as introduced, would remove the 2025 sunset date on authority enacted in 2022 to allow localities to impose a tax rate on certain motor vehicles that is different from the rate applicable to general tangible personal property. This legislation was originally enacted to allow localities to address the spike in used car values during the pandemic. The Senate Finance and Appropriations Committee amended SB 194 to extend the sunset for two years (to 2027). The House bills have not yet been heard.
HB 384 (Ware), HB 1429 (Laufer), and SB 483 (Aird) would add certain farm machinery, equipment, and implements used by an indoor, closed, controlled-environment commercial agricultural facility to the list of types of property that local governing bodies may wholly or partially exempt from taxation, or tax at a different rate than the rate imposed on general tangible personal property. Thees bills have not yet been heard.
HB 263 (McNamara) would provide that sales and use tax applies to accommodations furnished to transients for stays of fewer than 30 continuous days; under current law, sales and use tax applies to stays of fewer than 90 days. (Transient occupancy taxes apply to stays of fewer than 30 days.) The fiscal impact statement accompanying the bill indicates that the legislation is expected to result in an unknown negative effect on state and local revenues. This bill has not yet been heard.
HB 875 (Earley) would cap the personal property tax valuation of internal combustion automobiles at the assessed value during tax year 2023, or the tax year in which the vehicle was purchased new, whichever is later, as long as the Regulation for Low Emissions and Zero Emissions Vehicle Standards remains in effect. VACo had expressed concerns about the precedent set by prescribing valuation of property in this manner. The bill was tabled in a subcommittee of House Finance.
VACo Contact: Katie Boyle