Several Constitutional amendments have been introduced this session, as this year is the traditional beginning of the two-year Constitutional amendment process. Any Constitutional amendments that pass this year would need to pass in identical form again in 2024 before being placed on the ballot in November 2024.
HJ 462 (Anderson) is a Constitutional amendment that would exempt motor vehicles (defined as automobiles, motorcycles, and pickup trucks) owned by an individual for personal, noncommercial use from taxation. The amendment does not address reimbursement to localities for lost revenue, and localities participating in the Commission on Local Government’s fiscal impact statement process identified significant potential revenue impacts from the elimination of this revenue source (as well as the assumed elimination of the current $950 million provided by the state each year for personal property tax relief reimbursement to localities). The 2021 Comparative Report of Local Government Revenues and Expenditures documents counties deriving $2.2 billion in personal property tax revenues, the bulk of which are attributable to personally owned, noncommercial vehicles.
Elimination of a portion of the “car tax” has been attempted in the past, with 1998 legislation setting out a five-year phased approach for elimination of taxes on the first $20,000 of value for each qualifying vehicle, beginning with 12.5 percent relief in 1998, and reaching 100 percent in 2002, with the state reimbursing localities for lost revenue, contingent on certain state revenue triggers being met.
Due to rising costs to the state to administer the program, the state capped the reimbursement rate at 70 percent in 2001, and in 2004, the reimbursement amount was capped at a fixed $950 million, where it has remained. Since Tax Year 2006, localities have received a pro rata share of the fixed $950 million amount based on their respective proportions of the Tax Year 2004 reimbursement amount.
HJ 462 has not yet been referred to a committee but will likely be heard in the House Privileges and Elections Committee. VACo opposes this proposal.
Key Points
- Local governments would be forced to turn to other sources of revenue to compensate for the significant losses associated with eliminating this revenue stream.
- Full state reimbursement to localities for lost revenue on a sustained basis is unlikely given Virginia’s previous experience with the Personal Property Tax Relief Act of 1998.
HJ 533 (Tran)/SJ 231 (McPike) would extend the current real property tax exemption for the surviving spouse of any member of the armed forces of the United States who was killed in action to surviving spouses of servicemembers who die in the line of duty with a Line of Duty determination from the Department of Defense. Legislation enacted in 2022 authorizes localities to declare property owned by these surviving spouses as a separate class of property and impose a different rate of taxation than that imposed on the general class of real property (this rate can be lower than the general real property tax rate but cannot be zero).
HJ 485 (Price) would enable the General Assembly to authorize the governing body of any county, city, or town to provide for an exemption from local property taxes for property owned by a low-income taxpayer, within such restrictions and upon such conditions as may be prescribed. HJ 498 (Carr) and SJ 247 (Hashmi) would authorize local governing bodies to provide for an exemption, or partial exemption, from real estate taxes for property owned and occupied by persons of low income or low financial worth; localities would be authorized to establish income or financial worth limitations.
HJ 517 (Leftwich) would enable the General Assembly to authorize localities to provide for full or partial exemption from real property taxation of real estate on which housing is to be constructed.
HJ 458 (Anderson) would impose term limits on state legislators and local and Constitutional officers. Individuals would be limited to three consecutive terms in the Senate or six consecutive terms in the House of Delegates, beginning with the 2026 Regular Session of the General Assembly. Individuals would be limited to three consecutive terms for any county, city, town, or constitutional office (or two consecutive terms as clerk of the court), beginning January 1, 2026. SJ 224 (Chase) is similar but applies only to state legislators and would take effect beginning with the 2024 General Assembly.
VACo Contact: Katie Boyle