Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, April 24, 1990 TAG: 9004240499
SECTION: EDITORIAL PAGE: A-8 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
But what's this? A hint of sophistication creeping into the discussion? In hope of encouraging even more, the following thoughts are offered:
The fairness issue. One drawback to the tax is the subjectivity of the assessment process. But annual reassessments and computerized analyses of actual sales prices - the basis of the fair-market values by which, under Virginia law, real estate must be assessed - have gone far in reducing assessment inequities.
Moreover, sharp jumps in assessed values of individual properties often reflect corrections of previous underassessments. Underassessments, by maldistributing the tax load, are as much an affront to equitable taxation as overassessing.
The upkeep issue. Another drawback is the way in which the tax "rewards" people who don't keep up their property, a "reward" only partly mitigated by the loss such people (or their estates) incur when the property is put on the market. But stricter enforcement of health, safety and maintenance codes (or enactment of stricter codes, if needed) is the straightforward way to deal with the problem.
The planning issue. If City Council in its wisdom determines that Roanoke should work toward a lower real-estate tax rate, the proper method is to plan for it over a period of years. That's how, during the '80s, the rate gradually was dropped from $1.35 to $1.25 per $100 of assessed value.
Two months before the start of the next fiscal year is no time to start mucking with the revenue base on which budget planning has been grounded. It was good last week to see incumbent Councilman Howard Musser, up for re-election, retreat from his call for an immediate reduction in the rate. He and ticketmate James Harvey instead called for a gradual-reduction plan, which makes more sense.
The inflation issue. Musser is flat wrong, though, when he argues that cumulative reassessments over the past three years mean city property-owners now pay the equal of a $1.48 tax rate. He's wrong because a 1990 dollar isn't the same as a 1987 dollar.
When you spend more at the store, you pay more in sales tax, but nobody argues that the sales tax has gone up. When you get a raise, you pay more in income tax, but nobody argues that the income tax has gone up. Why should the real-estate tax be viewed differently? When your property rises in value, you pay more in real-estate tax. That doesn't mean the real-estate tax has gone up.
On average, assessed real-estate values in Roanoke have risen faster than overall inflation. Taking both into account, you could say that the rate is now equal to a 1987 rate of roughly $1.30. The point then would be arguable, but not ridiculous on its face.
The tax-shift issue. No significant tax plan, whether sudden or gradual, is realistic unless there are (a) significant changes in city policy or (b) new revenue sources.
As for (a), such moves as closing some schools or cutting police strength don't strike us as the road to political popularity. Consolidation with Roanoke County, hardly a sure thing, would help. Continued declines in state and federal money as a percentage of city revenues, closer to a sure thing, won't.
That leaves (b), which would be a tax-shifting plan, not a tax-cutting one. In effect, this is what happened during the '80s. Another sign of the new sophistication is that yesteryear's tax-cutters acknowledge the point, and concede the need for other sources of local revenue to replace lower proceeds from the real-estate tax.
Trouble is, local governments in Virginia are limited by the General Assembly in using other broad-based taxes to supplant the real-estate tax. Adding a local half-cent to the sales tax would require legislative action. The General Assembly has granted our favorite, the power to levy a local-option surcharge on the state income-tax, to Northern Virginia localities, which promptly encountered a wall of public resistance to imposing it.
Perhaps reducing Roanoke's real-estate tax rate is a worthy goal. But it's no cure-all, and would fast lose its worth if not done carefully.
by CNB