Homestead Exemption Killed
Posted by Chap at 2/25/2008 1:49 PM and is filed under uncategorized 
One of the more dramatic moments occurred today on the Senate floor when the constitutional amendment to create a Virginia "homestead exemption" was killed on a 21-19 vote.
All nineteen Republicans and two Democrats voted to kill the measure which had passed this body in a preliminary stage on a practically uncontested (36-3) vote. Now this action and the killing of a similar bill in the House of Delegatres will knock the homestead issue off the ballot and prevent overloaded Virginia homeowners from receiving relief.
Once approved by the people, the homestead exemption gives a locality the right to exempt 20% of an owner-occupied dwelling from property taxes. The measure was a centerpiece of Governor Kaine's successful 2005 campaign. Local governments in northern Virginia have requested the authority in order to deal with skyrocketing residential real estate assessments.
Ironically, if not shockingly, the same General Assembly which killed the homestead relief voted overwhelmingly in 2006 to eliminate the estate tax and thus make multi-million dollar inheritances "tax free."
Those are the people that get tax breaks, because they can afford lobbyists to plead their case. Ordinary citizens? No such luck.
Prior to the vote, I had a chance to speak on the floor and I did. I asked the Senate to approve a tax break for "Virginians that can't afford a lobbyist." These are people living on fixed incomes or stagnant salaries that have been faced with annual double-digit tax increases on their homes.
Today that relief was denied.
Yes, the business community spoke against this bill. Their opposition illustrates the reason that this bill is necessary. Right now, homeowners are assessed the fair market value of their property. Business pay taxes based on revenue generated. In other words, if a building is empty, the taxes go down. Ordinary homeowners are stuck with the bill, even if their income drops.
The Homestead Exemption wouldn't have solved this problem completely. But it would have leveled the playing field for ordinary citizens (or at least given local governments a tool to help).
Killing it didn't prove anything ... except that Republicans in the Assembly can still unite if that means denying a legislative victory for Democrats and the taxpayers of Virginia.
Pretty typical, now lets be sure to provide names of all the voters for review of their constituents. It should be the American way!
The thing to be clear about with the homestead exemption, if added to the Virginia constitution and implemented by the local jurisdictions, is that it would almiost certainly result in a property tax increase for businesses. That is, if local jurisdictions gave up property tax revenue from homeowners, they would try to make that up elsewhere, either with business taxes, or local government fees like water and sewer. To think that local governments would cut spending to match the lost revenue is a fantasy. There is no such thing as a free lunch.
Whitney: No doubt about that. But remember that businesses right now are not taxed based on the FMV of the property. Homeowners are. That's the fundamental disconnect in the current law.