Sunday, December 30, 2007
Editorial: A Homestead Act would strain localities
Lawmakers pander to homeowners by having everyone else pay higher taxes for local services.
From the RoundTable blog
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It is easy for lawmakers to look tough on taxes when they are slashing someone else's revenue. With a shortfall cramping state spending, some in the Virginia General Assembly realize they cannot target state finances for cuts. Instead, they push a Homestead Exemption Act that would let them posture while counties, cities and towns deal with the fallout.
State Sen. Mary Margaret Whipple, D-Arlington, has already submitted the act for the upcoming General Assembly session, which kicks off on Jan. 9. If approved, it would ask voters to amend the state constitution to allow localities to waive up to 20 percent of property taxes.
Technically the amendment would allow the General Assembly to allow localities to do it, but it strains the imagination to think legislators would seek the power and not use it.
Democratic Gov. Tim Kaine pushed the idea in 2005 when he was running for office. Back then, housing prices were climbing and property tax revenue with them, especially in Northern Virginia.
Today, as the housing market slumps, the need for relief seems less pressing. The political grandstanding underlying it remains plentiful, though.
Usually localities welcome more authority to make their own decisions, but the Homestead Act is a phantom choice. Once the exemption is officially allowed, few local governments will be able to withstand pressure from residents and anti-tax zealots who demand the break.
Localities that cave will grant isolated relief, but if they hope to maintain the same level of community services, they will have to shift the tax burden elsewhere. Most likely, people who own commercial and industrial land will pay more.
So will some young people, poor people, struggling families and anyone else who does not own a home. The Homestead Act only grants an exemption to property owners who live on their land. Renters would be out of luck. Landlords would not receive any tax discount and therefore would continue to pass on the higher rate to tenants.
Localities have a hard enough time raising the money they need these days without lawmakers meddling in an attempt to salve anti-tax urges.
With bipartisan support in Richmond, the Homestead Act almost inevitably will go to voters. If it must, at least lawmakers could make it fair by granting it to all residential property owners rather than force localities to favor people who pay a mortgage instead of rent.
