Assembly May Offer Tax Relief
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Assembly May Offer Tax Relief

With tax reform packages and other bills, Assembly session could offer alternatives to property taxes.

With the impending release of county budgets, property taxes will be at the forefront for Arlington taxpayers. But with the General Assembly still in session, Arlington officials say there are other factors in the mix.

“I would like to see what the state does on tax reform: whether counties are given other options, whether federal revenue streams are reduced,” said County Board Chair Barbara Favola (D).

Arlington legislators Del. Adam Ebbin (D-49) and state Sen. Mary Margaret Whipple (D-31) have introduced four bills offering some different taxing options to Virginia cities and counties, options that could let future County Boards cut back real estate taxes.

“It’s very tough for local governments,” said Whipple, who served as a County Board member for 13 years before heading to Richmond in 1996. “They’re limited in the number of taxes they can access, and most of the taxes they do have are capped.”

County Board members will begin budget discussions before the Assembly session ends, and finish budget discussions before an Assembly veto session would begin, a timetable that leaves Board members guessing at how much state money they’ll get, said Board member Jay Fisette. “There are federal and state dollars that come in, and we always have to monitor the state,” he said. “That’s what ultimately makes you a little cautious.”

<b>IN THIS SENATE</b> session, Whipple has introduced three bills to give local government more taxing options. Senate Bill 453 would give Virginia counties the same taxing abilities as cities, particularly covering cigarette taxes; SB 455 would increase the state cigarette tax to 75 cents a pack; and SB 458 would increase the state sales tax on gasoline from 2 to 4 percent.

Of the three, Whipple said, the tax most likely to pass the Senate is an increase in the state cigarette tax — and in a form that would give more taxing power to Virginia’s counties.

“So many people put in different versions,” said Whipple: Gov. Mark Warner (D) included a cigarette tax proposal in his tax reform package, and Fredericksburg state senator and Senate president John Chichester (R-28) also put forward a cigarette tax bill, which would raise the state tax to 35 cents a pack, and letting counties and cities add another 55 cents on top of that.

“What comes out in the Senate budget, I guess, is more likely to be Sen. Chichester’s version than mine,” said Whipple. “He’s chair of the finance committee.”

That version would give Arlington the ability to levy local cigarette taxes, and to raise millions of dollars through the tax. “It would give a new and substantial source of revenue to localities,” said Whipple, “which could diversify the tax base.”

It could also effectively moot the local need for Whipple’s bill 453. “For Arlington, the cigarette tax is the one piece of taxing authority they don’t have,” said Whipple. “So that would address the equal taxing powers.”

<b>WHIPPLE’S GAS TAX</b> bill would be a small increase, only 2 percent. “The way prices bounce up and down, I don’t think another two cents would be noticed that much,” said Whipple.

The money raised through that tax would be dedicated to paying transit costs. But that can still lift a heavy burden off local governments: some Metro costs could be paid through the gas tax, Whipple said, and in a year when Metro is facing a budget shortfall, that could mean Arlington and other Metro members would need to make up less of that shortfall.

<b>EBBIN IS SUPPORTING</b> Whipple’s gas tax bill, and is putting forward his own bill to increase local taxing authority. House Bill 1399 would eliminate taxes on groceries, replacing those funds instead with a .1-percent tax on incomes over $17,000 a year — a tax that cities and counties would levy and collect.

“I think it’s regressive to tax people on their groceries,” said Ebbin. “It’s time to talk about retiring it overall, but I don’t want to put more pressure on property taxes.”

While the bill is “a step toward diversifying” local tax revenues, “it does not provide relief to property taxes in the amount we need,” said Ebbin. “It’s really targeted.”

<b>ANY TAX BILLS</b> run the risk of getting caught in a partisan crossfire this Assembly session, said Whipple.

“I have been told that tomorrow, the house finance committee is going to vote down all tax reform packages,” and they may not make distinctions for small, targeted taxes like Ebbin’s, she said.

That will be unfortunate, Whipple said, because it will mean the state budget approved by the house will be much smaller than the Senate budget, putting more strain on education and other state-funded activities.

Some of that money will come back in the House-Senate conference committee on the budget. But “state government is not paying its fair share of education costs,” said Whipple, and that won’t change after the conference committee.

“That leaves localities holding the bag for necessary expenditures, and only the real property tax for the money,” she said. “It’s a tough bind.”