City To Consider Car Tax Increase

City To Consider Car Tax Increase

Maximum increase would be 50 cents and would be used to decrease property tax.

All taxes come out of the citizens’ pocket. The Fairfax City Council is considering asking the citizens to pay out of a different one. During a March 22 work session and council meeting, the council approved advertising a 50 cent increase in the city car tax, more formally known as the "personal property tax." The vote was 4-2 with Councilmembers R. Scott Silverthorne and Jeffery Greenfield voting against the proposal.

"The bottom line is it still comes out of the residents’ pockets," Silverthorne said.

The proposed increase was suggested by Mayor Robert Lederer as a way of decreasing the real estate tax. "The only reason I would suggest we consider it, if we consider it at all, would be as a tool to reduce the real estate tax," Lederer said.

The council needed to act during its meeting in order to properly advertise the proposal in time to have the option of increasing the rate. The advertised rate is the maximum increase that could be allowed. The council can still choose to increase the tax by a lower amount, or not at all.

Lederer and Councilmember Gail Lyon both stressed that they were not necessarily in favor of the increase, but they wanted to keep the council’s options open. "I never want to not have a tool in my toolbox," Lyon said.

Silverthorne, who noted that he was on the council in the early 1990s which raised the car tax to its current rate cautioned against an increase in what he said is an extremely unpopular tax. "We are, I believe, treading in dangerous waters in tinkering with the car tax," Silverthorne said.

The proposed 50 cent increase, from $3.29 to $3.79 per hundred dollars of the vehicle’s value, in the personal property tax would generate approximately $1.2 million, according to estimates made by the city Department of Finance. That amount of money would allow the council to reduce the property tax rate by 2.6 cents. The currently proposed property tax rate is 87 cents per $100 of assessed value.

Residents may see a net decrease in their tax bill if the proposal is approved, suggested Lederer. For residents, the personal property tax generally applies only to their vehicles, and a portion of the tax is paid by the state. Of course, the state funding ultimately comes from the resident’s tax dollars, too.

Businesses do not receive the state rebate on vehicles that they own. Additionally, businesses pay the personal property tax on some other equipment, as well.

Residents pay about 61 percent of the total of the personal property taxes collected by the city. However, they pay 68 percent of the real estate taxes, said David Hodgkins, director of finance for the city.

Therefore, by reducing the real estate tax rate, and increasing the car tax rate, some of the tax burden would be shifted more to businesses than to residents.

Silverthorne pointed out that that proportional split may be true now while real estate values are increasing, but that if assessments should begin to decrease while car prices remain static or go up, the percentages would likely shift, and not necessarily in favor of homeowners.

This tax shift would also likely hit less affluent residents harder. Residents who live in an apartment, but own a car would see an increase from the car tax rate, but would not enjoy the benefits of decreasing the real estate tax.

The rate will ultimately be decided on April 12, the scheduled date for the adoption of the budget.

THE COUNCIL, during their regular meeting, also established a special tax district along Route 50. The city’s Business Improvement District, along that corridor, will receive additional services, not generally available in the city. In exchange, they will pay an additional 6 cents in property taxes.

Those taxes will be paid only by the businesses, however, any residential development which might occur along the corridor will be exempt. Silverthorne opposed this exemption, noting that residents of the area will also receive the benefits. "Therefore the burden and the cost should be shared by everyone," Silverthorne said. The measure passed 6-1, with Silverthorne opposing.

The council decided not to charge Jaguar Development, developer of the Higginbotham Property on the corner of Main Street and Judicial Drive for Yorktown Drive. The city owns the street and is going to vacate the land so that the recently approved redevelopment of the property can occur.

The council decided to move the polling place for precinct two from the John C. Wood Center to the Northern Virginia Mennonite Church at 3729 Old Lee Highway.

The council also heard a report from the city’s auditor that recommended some minor changes in accounting practices.

The council also approved the following actions:

* Awarding a contract of $53,260 for testing and inspection services.

* Reimbursing Truro Episcopal Church for costs incurred in performing architectural services on behalf of the Lamb Center, a day shelter for homeless people.

* Extending a Special Use Permit to allow Woody’s Ice Cream to continue to operate.

* Appropriating an additional $51,000 to construct a trail adjacent to Providence Square Condominiums which will connect Sager Avenue to Main Street. The balance of the $102, 810 needed for the trail will come from developer contributions and existing funds.

* Appropriating an additional $52,000 to construct drainage improvements along Oak Place. The balance of the $201,700 contract will come from already budgeted funds.

* Allowing the settlement of a lawsuit against the city. The suit stemmed from a dispute over a deck, and the city was named in the suit which was essentially between two residents and their homeowner’s association. There will be no cost to the city.