Minutes 06/11/1974 - Laserfiche WebLink

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308 June 11, 197~ property and the difficulty of enforcing the standard of true value, have sought to enforce equality in the burden of taxation by insisting upon uni- formity in the mode of assessment and in the ra.te of taxation.' (Em~s~-added) Southern Railway Company ~..Commonw-~It-~6-~---V~-~nia, 211 Va. 210, 214, 176 2~ S78 (l~. If the tax freeze is adopted there is certain to be a lack of uniformity throughout the city tax structure as to a~sessments. Real ~roperty, even the exempted property, w-~l show--~anges in actual ~arket value, at differing rates. Some property~will advance in value rapidly, while other pieces will advance more slowly, not at all, o,r perhaps decline in value. The freeze would obviously benefit the individual whose property value is rising rapidly far more than one whose property value is advancing more slowly, re- maining constant or decreasing. The freeze on assessments is certain to result in lack of uniformity unless all property in Portsmouth remains constant in value or increases at precisely the same rate. Neither prospect appears likely to occur. The tax freeze, if adopted, would also operate to freeze the tax rate, either at the January 1, 1974, level, or at the level prevailing at the time eligibilit~ is certified, depending upon which alternative is chosen. I~ council chooses to make the freeze effec- tive January 1, 1974, Portsmouth could have ~wo tax rates in effect at the same time. Thi~ would come about.if council increases the tax rate for fiscal year 1974-75 or any su~ sequent year. Sould council adopt the other alternative of making the freeze effective at the time ~he taxpayer first achieves eligibility, the city could have several different tax rates in effect at the same time. Moreover, under the alternative set forth in Exhibit A, tax rates could vary within the class of citizens eligible for relief, sin~e senior citizens would become eligi-~f~ tax relief at different times, and therefore, they could be frozen at ~arious rates. For all of the reasons set forth above, it is clear that a tax freeze can not be reconciled with the constitutional requirement of unifo~rmity in taxation. While council may lawfully exempt qualified senior citizens £rom a portion of their tax liability, the basic tax liability must be computed in a uniform manner. Since the reeze proposal is complet-~-~y at odds with the uniformity principle, it is my opinion that it is unconstitu- tional. Moreover, as mentioned before, I am, by law, requi~ed narrowly and strictly to construe all tax exemption legislation. I am further required, by the provisions of ~ 58-1 of the Code of Virginia (1950), to construe tax legislation so as to preserve its constitutionality, if possible. Since the tax freeze ~s not permitted by express language or clear implication of the state code and since to read the state code as permitting a tax freeze would be to give it an unconstitutional construction, it is my conclusion that a tax freeze is not authorized by state enabling ~egislation. Accordingly, it is my duty to recommend that council not enact this ordinance." EXHIBIT A "Furthermore, persons qualdfy~ng for and claiming exemptions shall have exempted that additional portion of the real estate tax levied on the qualifying dwelling and land which is attributable to an increase in assessment, assessment ratio and/or tax rate taking place after the date on which the director of social services certifies that the applicant ms eligible for tax relief under the provisdons of this article. The a, mount of real estate tax or any portion thereof levied on the qualifying dwelling and land prior to the date eligibility is certified by ~the director shall be exempted only according to the above schedule." Report by the Finance Department of an.estimated financial impact.of a tax freeze, effective January l, 1974, was presented: "At the Council meeting he.~d on May 14, 1974, you requested t~he Finance Department to furnish financial estimate~n the impact of freezing the tax rate as of January 1, 1974, as outlined in Ordinanc~ 1974-53. I submit for your info?marion the attached list of projected percentages of exemption based on a frozen tax rate. The projections shown on the attached sheet were arrived at by calculating the actual percentage of tax increases from 1964 through 1974. We have taken the same percentage of increase in annual taxes from the past 10 years and projected these percentages for the next 10 years (1974 through 1984). Using this method Of projection, you will note that the percentage exempted~in~1974 for homes in four diffe~ ent neighborhoods within the City is 20% for 1974; however, this projected percentage exemption increases up to a maximum of 61.1~ over a 10-year period if taxes are frozen as of January 1, 1974, and the same percentage of increase in taxes occurs for the next ten years that occurred in the previous ten years. We are unable to obtain a realistic estimate of the total amount of dollars that would be exempted under the tax freeze proposal; but, we have attempted to illustrate how the projected percentages will compound annually if the same percentage.of increase in tax occurs during the next 10 years that occurred during our previous 10 years. would also like to point out that under our current ordinance, it staCes 'that anyone attaining the age of 65 who meets the qualifications for tax relief for the elderly, that his taxes will revert to the amount-paid as of January 1; 1974'. Therefore, anyone attaining the age of 65 during the next 10 years, or thereafter, will have his taxes reduced back to the amount paid as of January 1, 1974. In conclusion, it would appear that approximately 20% of the taxes for 1974-75 would bc exempted for those qualifying under this ordinance and the percentage would compound based on the amount of tax increase over the next few years."