There are three constitutional amendments on the ballot on Tuesday that are worth bringing up here, if only as a form of education (for all of us). Here are some quick notes on each of them.
The first is a bit of Dillon Rule busywork:
Shall Section 6 of Article X of the Constitution of Virginia be amended to authorize legislation that will permit localities to establish their own income or financial worth limitations for purposes of granting property tax relief for homeowners not less than 65 years of age or permanently and totally disabled?
Give permission to localities to provide exemptions to their own taxation structure? Duh. Yes.
The second is a widows-and-orphans unfunded mandate:
Shall the Constitution be amended to require the General Assembly to provide a real property tax exemption for the principal residence of a veteran, or his or her surviving spouse, if the veteran has a 100 percent service-connected, permanent, and total disability?
I don’t think that the state has any business ordering localities to stop taxing some people. Should localities offer such a tax break to veterans? Sure, it strikes me as a good idea. But if the state wants to reduce taxes for veterans, they should reduce their own revenue, not localities’.
The third could increase the state’s rainy day fund:
Shall Section 8 of Article X of the Constitution of Virginia be amended to increase the permissible size of the Revenue Stabilization Fund (also known as the “rainy day fund”) from 10 percent to 15 percent of the Commonwealth’s average annual tax revenues derived from income and retail sales taxes for the preceding three fiscal years?
Note that this doesn’t actually increase the rainy day fund—it just allows more money to be socked away there if the state deems it necessary. I find it much harder to know how to vote on this one. On the one hand, sure, why not increase that cap so that, if it does look like it’ll be a good idea to save up more quickly, it’ll be possible to do that. On the other hand, why 15%? Why not 10%? Or 20%? Or 50%? Was there something wrong with 10%? I’d like to assume that there’s some logic behind these particular numbers, but much like “three-strikes” laws, I fear that there’s not.
Waldo:
The Roanoke Times recommended a vote against the first two amendments. Their reasons, amplified somewhat by me, are as follows:
The first proposed amendment seems like it is just a “local option,” Dillon Rule no-brainer. But when you compare it to the present provision in the Constitution, what it is in effect doing is allowing a locality to STOP means-testing its tax relief to the elderly. Note that it says that the change would amend the Constitution to “PERMIT” the locality to use a means test, so that only the poor would receive the tax break. But the present state of the law REQUIRES means testing for this tax break for the elderly. Under the Constitution now, localities already may grant exemptions from property taxes to residents 65 years old or older and to residents permanently and totally disabled. But that tax break can only be given to people who have “an extraordinary tax burden on said property in relation to their income and financial worth.” In other words, there is a means test — only people below a certain income or net worth threshold can get the discount.
This change would go from a situation where the tax break MUST be based on need, to a situation where the locality could decide to grant the exemption to all elderly, regardless of need. I’ll be reaching the 65-year-old threshold sooner than you will, but that is one tax break that I really don’t think I deserve.
When we give a tax break to anyone, that increases the burden on everyone else. I don’t mind taking up the burden to help poor folks, but I DO mind taking on an additional burden to help people who don’t need the help. My neighbor the retired doctor doesn’t need the break, and it would really chafe me to be paying higher property taxes to make up for giving him a break.
Likewise, the “disabled vet” exemption has no means test. Tax relief shouldn’t be a political football to be thrown to whoever we like at the moment; to the extent that taxes are not evenly applied, it breeds resentment. If a disabled vet is a very successful investor, or is married to a person who is successful in his or her career, there would be no need for this tax relief.
As for the last one, 10% of the income and sales tax revenues has recently amounted to about $1.3 billion. 15% would take it to $2 billion. We have seen shortfalls in recent years of $6 billion, as budgets have increased. Of course, the real problem here is that the state budget includes a lot of revenues from other sources — deed taxes, for just one example. So when the real estate boom became a bust a couple of years ago, the amount of revenue from deed taxes declined sharply. When the rainy day fund is tied in its size to sales and income tax revenues, and when those revenues decline as a relative share of the budget, the rainy day fund becomes less of a “rainy day” fund and more of a “brief shower” fund. It is of less value at the moment than when it was established in the 1990’s. Hence the desire to increase it.
FWIW, cvllelaw, I’m actually OK with giving localities the power to enact a non-means-tested tax break. I think it’s foolish, I don’t think that any localities should take up the state on it, but I think that they should have the right to do so.
(I’m feeling a bit like the People’s Front of Judea right now…)
Just when I thought I had this election thing all figured out…
#1. I thought I was a no, but now I’m undecided.
Generally, I’m all for lowering taxes, but in this case, I don’t know if doing away with the means requirement is a good call. I have to think more on this one.
#2. I think I’m a yes.
The number of veterans who have a “100 percent service-connected, permanent, and total disability” and would qualify for this is really low (in my mind negating the “overburdening others” argument outlined by cvllelaw), and I’m generally in favor of helping out our veterans (and their families), especially those who have been disabled as a result of serving our country.
#3. I guess I’m a no.
In times of economic downturn, I feel that the government should also tighten its belt, so to speak. Budget projections shouldn’t really be off by more than 10% anyway. Ideologically, I don’t think that the government should stow away more of our money than is absolutely necessary. Giving them an additional 5% allows the government the ability to be off by an additional 5% without consequence.
That said, I really have strong views on any of the three and am off to do more research. :-)
*”don’t really have”
#2 makes me pretty uneasy without more information available. What qualifies as a “total” disability? Loss of the use of all four limbs? Or does total blindness count? What about legal blindness — if I can’t drive or read but I can detect light and color, that’s not total blindness. Do I still get an exemption? Also, precisely how many people are we talking about here? And at least as importantly, how are they distributed throughout the Commonwealth? Is this a state-wide feel-good constitutional amendment that actually only affects a handful of cities with military bases, VA hospitals and large veteran populations? Is this the ballot-box equivalent of Danville slapping a yellow-ribbon bumper sticker on their car while Norfolk and Hampton are left to do the heavy lifting?
What’s the process for qualifying a veteran for the exemption? How do we handle the applications of veterans from earlier wars (from as far back as Vietnam, Korea or even WWII) who may not have the requisite proof that their disabilities are “100% service connected?” And how do we define “permanent?” If there’s a possibility that some forms of therapy might work over time — but then again, they might not — does the veteran get an exemption?
Michael and Sam, I think that both of you raised an important question about #2 that should really be asked way more often about a lot of bills: How many people are we talking about here? I’d love to get the answer to that.
Sens Barker and Puller:
http://www.senatorbarker.com/
So, 7000? If they all own homes that would qualify.
Wow, 7,000—that’s quite a few more than I expected. I’m not really sure how that affects my thinking. With a homeownership rate of 67%, we can figure that’s approximately 4,700 homes. (That estimate makes oodles of assumptions, but whatever.) If the average assessment is $150k, and the average tax rate is $0.80 (and I totally invented those two numbers), then that’s $5.64M in tax revenue lost to localities. Fairfax, with 13% of the state’s population, would lose $726,000 annually. On the other hand, little ol’ Bedford, VA would lose $48,000 annually. Again, lots of assumptions here, but you get the idea.
Thanks so much for tracking that down, Michael.
They’ll all pass.
Thanks for posting this.
Increasing the rainy day fund will only encourage spineless Richmond legislators to pander to the anti-tax, something-for-nothing crowd and draw down the savings. No.
Kill the Dillon Rule, don’t wing it.