Jeremiah Knupp -- October 29th, 2010
On November 2nd voters in Harrisonburg and throughout the state will face three referendum items that if passed will modify the state’s constitution. These items have already been passed by the state House and Senate and signed by the governor. A majority vote by Virginians will make them law.
Question 1: Property Tax Exemptions for the Elderly and Disabled
“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?”
Virginia law currently allows localities to give full or partial real estate tax exemption for the home or personal dwelling of the elderly and those with permanent disabilities who have “an extraordinary tax burden” in comparison to their income. This is defined as a combined income of up to $50,000 or a net worth of $200,000. Localities, if they choose to offer exemptions, set their standards up to maximums allowed by the state.
The proposed amendment would remove the state mandated “cap” on income that qualifies for relief and allow localities to establish their own standards independently of the General Assembly on which elderly or disabled persons should be exempt from real estate tax on their home.
According to June Hosaflook, Harrisonburg’s Commissioner of Revenue, City Council has established an combined gross income of $30,000 and a net worth of $75,000 as the maximums allowed for city real estate tax exemption (for Rockingham County residents the limits are $32,000 and $70,000). Because these numbers are well below the state standards Hosaflook says if the proposed law passes it will not cause a change in the city’s tax exemption standards.
Question 1 has been officially supported by the Republican Party of Virginia.
Question 2: Property Tax Exemption for Certain Veterans
“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?”
This proposed amendment would exempt any veteran declared by the federal Department of Veterans Affairs to have “a one hundred percent service-connected, permanent, and total disability” from real estate taxes on their home. After a veteran dies their spouse can continue to claim the exemption as long as they don’t remarry and continue to live in the same property.
Hosaflook said that under the current law a disabled veteran can qualify for tax exemption based on their income and net worth, but the proposed amendment would do away with this requirement and base exemption solely on disability status.
Question 2 has been officially supported by numerous veterans’ organizations as well as the Republican Party of Virginia.
Question 3: Revenue Stabilization 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?”
The Virginia state government keeps a Revenue Stabilization Fund that is used to make up for deficits in tax revenue and keep the state budget balanced without making cuts in programs or services. The fund is currently limited by law to an amount calculated as 10 percent of the Commonwealth’s average annual tax revenues from income and sales taxes from the preceding three fiscal years. The proposed law change would raise that limit to 15 percent, which would increase the amount of money in the fund by 50 percent (Example: 10% of $1 is 10 cents. 15% of $1 is 15 cents. 15 cents is 5 cents more than 10 cents, or 50% larger).
Historically, the state government has kept a general fund revenue reserve that totaled millions of dollars. In 1990 the General Assembly authorized the stabilization fund to become a permanent part of the state budget. The proposed amendment was ratified by the voters in 1992. Money in the fund, when not in use, is invested and earns interest.
Dan Timberlake, state director of the Office and Budget and planning explained that the term “rainy day fund” is somewhat of a misnomer. The fund is not an emergency stash of money that can be drawn from to meet a specific need, but a calculated fund based on tax revenue that will go into the state’s general treasury to make up the difference between expected and actual tax revenue.
Timberlake noted that the fund had been used five times since its inception 18 years ago, all between 2002 and 2010.
“Tax revenue and the state budget are much larger than when this fund was established in the early 1990s,” Timberlake noted as the reasoning behind the law change. “So the amount of need could be potentially greater than when the fund was first conceived.”
The process by which the fund is calculated, maintained and can be used is complicated, but those interested in understanding it better can read more in this Department of Legislative Services report.
Question 3 has been endorsed by the Republican Party of Virginia, as well as the Harrisonburg Democratic Committee. In a press release the committee stated “This coming election Democrats are urged to vote yes for this progressive initiative to improve Virginia’s fiscal stability.”
The Virginia State Board of Elections has an informational site where voters can confirm their registration or find their polling place. You can also view a sample ballot to make sure you’re aware of the local offices and issues that you will face at the polls on November 2nd.