It is disconcerting and truly scary that a legislator of the Virgin Islands does not understand real property taxation. Attorney Messier has it 100 percent right.
In the real world, a municipality will first develop a reasonable, workable budget, taking into consideration all sources of funds (in our case, millions and millions in Federal funds, gross receipts taxes, income taxes, dozens of "fees" charged, etc.,etc.).
This would require each agency or department to first put together their own budgets and submit them for finalization and approval. When the final budget is set, an "overlay" of around 10 percent is often added to make sure all expectations are met with no surprises or shortfalls. Once the final budget and overlay are determined, the number that represents the total valuation of taxable real (and personal in many jurisdictions) property in the jurisdiction provided by the tax assessor. That portion of the budget that is intended to be covered by real property taxes (with overlay) is then divided by the total valuation of taxable property, resulting in the "mil" (or tax) rate applicable to the valuation of each individual property (a decimal figure in the 1/1000 order, i.e., $10 per thousand of valuation).
So, a budget projection on the order of $10,000,000 , and a total taxable property valuation of $1,000,000,000 results in the following: $10,000,000 /$1,000,000,000 = 0.010 yields a mil rate of $10 per thousand. On a million dollar house, the tax would be $10,000. Simple, right?
All governmental agency heads can provide real, carefully developed, austere budgets and stick to them, providing the taxpayers the best value for their money. The legislature would set the rate based on these amounts, rather than sticking to the present rate and not adjusting it downward to reflect the increased valuations, like municipalities in the realworld do.
It is an annual process that, because department and agencies in the real world maintain accurate records, takes much less effort than seems to be necessary here in the Virgin Islands.
What, at present, seems most likely, is that a monstrous windfall is going to hit the legislative coffers in a couple of years because the mil rate won't change. Furthermore, municipalities with much higher populations, more roads, more students in schools, more services and much larger land areas seem to manage on a fraction of what the V.I. government consumption levels operate at. What do you really, really think is going to happen? Do think the legislature will forego the gold ring and slow this merry-go-round down, reducing the mil rate? Do you think the foregoing process has even been considered, much less inititated? Do you think we might be in trouble?
Kevin W. Weatherbee,
Editor's note: Weatherbee is an attorney, former certified Maine state tax assessor, and a certified real estate appraiser. We welcome and encourage readers to keep the dialogue going by responding to Source commentary. Letters should be e_mailed with name and place of residence to [email protected].
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