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Senate Passes Property Tax Reform Bill

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Feb. 7, 2008 — Bolstered by revisions and amendments to bring more financial relief to residents feeling the pinch of higher property values, a comprehensive bill proposed in large part by Gov. John deJongh Jr. finally made its way through the full Senate body Thursday, passing on a 10-to-four vote.
Voting in favor of the property tax bill were Sens. Liston Davis, Carlton "Ital" Dowe, Louis P. Hill, Norman Jn Baptiste, Shawn-Michael Malone, Basil Ottley Jr., Usie R. Richards, James A. Weber III, Celestino A. White Sr. and Alvin L. Williams. Voting against the bill were Sens. Juan Figueroa-Serville, Neville James, Terrence "Positive" Nelson and Ronald E. Russell.
Sen. Carmen Wesselhoft was absent. Later in the meeting, White said that she is currently off island for medical reasons.
Initially submitted to the Legislature late last year, deJongh's proposal outlines a multi-rate tax structure with four different property classes — a plan, the governor has said, that would cut residents' bills in half and prevent the kind of exorbitant increases that would have been seen if the government decided to apply new property valuations against the current .0075 tax rate.
During subsequent hearings — and after extensive testimony from members of the governor's financial team — majority senators revised deJongh's proposal, incorporating sections that would have, among other things, clarified the definition of time-share properties and how they should be taxed.
Sponsored by Malone, the bill would have also increased income requirements for senior citizens, allowing individuals making no more than $30,000 to qualify for a property tax exemption. Households with a combined income of no more than $135,000 would also be eligible for a 40 percent tax credit if their new property tax bills jumped more than 125-percent, the bill said.
While Malone's proposal was lost in a split vote cast during last month's legislative session, the increases in income requirements were also woven into the bill approved on Thursday, which came down as a 16-page amendment in the nature of a substitute. Incorporating other changes announced by the governor during a press conference held earlier this week, the amendment also reduces the number of property tax bills issued during fiscal year 2008 to one and sets up an amnesty program for delinquent tax payers (See "Governor Calls Special Senate Session for Vote on Revamped Property-Tax Bill.")
Testifying during the first half of Thursday's special session, members of the governor's financial team reminded senators that the elimination of one billing cycle would slice in half the $123 million in anticipated property tax revenues already factored into the FY 2008 budget and force the government to re-determine exactly what allocations can be sustained over the next few months.
"Even if the amnesty program is approved and we have some revenue come in from that, we're still looking at a $60 million shortfall for FY 2008," said Nathan Simmonds, the governor's senior policy advisor.
Reviewing Simmonds' remarks, minority senators said they were opposed to using a tax increase to balance the budget.
"We're not taxing for need, we're taxing for greed," said Sen. Terrence "Positive" Nelson. "I'm not supporting an increase in taxes that's based on balancing the budget."
While the pros and cons of passing the bill were debated well into the evening, senators did emerge from Thursday's session with at least one general consensus: the court-mandated property revaluation project conducted by the Office of the Lieutenant Governor was "faulty," resulting in higher tax calculations for residents — particularly those living on St. John.
Tax Assessor Roy L. Martin said his office has been receiving a steady stream of complaints since property tax impact notices were mailed out last July. An informal appeal process has been ongoing over the past few months, he said, explaining that many property owners have since had their properties re-assessed, and their bills recalculated to reflect the lower values characteristic of the real estate market in 2006. All revaluation data will be posted on the office's website, he added, and will be updated every week as more of the appeals are handled.
Once the bills are officially sent out in April, residents can then file formal appeals with the Board of Tax Review, Martin said. He said that residents' property values would be re-assessed each year, with a new revaluation project conducted every five years.
While majority senators said they "took comfort" in Martin's remarks, members of the minority decried the high market value of land on St. John, and later tacked on some additional amendments to the bill that increases exemptions for veterans by $200, and ensures that taxes applied to unimproved and residential properties rise by no more than 3 percent within a five-year period. Though the measures would be applicable to residents throughout the territory, senators said that St. John residents in particular are seeing tax increases in the 200- to 300-percent range.
Underscoring senators' remarks, St. John resident Myrtle Barry testified that correctly assessing value of each residential, commercial and unimproved property is the first step in implementing fair property tax reform.
"We're not against property taxes — it's what makes the economy grow," she said. "We just want to make sure that the first figure in the formula — the assessed value of each property — is correct. If it is not correct, it skews everything else."
Barry also suggested that senators tie property-tax revenue to certain local projects.
"It's all well and good to have property tax increases, but what about the services that are needed on St. John?" she asked senators. "We need a new school, an ambulance boat to transport patients … the Guy Benjamin school needs a cafetorium. So we are also asking that when you implement taxes upon us, especially since the people of St. John are paying more, that we likewise receive very good service. If you pay for it, you should receive good service in return."
In a press release sent from Government House Thursday evening, deJongh commended senators for passing the property-tax bill.
"I think the vote of the ten members who approved the proposal before the Legislature in the special session … shows that they understood the need to move forward on real property tax reform without delay," the governor said. "This was a difficult decision that the Legislature faced and acted upon. I am gratified by the votes of Sens. Davis, Dowe, Jn Baptiste, Malone, Ottley, Richards, Weber, White, Williams and Hill. Clearly these Senators understood the importance of bringing both fairness and relief to Virgin Islands property owners while funding the government's budget."
Present during Thursday's session were Davis, Dowe, Figueroa-Serville, Hille, James, Jn Baptiste, Malone, Nelson, Ottley, Richards, Russell, Weber, White and Williams.
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