A BILL to amend and reenact §§ 58.1-3321 and 58.1-3330 of the Code of Virginia, relating to local taxation of real property; effect on rate when assessment results in tax increase; consideration of inflation.
HB68 would change Virginia’s local real property tax “rate reduction” rules when a county, city, or town’s reassessment or annual assessment would otherwise increase total real property tax collections by 1 percent or more. Under current law, localities must lower the levy rate so the new assessment does not produce more than 101 percent of the prior year’s real property tax levy. This bill would require localities to account for inflation in that calculation by using the Consumer Price Index for All Urban Consumers (CPI-U), or zero if inflation is negative, so that part of an increase tied to inflation would not be treated the same as a true increase in taxable value.
The bill would amend §§ 58.1-3321 and 58.1-3330 of the Code of Virginia, affecting how local governments calculate property tax rates after reassessments. It would reduce the amount by which a locality must cut its tax rate when assessed values rise, to the extent the increase is attributable to inflation, and it would preserve the existing public hearing process for any decision to raise the rate above the reduced level. The measure would primarily affect counties, cities, towns, local taxpayers, and local budget officials by changing the formula used to determine real property tax levies.
There is limited recorded discussion or voting history available for HB68, so the overall sentiment cannot be measured from committee debate or floor votes. Based on the bill’s subject matter and its continuation in the Finance Committee, it appears to have been treated as a fiscal policy proposal requiring further consideration rather than as a highly controversial measure. The available record suggests the bill was still under review rather than having advanced with clear support or opposition documented.
The main policy issue is whether inflation should be excluded from reassessment-driven property tax increases when calculating the required rate reduction. Supporters would likely view the bill as preventing local governments from being forced to cut rates in a way that ignores rising costs and inflation, while opponents may argue that it weakens taxpayer protections and could allow localities to retain more revenue after reassessments. Another possible point of contention is the use of CPI-U as the inflation benchmark and whether that formula accurately reflects local conditions.