Potomac News Online | Parrish: increased tax relief for elderly
During a budget work session Monday night, Vice Mayor Harry “Hal” Parrish Jr. proposed increased tax relief for the elderly and a lower real estate tax rate for all Manassas residents.
“Our citizens have had a substantial increase in their assessments, and they need a substantial decrease in the tax rate,” he said.
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The “revenue alternatives” that Parrish presented during the meeting weren’t specific proposals, he said, but “ideas presented to create a discussion.” The goal of that discussion is to limit the increased tax burden on city homeowners, he said.
Real estate assessments in the city increased by an average of 26 percent during 2004, the largest jump in value in recent memory. Manassas, like many other area jurisdictions, has been proposing a real estate tax rate reduction to offset the jump in assessments.
The city’s original budget proposal for fiscal 2006, put together by City Manager Lawrence Hughes, incorporated a real estate tax rate of $1.05 per $100 of assessed value, a 10-cent reduction from last year’s rate.
Parrish and Councilman Robert Oliver worked with city staff to develop two other alternatives: lowering the rate to $1 or to 99 cents, but increasing other revenue sources for the city, such as the interest rate on delinquent taxes from 1 percent to 10 percent.
As a result of the record assessment increases, the city will still take in more money this year than last year, even with a substantially lower tax rate. The idea, Parrish said, is to limit the increased burden to city residents and provide some relief for the elderly and handicapped who may not be able to pay.
With the other revenue increases, the city would take in about $89 million during the next fiscal year at the $1 tax rate, up about 10 percent from fiscal 2005. At a 99-cent tax rate, the city’s revenue would increase by about 9 percent. At the $1.05 tax rate in the city manager’s original budget proposal, revenue would increase by about 12 percent.
Even if the tax rate is cut all the way to 99 cents, the average real estate tax bill for residents will still increase by about 12 percent from last year, Grzeika said.
However, the 99-cent rate would mean lower real estate tax bills for businesses. The value of commercial property in the city didn’t increase as much as residential property, so a 16-cent rate reduction would mean less revenue for the city in commercial real estate taxes in fiscal 2006, Grzeika said.
At the beginning of the budget process, Hughes warned the council against lowering the rate beyond $1.05.
“A lower rate just wouldn’t be sustainable beyond the next year,” Hughes said on Feb. 28. “I would say that even $1.05 is going to be hazardous to maintain.”
In addition to lowering the tax rate beyond $1.05, the plans presented by Parrish also call for more tax relief for elderly and handicapped residents.
Elderly and handicapped people are often on a fixed income, and are hit harder by the increased real estate tax bills, Parrish said.
“If they are on a fixed income, those tax increases are coming out of that fixed income,” he said.
In Parrish’s plan, people 65 and older or who are handicapped are eligible for total real estate tax exemption if their annual income is less than $40,000 and their net worth, excluding the value of their home, is less than $240,000.
Currently, elderly or handicapped people are only eligible for real estate tax exemption if their income is less than $20,000 and their net worth is less than $150,000.
The new budget proposal would also give a 50 percent real estate tax exemption to elderly or handicapped people with an annual income of between $40,000 and $46,000, and a 25 percent exemption for those with an annual income of $45,000 to $52,000.
If the new measures are adopted, the city will be passing on about $193,000 in tax relief to the elderly and handicapped, Grzeika said.
It will take a motion and a vote from the council for the proposed changes to go into effect.
“Could we go lower than 99 cents? Potentially,” Parrish said. “Might the council decide to go higher? Potentially.”