RK ARCHIVE - Norfolk car tax to increase

Former Governor Jim Gilmore won election based on doing away with the car tax. The program to do away with the tax called for the state to reimburse the localities. Due to the expense of the program, the reimbursement has never exceeded 70%. In 2005, the General Assembly changed the funding formula. Instead of reimbursing a fixed percentage, they decided to reimburse a maximum dollar amount, leaving it to the localities to figure out what percentage of the car tax this would cover. I recall a conversation I had last spring with Senator Nick Rerras (6th) regarding this and he felt the level of reimbursement was sufficient; I was skeptical.

As the result, during my run for treasurer last year, one of the things I advocated was a change to the frequency of car tax billings. Norfolk bills only once a year for the car tax. Given the fixed reimbursement, I knew the bills had to go up and shifting to semiannual billing - like most of the surrounding cities - would ease the burden on taxpayers. Today's Pilot shows that my prediction that the car tax would rise has come true. The capped reimbursement works out to be only 60% of the actual car tax, so the residents of Norfolk will seeing larger car tax bills. The bills, which will be mailed soon, will be due June 5.

In a time of rising real estate taxes, higher gas prices, and other increases in the cost of living, people's resources are stretched. Allowing people to pay in smaller increments helps with home budgeting. Now is the time for Norfolk to change its billing practices, before the bills get too large and more people get behind.

Comments

yeah, but not everyone (Greg Bouchillon - 4/13/2006 1:21:49 PM)

can afford that convenience. Just like our house taxes are split up, lower income people might have an easier time paying twice a year.

Recommended ... (Rob - 4/13/2006 9:49:40 AM)

Greeat analysis.

Vivian, what are your plans for the future? Planning another run? Can you give us some details on your last run?

Not everybody can (Vivian J. Paige - 4/13/2006 11:31:03 PM)

Lowell, not sure where you are physically but per capita income here in Norfolk is not very high. Yes, some people can pay their taxes once a year. But a lot of people struggle to do so. Plus, the bills get issued about 30 days before they are due. For people living paycheck to paycheck, there's just no way a bill like that doesn't wreak havoc on the budget.

I can't think of any reason NOT to allow citizens to pay their bills in smaller increments.

Rob - right now my plan is to get to April 17! I haven't had any time off since December 2004. I literally started campaigning on 4/16 last year, just after tax season ended. I just want one day to sleep!

You still pay the same amount of $$$ (Lowell - 4/14/2006 8:20:31 AM)

with 2 payments as opposed to 1, right? I guess I'm just curious, economist that I am, about whether this is purely a cash-flow problem. You don't have to pay interest or anything if you pay twice a year instead of once, right?

Yes the same (Vivian J. Paige - 4/14/2006 9:13:36 PM)

Yes, it's a cash flow problem. Or rather, a cash flow management problem. It's just hard for some folks to come up with the money all at one. The same logic applies to real estate taxes. Here in Norfolk, they are billed quarterly, while in Va Beach, they are billed semiannually. The quarterly billing makes it easier for people to pay.

The other part of this is that the city could manage its cash flow better, too. Instead of having all the money come in at once (or at least a large portion of it), they could have it come in at different increments. I actually see the city making some money on this.