Another sticker shock – soaring personal property taxes

Faced with “unprecedented increases” in personal property taxes, Fairfax County Executive Bryan Hill has proposed lowering the assessment ratio for the 2022 tax year.

Mason Supervisor Penny Gross discussed that issue, along with other highlights of the advertised budget for FY 2023 at a community meeting March 10.

“Most vehicles typically depreciate annually,” Hill wrote in a March 10 memo to the Board of Supervisors. “However, currently new cars are in limited supply and used cars have appreciated in value.” That’s due to “unprecedented circumstances brought on by the pandemic.”

As a result, Hill says, the FY 2023 budget proposal projected an increase of 15.5 percent in personal property taxes, based on November 2021 pricing guidelines issued by J.D. Power and additional data. But then, the Jan. 1 estimates from J.D. Power came out, with a 33 percent increase.

Related story: County executive proposes an ‘optimistic’ budget for FY 2023

Examples in Hill’s memo include the following:

• A 2016 Honda Civic, valued at $13,125 in 2021, is valued at $17,575 in 2022, an increase of 33.9 percent.
• The value of a 2018 Toyota Corolla has gone from $15,050 in 2021 to $21,500 in 2002, a 43.5 percent increase.
• A 2017 Chevy Equinox has gone up 36.9 percent, from $11,100 to $15,200.

Hill cites other used cars that have seen big jumps in value: a 2017 Accord (37.8 percent), 2020 Honda CR-V (33.1 percent), a 2016 Hyundai Tucson Utility (34.9 percent), 2015 Lexus RX Utility (20.1 percent), 2016 Chevy Suburban (29.6 percent), 2018 Chevy Cruze (40.3 percent), and a 2016 Ford Fusion (43.3 percent).

As a result of these higher values, the average taxpayer’s personal property tax bill would be $415 for FY 2023, a $186 increase from the previous year.

Related story: Real estate assessments are way up

The memo from Hill presents several options for reducing the personal property tax burden. The Board of Supervisors hasn’t discussed Hill’s memo yet, but will probably do so at its March 15 Budget Committee meeting.

The Budget Committee is also likely to consider reducing the real estate tax rate. Due to rising real estate prices, assessments are up an average of 9.57 percent countywide for 2022. Assessments in Mason District are up 10.24 percent.

The advertised budget for 2023 proposed by Hill would retain the current tax rate of $1.14 per $100 of assessed value. If that rate is retained, the average tax bill would increase by $666.

At the Mason budget meeting, Gross said she expects the supervisors will reduce the tax rate to $1.10 or $1.11.
The board has the flexibility to approve a lower rate than what’s in the advertised budget but cannot go higher.

Hill’s memo describes possible options for addressing the increases in personal property taxes.

The favored option, recommended by county staff, calls for partially offsetting the increased vehicle values by using an assessment ratio of 85 percent in tax year 2022 (FY 2023).

This would result in an effective average assessed value increase of 13 percent ($78). This would apply only to vehicles and only for one year.

Related story: McKay vows to reduce property tax rate

The county staff does not recommend reducing the personal property tax rate, which is $4.57 per $100 of assessed value. Lowering the tax rate would not only apply to vehicles, but would also apply to other property, such as business furniture and equipment. Reducing the tax rate to $3.97 per $100 would reduce business personal property tax revenues by nearly $18 million.

County staff also doesn’t recommend switching to a different assessment valuation method. The county currently uses the trade-in value, along with the J.D. Power pricing guide.

Other jurisdictions use the loan value or retail value. According to Hill, the county doesn’t have enough information to estimate the impact on taxpayers if those methods are used.