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Governor Calls Special Senate Session for Vote on Revamped Property-Tax Bill

Feb. 5, 2008 — New changes will make the governor's property-tax bill more palatable for senators and allay residents' fears of having to pay two sets of property taxes in fiscal year 2008, Gov. John deJongh Jr. said Tuesday.
The administration's first attempt at creating a comprehensive property-tax proposal was quashed recently by a split vote cast during the last legislative session.
During a press conference held at Government House on St. Thomas, deJongh also said that he has called senators into special session Thursday morning to vote on the revised plan, which still contains many of the same provisions submitted to the Legislature months ago — including increases in exemptions for elderly citizens and veterans, as well as the establishment of a multi-rate tax structure with four different property classes. (See "Tie Vote in Senate Kills Governor's Property-Tax Bill.")
Attempting to dispel senators' concerns that the proposal would impose significant increases on local residents, deJongh said the only real hike in property taxes would be felt by time-share holders whose amenities — such as pools, recreational facilities and restaurants — are owned by hotels that already enjoy certain tax breaks. Otherwise, rates set up for commercial, residential and unimproved properties will be cut in half. The government's other option of taxing residents at the current 1998 levels would only serve to double or triple property-tax payments, he added.
"Let us understand that for many homeowners in particular, the lowering by about half the rate at which they would be taxed under my proposal, as well as the increases in exemptions, actually results in no increase in taxes at all, or an increase of well less than the inflation rate over the past 10 years," deJongh said.
Under the governor's plan, residents would pay about $670 on unimproved land, $1,014 for residential properties and $3,739 for commercial properties. If the Legislature once again fails to pass the bill, residential property owners will pay $1,900, while commercial property owners will shell out $4,406.
Residents who see a 125-percent increase in their bills could also be eligible for a 40-percent tax credit, deJongh said. Other changes woven into the proposal, such as an amnesty program for delinquent taxpayers, should also lessen any additional strain put on local pocketbooks, he said. The program — which waives all penalties and interest on taxes owed before FY 2005 — could also help put an additional $60 million to $65 million in the government's coffers.
Once the program's window closes, however, residents who still haven't paid their outstanding taxes will have liens filed against their property and could eventually see their land auctioned off by the government, a Government House spokesperson said after Tuesday's press conference.
In terms of revenue generation, the administration's move to eliminate one of the anticipated billing cycles for FY 2008 would bring in about $56 million over the next few months — about half of the $123 million in property-tax collections already factored into this year's budget, members of the governor's financial team said later in the day. While the payment of delinquent taxes could help offset the revenue shortfall, there might still be a need to revisit this year's spending plan and pare down some of the proposed appropriations, explained Nathan Simmonds, the governor's senior policy advisor.
Still, the looming possibility of another budget cut should come as no surprise, deJongh said during Tuesday's press conference. While cutting out one tax bill during FY 2008 does address some of the concerns raised recently by community members, the need to make up for the revenue difference could prompt the issuance of two bills during FY 2009, he explained.
"Let me repeat what I believe all now must have heard before: The Legislature passed a budget, which I signed, which anticipated $56 million to be collected from real property-tax billings for each tax year," deJongh said. "Let us not pretend that we do not know where the government's money comes from — it comes from taxes, and that includes real-property taxes."
Urging senators to take quick action on his proposal, deJongh explained that the recent completion of a court-ordered property revaluation project would now prohibit the government from continuing to issue bills using the existing 0.0075 tax rate. Consequently, a new system — one that fairly assesses and taxes all real property in the territory based on fair-market value — has to be put in place and approved by a court-appointed special master, he said.
"That process is now being completed, and the information is being reviewed by the special master," the governor said. "The timing of when the court acts is crucial, as bills must be prepared, mailed and a period of time for payment permitted. That is why I believe the Senate must act now. The tax assessor needs time to implement the new system and the new rates that only the Legislature can set. The revenues produced would allow us to continue, without interruption, the most basic of services, from the paying of salaries to the funding of the spelling bee."
Once the court process is complete and the Senate's puts its stamp of approval on the proposal, FY 2006 bills — including the new rates and exemptions — should come out around April, Tax Assessor Roy L. Martin explained later. Once the bills are issued, residents with any questions or complaints can file a formal appeal with the Tax Assessor's Office, he said, adding that revaluation data for FY 2006 should soon be posted on the agency's website at vipropertyrevaluation.com.
When asked during the press conference about whether the revised proposal takes into consideration concerns raised by St. John residents who have recently seen a sharp spike in their property values, deJongh said that the bill, with its reduced rates, is meant to benefit residents territory-wide.
The government is not "in the business of taxing people out of their property," said Lt. Gov. Gregory R. Francis. The proposal ultimately balances what "is fair for residents" with what is needed to generate enough revenues to "manage our school system, provide resources for law enforcement and ensure that basic public services are provided for," deJongh added.
"But the Legislature and I can certainly work together to get this bill passed now," deJongh said as the press conference wrapped up. "And we know that it is very likely that this experience will show us how to improve it in the future."
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