An array of St. John residents testified Tuesday about what they called the hardship caused by high property taxes on St. John, urging senators to pass legislation to address the problem. Some told the lawmakers that assessments were way off and that appeals take too long.
V.I. law sets down rates that are the same for all islands, but because St. John’s property is generally valued much higher than that on other islands, the property taxes are far greater.
Under federal law, while rates may be different in different districts, they cannot be different within the same district.
Senators were considering a bill, sponsored by Sen. Janette Millin Young, to limit changes in assessed values.
The bill “seeks to work an end run around the clear mandate of the law that all property in the Virgin Islands must be assessed at fair market value,” said Dolace McLean, legal counsel to the Lieutenant Governor.
St. John residents and real estate professionals gave anecdotal accounts of problems with tax assessments. The question of why the problems appeared to be restricted primarily to St. John was largely unexamined.
One testifier pointed to instances where sale prices were lower than assessed values.
McLean said the Office of the Tax Assessor and Recorder of Deeds “have run into numerous situations where taxpayers misrepresent the nature of their transaction and understate the sale price of property in order to pay lower property tax.”
Several testifiers said the fact that much of St. John is federal land meant other St. Johnians had to make up the difference by paying more. Property taxes are assessed based on the assessed value of the property, not a proportional amount based on land area on the island, so it is not clear by what mechanism such a problem could occur.
Regardless of other factors, property tax bills are much higher on St. John because St. John property values have risen much more than other parts of the Virgin Islands as very wealthy individuals have purchased property, bidding up the price of land.
Senators were sympathetic to the plight of St. Johnians and ultimately voted to send the bill out of committee. Often that would mean the legislation has moved closer to becoming law. But that is not clear in this case.
“At the next level you will see a substantially different bill,” said Sen. Kurt Vialet, the Finance Committee chair. “The process after voting on this bill is not a bill before the Rules Committee in one or two weeks.”
Vialet said senators will meet informally to discuss extensive amendments and “take time to be legally sufficient and don’t open Pandora’s Box, in terms of litigation.”
Voting to send the measure out of the Finance Committee on to the Rules and Judiciary Committee were: Vialet, Sens. Marvin Blyden (D-STT,) Dwayne DeGraff (D-STT,) Neville James (D-STX,) Nereida “Nellie” Rivera-O’Reilly (D-STX,) Tregenza Roach (D-STT,) and Brian Smith (D-at-large). All members were present.
The territory cannot set different tax rates on different islands. If the territory were to approve a constitution and that constitution created separate property tax districts, it might be able to set different rates on different islands. The fifth attempt to create a V.I. constitution went down in flames in 2012 after elected Constitutional Convention members sent a document that violated federal law and the U.S. constitution, then declined to amend it to make it legal. The V.I. Legislature has the authority to set up another process or potentially to designate itself a constitutional convention and create a constitution. See: “V.I. Answer Desk: What Is the Status of a V.I. Constitution?”