March 11, 2008 — A comprehensive property tax reform bill recently passed by the Legislature cuts an extra $27.4 million dollars from anticipated revenues for fiscal year 2008 and continues to throw this year's budget out of whack, the governor says.
While Gov. John deJongh Jr. signed a majority of the bill into law Monday, he line-item vetoed sections in which he said the reductions would be "too great a variance" for the government to absorb.
Senators went back and forth on the property tax bill for months, trying to find a balance between what deJongh initially submitted last year and what they said would be a "fair" tax structure for local residents. DeJongh's proposal — subsequently revised by Sens. Shawn-Michael Malone, Usie R. Richards and Celestino A. White Sr. — outlines a multi-rate tax structure with four property classes. (See "Senate Passes Property Tax Reform Bill.")
The plan would cut residents' bills in half, deJongh said, and prevent exorbitant increases that would have been seen if the government applied new property valuations against the current 0.0075 tax rate. After the first version of the bill failed to pass the full Senate, deJongh submitted a new proposal, this time cutting down the number of times residents would be billed for property taxes during FY 2008.
The bill passed on a 10-to-4 vote, and was bolstered by a number of amendments senators said would bring more financial relief to residents whose property tax values had increased.
DeJongh eliminated several of these new additions Monday, including a provision that would have prevented homeowner's bills from increasing more than 3 percent during a five-year period. In a letter to Senate President Usie R. Richards explaining his decision, deJongh said the Revised Organic Act links the government's bonding capacity to the combined value of all real property in the territory.
"Imposing the suggested cap would have the effect of limiting the ability of the Virgin Islands to issue bonds and, consequently, would inhibit the territory's future ability to raise the capital required to repair, enhance and expand its critical infrastructure," deJongh wrote.
DeJongh described the cap as an "unsound tax policy" that would defeat "all the hard work undertaken by the government to correct the earlier deficiencies in our tax administration."
The governor also line-item vetoed sections that deal with how taxes for time-share properties get assessed and collected; mandate that the Lieutenant Governor's Office conduct property reassessments within 10 days of a complaint being filed by a taxpayer; and give home and land owners a tax credit if their 2006 property tax bills show an increase over the previous year.
DeJongh said the additional tax break "undermines" work done by the tax assessor and Lieutenant Governor's Office to develop "sound property tax policies." The proposal gives land and home owners "sufficient protections" to safeguard against any "onerous tax increases," he added.
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