Editorial – Tax values bring collective ‘ouch’
Published 5:44 pm Tuesday, May 30, 2023
Citizen outrage over the surge in assessed property values is understandable. The resulting tax bills will be painful.
Just how painful will be determined by Isle of Wight County supervisors, who soon will set the tax rate that determines how much of a windfall higher property values will bring county government’s coffers.
County officials have handled the uproar deftly to date. Commissioner of the Revenue Gerald Gwaltney has been patient, accessible and effective in explaining the process used for reassessment. Supervisors have been scrutinizing every penny in the county’s draft budget for the fiscal year that begins July 1.
As the Times’ Stephen Faleski reported in last week’s edition, state law requires that counties reassess real estate values every four years. According to Gwaltney, commercial, agricultural and industrial property values in Isle of Wight have collectively increased 28% on average since 2019. Single-family homes went up 34%.
Assessments are a snapshot in time, and in a case of terrible timing, the 2023 snapshot was taken during a real estate bubble, a perfect storm of factors ranging from low inventory, thus the ultimate of sellers’ markets, to crazy inflation post-COVID.
In 2019, Faleski reported, there were over 30,000 homes on the market across Virginia. As of late 2022, there were fewer than 8,000. Last month, there were only 108 homes on the market in Isle of Wight County when assessors completed their work. Bidding wars by prospective buyers drive home prices artificially high.
“Even the assessments that increased 40% to 50% or more aren’t all without cause,” Smithfield Realtor Jay Hassell told Faleski. “Many of the homeowners I’ve spoken with are quietly happy to see the appreciation, if only it didn’t come with the tax implications. The question is, as interest rates increase and home values potentially drop, will taxpayers be paying an inflated assessment over the next four years?”
County supervisors, when setting the tax rate, must give homeowners the benefit of the doubt and work on an assumption that current values are unrealistic. The signs are encouraging. The latest version of the county’s fiscal 2024 draft budget would carry a tax rate of 71 cents per $100 of assessed property value, down from the current rate of 85 cents. A rate of 66 cents would bring the same revenue as the current year. That rate may be unrealistic, as county government’s cost of doing business has risen just like everybody else’s.
Still, we’d like to see the supervisors sharpen the budgetary pencil one more time.