Newport News City Council voted to ease the property tax burden on city residents for the current calendar year.
Last year a microchip shortage slowed the production of new vehicles, which in turn increased demand for used cars and trucks. The value of vehicles usually is expected to decline over time, but the shortage has meant that the fair market values are higher than they likely would have been under other circumstances.
The council unanimously voted last week to decrease the assessment ratio for calculating the personal property tax ratio for cars and passenger trucks that weigh less than two tons. The tax rate, which is $4.50 per $100 of assessed value, will not change, but it will only be applied to 75% of the assessed value of the vehicle.
The commissioner of the revenue estimated that there would be a 33% increase in the value of the cars and trucks for the calendar year. The escalated value is expected to be temporary, but without the city council’s action, residents would have received bills based on the higher values.
The city expects to lose approximately $16.8 million from its general fund operating budget because of the decreased assessment ratio, according to Lisa Cipriano, the city’s budget director. The loss will be split over two fiscal years because property tax billing is based on the calendar year. The tax is due in June and again in December. The decrease to the assessment ratio is only in effect for this calendar year and will be reflected on both bills.
The city councils in Hampton and Virginia Beach have also voted to reduce the assessment ratio by 25%. Norfolk is providing relief by waiving its vehicle license fee for the 2022 year to save taxpayers roughly $5 million a year in fees.
Jessica Nolte, 757-912-1675, jnolte@dailypress.com