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The twist, double twist in taxes
"Nothing is certain but death and taxes," the saying goes. Without sufficient tax revenue, death comes quickly to education programs and government services.
Bath County government has been kept thriving for more than two decades by tax revenue from public service corporations, primarily the Bath County Pumped Storage Station operated by Dominion Virginia Power, which has pumped not only water to generate electricity, but has also pumped more than $120 million into the county's coffers.
For most residents and landowners, the tax process is simple. Supervisors hire a firm to assess the fair market value of real estate based on state requirements, and then supervisors set a tax rate per $100 in valuation. To figure out how much tax is owed, multiply the rate by the number of hundreds of dollars of value, a simple bit of math most students can follow.
But there's a twist. Because public service corporation assets cross county and state boundaries, a more equitable but complex method was developed to determine the value of these companies' assets. In Virginia, the State Corporation Commission does this assessment every year. The process dates back over a century to the early days of railroads.
But there's a double twist. When Virginia changed the law to require all assessments be determined at fair market value, it did not force localities to assess market value every year. The SCC, however, does assess public service corporations' values every year. What that means to Bath County is nearly $3 million in potential tax revenue lost just this fiscal year. To make up for that loss, supervisors dipped into the contingency fund rather than raise the tax rate.
As supervisor Jon Trees noted Tuesday, when revenue declines, you either raise taxes or cut services. If Virginia Power is paying less in tax, and it is, the rest of the county residents either have to pay more or accept fewer services.
Now the final twist - the Homestead Preserve's multimillion dollar development came to the county and suddenly, property values sky-rocketed in some areas. Fortunately, that boom has leveled out for now. But the reassessment three years ago left landowners reeling from huge increases and subsequent rises in the amount of taxes they pay.
The supervisors adjusted the rate after that assessment so the hike in taxes wasn't nearly has high as the increase in property values. But those high values cause a lot of anxiety, especially for those on fixed incomes.
What county residents need to realize is if they want Virginia Power to pay a fair share of assessed value based on yearly assessments, they, too, must be willing to pay a fair share based on yearly assessed value. And they need to understand their actual tax bill is not determined by assessed value. Supervisors can and should adjust the rate so any increase after through assessment is reasonably accommodated in the tax rate. In fact, state law clearly stipulates an assessment cannot be used by any locality as a way of raising taxes.
Bath County does not need to reassesses less often, as some residents said Tuesday. Instead, the county should assess property every year. Once landowners understand the process, they will see it's the best way to minimize the burden on everyone.
Not only should Bath's leaders start assessing annually, they should also begin a program to better educate county residents on how the process actually works.
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