Merits of Land Use Taxation questioned
by Larry Chowning
The Middlesex County Land Use Taxation Ordinance came under fire at the April 10 public hearing on the proposed 2014-15 county budget that calls for a 5-cent real estate tax increase.
In effect, land use taxation gives tax breaks to owners of farmland and woodland. Over 500 parcels, totaling more than 50% of the land in Middlesex, receive land use tax breaks.
“You know this is wrong! This is absolutely wrong!” Hal Muller of Urbanna told the Middlesex Board of Supervisors at the April 10 hearing. “Why in the hell are we subsidizing multimillionaires when we have citizens who can barely get by and our school children aren’t getting what they need.”
Muller’s comments were applauded by many of the 75 people at the hearing.
Land use taxation was approved by county supervisors in the mid-1970s as a way to keep Middlesex rural; to encourage farming; and to keep residential development in check. The primary idea behind the ordinance was that if owners of farm and timber land received the tax incentives, they would be less likely to sell their land to developers.
During reassessments, all real estate is appraised at 100% fair market value. However, because Middlesex has a Land Use Ordinance, for taxation purposes the Commissioner of the Revenue’s office reduces the values placed on farm and timber land.
All other land in Middlesex is taxed on the highest and best use at 100% fair market value.
Local land use ordinances are allowed by state law. Currently, 77 of Virginia’s 95 counties have some degree of land use taxation, according to the Virginia Tech Department of Agriculture website: usevalue.agecon.vt.edu.
The Middlesex County Comprehensive Plan addresses ways of keeping the county rural. Land Use Taxation is one of the controls listed in the plan. The comprehensive plan also notes that farm and forestry land requires less county services than residential and business properties.
The cost of running the county government, however, is rising and the bulk of the taxes are being paid by residential landowners on full-market value. County supervisors have proposed a 10% tax increase (5 cents on the current 48-cent real estate tax rate) for the proposed FY15 budget. The 5-cent tax hike is expected to generate an additional $1,075,000 in tax revenue needed to balance the budget.
Four cents of the proposed 5-cent tax hike is to cover additional expenses for the schools, police protection, and jail costs. The $215,000 to be generated by the other one cent is earmarked for the county’s capital improvement fund.
Last year, on a 3-2 vote, supervisors approved a 2-cent increase on the real estate tax rate, which generated an additional $430,000.
Muller, a waterfront landowner at Kilmer’s Point, is a persistent opponent of land use taxation. “Everybody who is sitting out in this audience and is not on land use is subsidizing $348,000 annually for 239 landowners who own 533 parcels of land,” he said at the public hearing. “There are people who live in Florida [and own land in Middlesex] who are paying $26 a year in real estate tax on land valued substantially higher.
“John Hancock (insurance company) sure as hell doesn’t live in this county,” Muller said. “I’ve got an insurance policy with them but we are giving them a discount on several pieces of property [in Middlesex].”
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