VIRGINIA BEACH, Va. - Commissioner of the Revenue Phil Kellam is warning that Virginia Beach residents could see a sizable increase in their personal property tax bills this year if city council doesn't take action.
This week, Kellam says he received an assessment report on vehicle values, showing values increased by more than 40%. The higher someone's vehicle is worth, the more they have to pay in taxes.
Kellam believes the increase is due to COVID-related issues, causing the value of vehicles to skyrocket. Microchip shortages have led to delays in car manufacturers producing new cars, causing prices to increase.
"In my opinion, the current market is distorted, and the values we are seeing are not reflective of an equal and healthy market between willing the buyer and seller," Kellam said in a statement.
He spoke in front of city council on Tuesday and laid out three options: Do nothing, lower the property tax rate for this year, or the city could use a ratio to offset inflation.
"Most people expect their vehicles will be depreciating assets, but this year we had a startling revelation," Kellam told News 3 on Thursday.
He is hoping city council members will provide him direction by mid-March.
"I just think this is such a tremendous increase in revenue the city council needed to know and certainly the citizens needed to know," said Kellam.
On Thursday afternoon, Gov. Glenn Youngkin toured a business in Chesapeake. News 3 asked Youngkin what should be done.
"We should take a step back and make sure we're very, very conscious about how much we're taxing people," Youngkin replied.
Virginia Beach isn't the only city that could see increases. In a phone conversation, the Hampton Commissioner of the Revenue Ross Mugler said that every locality in the area will probably see a tax increase of 26 to 42%, with Hampton on the higher end of that increase.
According to Mugler, the three options to help mitigate the increases are to change the tax rate, reduce the assessment ratio or pass a bill in the General Assembly to send refunds to taxpayers. Hampton is leaning towards reducing the assessment ratio.
Portsmouth Commissioner of the Revenue Franklin Edmondson said the city's expected property increase for vehicles is around 35 percent, but that number could be higher or lower. Portsmouth will hold property tax appeals on Saturday, May 14.
Chesapeake Commissioner of the Revenue Victoria Proffitt told News 3 reporter Brendan Ponton that Chesapeake is seeing an average increase of 28%. Proffitt is in the early stages of bringing up a one-time reduction in rates to the city council.
Norfolk Commissioner of the Revenue Blythe Scott sent the following statement to News 3: "Based on preliminary estimates, the City of Norfolk is anticipating increases in vehicle value assessments for the upcoming personal property tax billing. Norfolk continues to use J.D. Power for valuation purposes, which takes into consideration nationwide increases due to steady demand coupled with increasingly limited supply of both new and used vehicles. Our offices acknowledge the hardship this may present for taxpayers and are currently in communication with City management regarding this matter."
Suffolk Commissioner of the Revenue Susan Draper said that rising taxes are a concern in the city, but at this time no decision has been reached on how to combat the issue.
The office for the Newport News Commissioner of the Revenue released the following statement: "Yes, this is a concern for Newport News. We are in the middle of our budget season and are looking at multiple options to assist taxpayers."