Vithoulkas to announce plan for Henrico car-tax bill relief Friday

Outraged by the increase in your recent first-half car tax bill? You’re not alone.

Many Henricoans were shocked to receive much-higher-than-anticipated personal property bills (which are due June 5) in recent days, and they’ve flooded county officials with hundreds of calls, texts, emails and social media messages complaining about them. Some vehicle owners saw increases of 35% or more on the assessed value of their vehicles and increases of hundreds of dollars on the amount of tax they owe.

But a proposal for some relief is coming in two days.

Henrico County Manager John Vithoulkas told the Citizen Wednesday that he intends to announce a plan to mitigate those increases during an 11 a.m. news conference Friday.

“We’re Henrico, and we do things a little differently,” he told the Citizen, without providing specific details of what the plan might entail. “We’ve had a team literally burning the midnight oil to do what is possible within the state code.”

Legally, the county cannot alter its first-half tax bills once they’ve been issued, but thanks to bills passed unanimously this year in the Virginia House of Delegates and Virginia Senate, and signed into law last month by Gov. Glenn Youngkin, localities now are able to return surplus personal property tax revenues to their citizens if they choose. (Previously, localities only had the authority to return surplus real estate tax revenues – something Henrico became the first one in the state to do earlier this year, when it gave back $10 million to property owners at the rate of 2 cents per $100 of assessed value).

Brookland District Supervisor Dan Schmitt suggested to the Citizen that Henrico would take the same approach now and do whatever it’s able to do to provide relief for vehicle owners, whether that means refunding money or reducing the second-half bills, which are due in December.

“We’re going to ‘Henrico’ this problem,” he said. “We’re just going to fix it – somehow we’re going to do it. We’re going to give [some car tax money] back – I don’t yet know how, I don’t yet know how much.”

County finance officials anticipated that used-car values would increase this year, since a global shortage of microchips (prompted by the pandemic) has brought new-car inventory to a crawl, resulting in skyrocketing demand for used vehicles. But when data from the U.S. Bureau of Labor and Statistics in February showed that the average price of used cars and trucks in the nation had risen a staggering 40.5% between January 2021 and January of this year, it caught Henrico – and localities nationwide – off-guard.

In Virginia, localities are required to assess vehicles as close to their fair-market value as possible, a process that Henrico and others complete by using automotive industry valuation guides. As various localities throughout the state issue their car tax bills, they're being met with the same shock displayed by Henrico vehicle owners.

In emails he sent to concerned constituents, Schmitt acknowledged that the dramatic valuations were stunning and challenging for residents to accept, even though Henrico’s personal property tax rate of $3.50 per $100 of assessed valued is the lowest in Central Virginia (tied with Williamsburg).

“This is an incredible inflationary amount during any ‘normal’ period of time, not to mention on top of what we have all seen with increased costs across the board recently,” he wrote. “While some valuation increase was certainly to be expected as the cost to purchase and the resale value of automobiles has risen sharply, the level of jump in this year’s valuation is beyond the scope of what was expected nor what would be considered to be reasonable.”

“That money doesn’t belong to the government,” Schmitt told the Citizen Wednesday. “We’re going to have a surplus in our personal property levies, and that money belongs to the residents.”

Spurred by the 1997 “no car tax” campaign promise of gubernatorial candidate and former Henrico Commonwealth’s Attorney Jim Gilmore, Virginia began phasing out its car tax the following year after Gilmore’s inauguration as governor. But the promise never fully materialized.

The General Assembly approved a five-year phase out of the tax (from 1998 through 2002), but when money became tight in 2002, lawmakers opted against completing the phase-out, deciding instead to freeze the tax-relief rate at 70% (meaning vehicle-owners would remain on the hook for the other 30% of assessed value).

Two years later, the General Assembly voted to freeze the total amount of tax relief the state would provide to localities to mitigate the vehicle tax at $950 million annually, beginning in 2006. It’s remained at that level ever since, meaning that as the number of registered vehicles in the state has grown, the available amount of tax relief for each one has shrunk. In some localities, some vehicle-owners now are responsible for about 70% of the tax themselves.

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