FY 17 Tax Year Tax Releif Percentage Resolution

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CITY OF CHARLOTTESVILLE, VIRGINIA CITY COUNCIL AGENDA Agenda Date: April 11, 2017 Action Required: Approval of Resolution Staff Contacts: Todd D. Divers, Commissioner of the Revenue Jason Vandever, City Treasurer Craig Brown, City Attorney Rosalind Collins, Deputy Commissioner of the Revenue Presented By: Todd D. Divers Title: Establishing 2017 Tax Year Tax Relief Percentage Background: In its original form, PPTRA was a vehicle-based entitlement. The state was obligated to provide annual tax relief to owners of all personal use vehicles, with the relief computed on the first $20,000 of assessed vehicle value. In 2005, this relief was computed at 70%. As the number and value of vehicles comprising the "fleet" in each locality grew, so did the state's annual obligation. The changes to PPTRA for years 2006 and after mark an end to this vehicle-based entitlement. SB 5005 established a fixed, annual grant to localities, the proceeds of which must be used to provide relief to the owners of qualifying vehicles. The Commonwealth of Virginia’s obligation is capped and made certain; localities distribute the relief amount as determined by local ordinance. Discussion: The method for computing the relief percentage is to subtract the tax year’s total tax on eligible vehicles valued $1,000 or less (that receive 100% relief) from the total PPTR grant amount ($3,498,256) and divide the result by the total tax on the rest of the eligible vehicles’ portion of value that is $20,000 or less. Based on 2017 tax year early book and projections for the tax year, staff recommends setting the relief percentage of tax on up to $20,000 value for vehicles valued over $1,000 at 47% for tax year 2017. This is the same as the rate for 2016 (47%) while overall number of vehicles is up and overall value up slightly, vehicles generally depreciated more this year than in previous years (biggest decline since 2008 per NADA). New vehicles with higher value do not use higher amount of relief also, due to the $20000 value cap in the law. Budgetary Impact: None anticipated based on forecast of vehicle levy. Recommendation: Approve resolution setting the relief at 47% for tax year 2017. 2017 Formula: 1. Tax Levy on all qualifying vehicles = $8,000,000 2. PPTR used on 100% relief vehicles = $ 63,000 (vehicles valued $1,000 and under) 3. PPTR total ($3,498,256) remaining = $3,435,256 4. Levy on up to $20,000 value = $7,300,000 (of qualifying vehicles valued over $1,000) Divide 3 by 4 = (.4706) 47 % Alternatives: N/A Attachments: N/A