This study is made pursuant to Senate Joint Resolution No. 5 agreed to during the 1971 Session of the General Assembly.

The newly revised Constitution of Virginia includes, in Article X, Section 6 (b) , a provision permitting the General Assembly by general law to authorize local and regional governments to provide relief from extraordinary property tax burdens on citizens 65 years of age or older. Also, under Section 6 (g) of that Article, the General Assembly may authorize local governments to charge a fee for services rendered to owners of any or all classes of property presently exempt from taxation. The new Constitution was ratified by a large margin, indicating the voters' approval of these new provisions.

During 1971, Chapter 169 of the Acts of Assembly was enacted (and is codified in Section 58-760.1 of the Code of Virginia) authorizing local governments to exempt or defer all or parts of property taxes for certain property owners 65 years of age or older. Chapter 133, Acts of Assembly was enacted (and is codified in Section 58-16.2 of the Code of Virginia) authorizing localities to impose a service charge in lieu ·of taxes upon certain tax exempt real estate. The General Assembly enacted these measures because the voters who approved the new constitution signified their desire for enactment of these programs.

However, the General Assembly recognized the fact that other issues before the 1971 Special Session restricted the time available for an in depth study of these measures. As a consequence, Senate Joint Resolution directed that this study be made.

The Commission has found that (1) the authority given local governments to exempt certain persons 65 years and older from part or all of the property taxes does not assure that all who might qualify will be afforded the same relief; (2) the local option feature: of the act can conceivably di??criminate against certain of our senior citizens solely because of their community of residence; (3) local governments, already hard pressed to find the funds with which to operate. their governments, are asked to further deplete available funds by enacting these programs; (4) the 1971 act does not require graduated tax relief rates in proportion to the amount of a person's income; ( 5) senior citizens who do not own their homestead but who would otherwise be eligible are .not directly included in the existing legislation; and ( 6) criteria for eligibility does not recognize variances in tax burdens according to geographic regions or cost of living areas within the Commonwealth.

In the second area of the Commission's study, that of a service charge on tax exempt property, the Commission has found that the legislation enacted at the 1971 Special Session is too restrictive. The need for a broader definition is clearly seen from the statements made to this Commission by local government officials who noted that up to 23 % of their communities' property is presently exempt from taxation.

The Commission recommends legislation to broaden these provisions, including in the legislation features which insure that such charges be directly related and limited to costs budgeted and expended for such exempt property.

Our report suggests changes in both areas of our study. Recognizing the need to alleviate undue tax burdens for our senior citizens while limiting the negative effects on local governments and our elderly citizens, in the body of this report the Commission recommends the enactment of legislation which will correct these present inequities.

We know that several local governments are attempting, with their limited financial resources, to provide property tax relief for the elderly as authorized by the General Assembly. Many others are considering doing so. This Commission has concluded that property tax relief for the elderly should be a State program, offering uniform relief for all eligible senior citizens. We urge prompt enactment of legislation as contained in this report, with immediate appropriations to fund a State program of property tax relief, before localities implement their programs. We still have time to provide a uniform Statewide plan. If we wait, localities will be further impaired in performing vital local services for their citizens and many of our elderly will be again. burdened with excessive taxes in proportion to their incomes.

The Commission holds the view that this report should present a plan that will provide property tax relief to low income senior citizens carrying excessive residential property tax burdens in relation to their family income, and that such relief should embrace every eligible citizen within our State.

To accomplish this purpose the Commission has departed from the local option approach provided in Article X, Section 6 (b) of the Constitution and submits herewith a statewide plan to uniformly accomplish the end result, namely, relief from excessive property taxes for all of Virginia's low income senior citizens. Attached as an Appendix is letter opinion of the Attorney General dated January 25, 1972, citing the authority of the General Assembly to enact the legislation recommended in this report.

We have carefully studied each of these subjects, have heard testimony from interested parties, and strongly recommend your adoption of appropriate legislation to enact both proposals.

For their assistance we are indebted to Dr. Billy Dee Cook, Office of Research and Statistics, Department of the Budget, District of Columbia; Dr. Kenneth E. Quindry, Research Professor, Center of Business and Economic Research, University of Tennessee; Mr. William H. Forst, Commissioner, Department of Taxation; Dr. John L. Knapp, Deputy Director, Division of State Planning and Community Affairs and from his staff, Mr. Robert G. Griffis, Chief, Research Service, and Mrs. Diane B. Chesson, Economist. Also, Mr. George Long, Executive Director, Virginia Association of Counties; Mr. Robert W. Wilson, Administrative Assistant to the Arlington County Manager; Mr. Joseph W. Weiss, Administrative Aide, Arlington County; Mr. Edward G. Heatwole, Director of Finance for Henrico County; Mr. Richard Chandler, Richmond City Assessor; Mr. John R: Shannon, Deputy Director, Advisory Commission on Intergovernmental Relations; Mr. Richard L. DeCair of the Virginia Municipal League and Mr. G. William White, Esq., Division of Statutory Research and Drafting.