RD199 - Annual Report on the Personal Property Tax Relief Act of 1998


Executive Summary:
Section 58.1-3529 of the Code of Virginia requires this report and the forecast contained herein. The reimbursement percentage for tax year 2005 is assumed to be 70 percent of the first $20,000 in vehicle value. The local reimbursement level for tax year 2006 and beyond is set at $950.0 million pursuant to Chapter 1 of the Acts of Assembly of 2004, Special Session I.

Actual Personal Property Tax Relief Act (PPTRA) reimbursements for fiscal year 2005 totaled $907.2 million, $4.0 million below the official forecast of $911.2 million. Fiscal year 2005 marked the third consecutive year that actual reimbursements were less than the forecast.

Table 1 shows historical PPTRA reimbursements compared to the forecast for the year, and the November PPTRA reimbursement forecast for fiscal years 2006 through 2010. In order to incorporate actions of the 2004 Special Session of the General Assembly, the fiscal year 2006 forecast excludes tax year 2006 liability.

[Table 1 can be viewed in full report.]

PPTRA reimbursements are driven by vehicle counts (qualifying vehicles) and average assessed vehicle value. Historical and forecast data for these two variables are shown in Table 2 on the following page, which compares tax year 2004 estimates with those for tax year 2005.

[Table 2 can be viewed in full report.]

The number of qualifying vehicles (QV) is a key determinant of growth in reimbursements. However, the lack of current data on qualifying vehicles makes it necessary to rely on the number of registered vehicles by locality in the Commonwealth. Available history shows that the growth in vehicle registrations has been an accurate indicator of the growth in qualifying vehicles. The 2005 forecast anticipates weaker growth in the number of qualifying vehicles than was projected in the 2004 forecast.

The other key determinant of growth in reimbursements is average assessed vehicle value (AAVV). The growth rate for this variable is based on a forecast of new and used vehicle prices. Table 3 provides historical and forecast data on average prices of new and used vehicles.

[Table 3 can be viewed in full report.]