Attention turns to the real-estate tax burden

WITH THE REPEAL of Virginia's hated car tax going as far as it can go for now, political sights are being set on taxpayers' next-most-despised levy, the real-estate tax. Lt. Gov. Tim Kaine, the Democratic candidate for governor in this fall's election, has announced a plan to allow local governments to create "homestead exemptions" sheltering from taxes up to 20 percent of a home's value. Meanwhile, former Attorney General Jerry Kilgore, the GOP candidate, has proposed capping real-estate assessment increases at 5 percent annually.

Real-estate tax relief has also become a campaign issue in New Jersey, the only other state with a gubernatorial election this year. Elsewhere, several state legislatures are looking for ways to ease the burden on homeowners. Lawmakers in Texas have agreed to shift some of the education load, and the tax bite, from local governments to the state. In Illinois, legislators are discussing a plan to raise the income tax in exchange for lowering the property tax. In Pennsylvania, which legalized slot-machine gambling last year, local governments are debating whether they want gaming revenues to supplement their education budgets to help ease the real-estate encumbrance.

The bottom line in all these scenarios is that there be some way of replacing the revenues lost to real-estate tax relief. Virginia knows well that when government acts otherwise, it is kidding itself.

When the robust growth of the 1990s slowed, Virginia ignored the safeguards built into its car-tax-cut legislation and allowed the phase-in of relief to continue. Local governments struggled to meet their responsibilities, and the state strained to fill the gap. Something had to give, and in 2004 it did. A budget impasse nearly doubled the length of the 60-day session, and the result was a $1.4 billion revenue-enhancement package that included a freeze on car-tax relief.

Real-estate tax relief must not be allowed to present the state with similar ends that won't meet. It is the single largest source of income for all localities, whose primary expense is education.