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HomeNewsArchivesTAX CREDIT BILL AIMED AT ENDING MORATORIUM

TAX CREDIT BILL AIMED AT ENDING MORATORIUM

May 22, 2003 – One of the bills submitted by Gov. Charles W. Turnbull to the Legislature for Thursday's special session is the administration's purposeful stride toward District Judge Thomas K. Moore's window of opportunity for the government to get his moratorium on property tax collections lifted.
The bill provides for property owners who have paid or pay their tax bills for 1999 through 2004 prior to enactment of a revised property assessment system ordered by the District Court to be entitled to a credit for paying any overbillings later determined, to be applied to their subsequent year's tax bill. It also calls for any such taxpayers later found to have been underbilled to be billed retroactively for any taxes owed based on the reassessments to come.
Turnbull said in his letter to Senate President David Jones accompanying the proposed legislation: "Although we believe that this bill fully addresses the issues raised in the court's opinion, I will defer action on it to allow the court time to review it. The next court hearing has been scheduled for June 2, 2003; therefore, this will provide sufficient time for me to act on the bill in accordance with the court's opinion."
Moore on May 12 imposed the moratorium both on sending out property tax bills for 1999 through 2003 and on collecting taxes on any bills already sent for 1999 and subsequent years. The order came in his ruling in a case brought by 11 property owners who argued, as others had successfully done earlier, that the territory's practice assessing commercial property for tax purposes on the basis of replacement value rather than market value results in unfairly high taxes and thus violates the Revised Organic Act of 1954, a federal law.
The settlement of the landmark tax assessment case in December 2000 required the government to reform the process and procedures of the Office of the Tax Assessor; two and a half years later, it has yet to do so, and Moore's order called a crippling halt to tax billing and collections until it does.
However, Moore's decree allows for the moratorium to be lifted before that reform is fully accomplished — by amending the V.I. Code to provide for retroactive adjustment of property tax bills for 1999, 2000, 2001, 2003, and 2004 "and for a reasonable time thereafter until a fair and equitable system capable of reliably and credibly assessing all real property at actual value is in place."
The governor's bill apparently is based on proposed legislation submitted to him by Lt. Gov. Vargrave Richards last week, one of several steps taken by the lieutenant governor, under whose office the Office of Tax Assessor falls, to counter the immediate effects of the court-ordered moratorium. (See "Lt. Gov. acts to resolve realty, tax ruling crises".)
Richards said in announcing his actions that his "immediate priority" was to get the 2002 property tax bills sent, and that his legislation was aimed at making that possible.
Sen. Emmett Hansen II had announced a day earlier that he had submitted a bill to bring the territory's property tax procedures into federal compliance and to conform to the District Court mandates. He did not detail the specifics of his proposal.
On Wednesday, Hansen was critical of the bill submitted by the governor. "It doesn't address the issue of actual value versus replacement cost," he said. "It certainly doesn't address the 80-page legal opinion."
To take advantage of Moore's window of opportunity, however, that may not be necessary in order to get the moratorium lifted.
At any rate, Hansen said, "What we really need to do is go out on the street and get the $80 million in unpaid property taxes."
The day after Moore's ruling, Attorney General Iver Stridiron filed an appeal with the Supreme Court seeking reversal of a 3rd Circuit Court of Appeals ruling in March that the District Court does have jurisdiction under the federal Revised Organic Act of 1954, which serves as the territory's constitution.
The V.I. Justice Department had argued unsuccessfully before the appellate court that the tax assessment issue was a local matter that did not fall under the federal court's jurisdiction.
The bill submitted by the governor includes a proviso that would nullify the overpayment credit and retroactive underpayment billing plan if a higher court reverses the District Court order and upholds the territory's present assessment system. The appeal is over jurisdiction, but a ruling against the District Court in that regard would have the effect of upholding the status quo.
Administration officials have said inability to collect property taxes already billed could add $40 million to the projected deficit of $115 for this fiscal year, which ends Sept. 30.
The governor's bill also would establish a Tax Assessor's Revolving Fund and earmark 1 percent of annual property tax revenues, up to $500,000, to go into it. The fund would be used to pay for equipment, staffing, training and professional services to maintain and improve the Office of the Tax Assessor.
Turnbull called an earlier special session, on Feb. 12, for the Senate to act on two bills, one of which called for the Tax Assessor's Office to assess commercial properties for the years 2001 through 2004 based on the 1999 valuations and set the next commercial property assessment for 2005. The bill was intended to provide a way for the government to bring desperately needed tax revenues into its coffers while the 11 plaintiffs' challenge to assessment process was before the District Court.
A week after that special session, according to published reports, Moore angrily charged in his court that the government was trying to circumvent his ban on its issuing of any more tax bills until the ongoing legal challenges to the method of assessment were resolved.
On Feb. 28, Government House announced that Turnbull had signed the measure into law.

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