Authority to re-examine property tax exemptions for certain nonprofits remains with the state

January 24, 2019

A Constitutional amendment approved by the voters in November 2002 allowed localities to grant real or personal property tax exemptions by ordinance, within certain categories set by the General Assembly.  Prior to passage of this amendment, property tax exemptions were granted only by the General Assembly.  Exemptions granted by the legislature before the Constitutional amendment took effect on January 1, 2003, may only be repealed by the General Assembly, while post-2003 exemptions granted by local governments may be revoked by local governments.

HB 2566 (LaRock), introduced at the request of Frederick County, would have repealed the pre-2003 exemptions enacted by the General Assembly, effective July 1, 2024, and allowed localities to decide whether to continue the tax exemptions of affected organizations via local ordinance.

VACo spoke in favor of HB 2566, which would have placed property tax exemptions granted before and after the passage of the Constitutional amendment on the same footing, with localities making the decisions about continuation of tax exemptions affecting local revenues.  After representatives of nonprofits spoke about the potential harmful effects of loss of their tax exemptions – assuming that the localities in which they operate would discontinue the exemptions – the House Finance Committee’s Subcommittee #2 voted to table the bill.

VACo Contact:  Katie Boyle

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