Harrisonburg City Council voted to extend the deadline for personal property tax payments from Dec. 5 to Feb. 1 during a special meeting on Wednesday.
The tax rate is 3.5%, or $3.50 per $100, of assessed value. Rockingham County’s personal property tax rate is 3%, according to county documents.
Items taxable under the personal property tax include cars, trucks, motorcycles, trailers, boats, mobile homes, aircraft and RVs, according to city documents. However, personal vehicles receive a slight reduction under the state-funded Personal Property Tax Relief program.
Mayor Deanna Reed and council members George Hirschmann and Sal Romero voted in favor. Council member Chris Jones abstained. Councilman Richard Baugh was absent.
State law allows City Council to grant up to a three-month extension for some types of taxes, including personal property tax, given a situation like the increase in unemployment and economic disruption stemming from the COVID-19 pandemic, according to Chris Brown, city attorney.
Jones said his reservations about the move stemmed from the potential unfairness of not having passed the extension earlier since about a quarter of the $15.5 million in tax bills sent out by the city had already been paid as of Wednesday. The data Jones cited was presented by Brown at the meeting.
Reed said those who have paid taxes early likely have the means to pay them, and the extension will still be helpful for residents who could be struggling to meet the tax deadline while balancing other bills like rent or other necessities.
“My frustration is that we should have prepared this earlier that we would not be in the situation where some people have paid or not,” she said. “But I’m for it and I think we need to extend it for Feb. 1 if that’s the date we want to set.”
Hirschmann and Romero agreed and said the extension would provide a “cushion” for taxpayers struggling during the pandemic.
“This will have a fairly drastic effect on collection activity,” Brown told council in relaying what Harrisonburg Treasurer Jeff Shafer said about the extension.
Brown said “an extremely important tool” of Shafer’s is the ability to send a notice to the state government about a resident’s nonpayment of taxes and have the balance taken out of the resident’s tax return.
Last year, about 90% of total taxes were paid by Dec. 31, with another 6.5% paid by between January and June 30. Those who struggle to pay often set up payment plans with the city after the deadline, according to city staff.
As of Monday, there were 22 active payment plans for past due tax cases, which was lower than at the same point last year, when there were 28 such plans, according to an email from city spokesman Michael Parks.
Shafer uses Department of Motor Vehicle renewal stops, the state tax refund incentive program and judgments in general district court for those who still do not pay, according to Brown.
City Manager Eric Campbell said the extension will result in a drop in revenue projections of about $700,000 to $800,000.
“We will assume that money is not coming in, and our revenues will be reduced,” Campbell said at the meeting.
The Harrisonburg budget for fiscal 2020-21 is $269.8 million, according to city documents.