The news from the latest auto dealers' guide to used-car prices hit city and county officials hard this month: One of their most important tax bases has shrunk dramatically.
Last summer's high gasoline prices, paired with drivers' reluctance or inability to take on debt with a new car, have sent car values tumbling.
For drivers, that likely means a tax break. Owners of a 2-year-old Ford Explorer, for instance, should see their personal property tax bills drop anywhere from $92 to $216, depending on where in the Richmond area they live.
But that tax break for drivers is squeezing local governments -- with projected hits to car tax collections of 15.5 percent in Hanover, 12.5 percent in Henrico, 8 to 10 percent in Chesterfield and 3 percent in Richmond.
So far, local officials aren't talking about increasing the tax rate to offset the decline in vehicle values, as reported by the National Association of Automobile Dealers' price guide.
Generally, they say they are looking to cut spending, but they haven't released details about where the cuts might come.
Personal property tax, which comes mostly from payments based on the value of cars and light trucks, typically accounts for a little less than 9 percent of the local revenue collected by Virginia cities, counties and towns, according to data from the state Auditor of Public Accounts.
Still, "we're looking at a major hit," said Elesteen Hager, Hopewell's director of finance.
He's estimating that Hopewell's collection of personal property taxes could fall 25 percent for the next fiscal year, which begins July 1, because so many vehicles on its tax rolls are sport utility vehicles and pickup trucks, which have seen the sharpest drops in value.
This year, Hopewell expects to collect $4 million in personal property taxes.
"Because the car market has tanked so, you're looking at 10, 15, 20, 30 percent declines in value," Hager said.
In King William County, fewer residents than usual are trading in their cars and trucks for new vehicles -- and when they do, they're tending to go for smaller cars and used vehicles, County Administrator Frank A. Pleva said.
He's expecting a drop of About 15 percent in personal property taxes.
Pleva said that's an especially hard hit. Rural counties usually have a smaller range of things to tax than cities and suburban counties, where sales-tax collections, machinery taxes, business license fees, and meals and hotel taxes can be important.
"It hit rural counties hard," because so many residents drive pickups and SUVs, said John A. Budesky, the county administrator in New Kent County.
He's forecasting a 15 percent decline in personal property tax collections.
"The supervisors have talked about it -- we're not raising the rate," he said. "We're trying to manage by cutting spending."
Hanover County's new budget forecasts a 15.5 percent decline in personal property tax collections, to $22.8 million for the fiscal year beginning July 1, while Henrico County is looking at a 12.5 percent drop for the current collection. Henrico expects to collect $101 million in personal property taxes this fiscal year.
Chesterfield County is looking for an 8 percent to 10 percent decline from this year's expected collections of $52 million, as the impact of big declines in SUV and truck values is somewhat mitigated by smaller declines in values for cars.
In Richmond, where residents drive fewer pickups and tend to hang on to cars longer than in the suburbs, personal property taxes collection likely will decline about 3 percent.
Contact David Ress at (804) 649-6051 or dress@timesdispatch.com.
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