Hearings and Business Meetings
October 25, 2005
SD-366 Energy Committee Hearing Room 10:00 AM
The Honorable Donna Christensen
the Hon. Donna M. Christensen
on S. 1829
before the Senate Energy and natural Resources Committee
October 25, 2005
Thank you Mr. Chairman for the opportunity to make this statement in support of S. 1829 -- companion legislation to one I introduced in the House -- to repeal the 1936 law which governs the levying of property taxes in the Virgin Islands. Passage of this legislation is necessary to allow the Virgin Islands to fashion a local property tax law that takes into account the circumstances and realities of our community.
I want to also to especially thank you, Mr. Chairman, as well as Ranking Member Bingaman, for your willingness to respond to my request to introduce S. 1829 and to so quickly schedule it for a hearing.
Mr. Chairman this bill became necessary when, five years ago, some of my constituents filed a lawsuit in federal court alleging that the Virgin Islands government was violating federal law in the manner in which they were assessing the value of commercial properties in the territory.
The court then ruled that the 1936 federal statute was not repealed by the 1954 Organic Act, as we had all believed, and invalidated the current Virgin Islands property tax law.
Mr. Chairman, the Virgin Islands is the only jurisdiction in the country whose local property taxes are based on federal law. This anomaly in our system of government is unnecessary today because the Virgin Islands, although still a territory of the Unites States, has been exercising all the rights and responsibilities of government in a similar manner as the fifty states, at least since we began electing our own governors in 1970 and before that since 1954, when Congress passed our Revised Organic Act.
In invalidating our local property tax laws, the federal courts have removed the ability of the Virgin Islands government to provide insulation for Virgin Islands homeowners to protect them against the consequences of rapidly rising property values on their tax bills.
Moreover, the provisions that were struck down were similar to those used in other jurisdictions throughout the United States. The local property tax laws which were struck down provided a 10 percent cap on the increase in assessments for residential real estate in any assessment period, as well as certain exemptions from taxation, for homesteads, veterans, and farmland and exemptions offered as part of our economic incentive program.
Mr. Chairman, the 10 percent cap limiting any increase in residential assessments is modeled after similar statues in the United States and is essential to protect homeowners for soaring property values. Without a cap or similar provisions, if and individual or a family owns a modest dwelling that is surrounded by million dollar homes, the assessed value and thus the property taxes due will increase significantly.
This will have serious consequences for long-time property holders. We have limited land mass in the Virgin islands which makes real property a commodity that is in short supply.
Because the current trend in real estate is for prices to continue to climb exponentially, basing property taxes on actual prices will create a large number of instant paper millionaires who will never be able to see this new wealth unless the property is either mortgaged or sold.
This situation presents a very serious for many of my constituents, most acutely on the island of St. John because their property tax bills are already moving way beyond their reach.
Many of the areas on St. John have seen wealthy individuals purchasing properties and making improvements which have the effect of immediately and drastically increasing the value of their properties as well as the value of the properties surrounding them.
I must caution however, that the entire Virgin Islands would be impacted should the 1936 law continue to prevail.
In summary, it is important for the economic security as well as the social stability of the Territory, for the 1936 statue be repealed.
Thank you once again for bringing this important bill to the Committee in such expeditious fashion. I look forward to its speedy passage, and to returning to testify on an equally important piece of legislation which has already passed the House twice, one which would create a Chief Financial Office for the U.S. Virgin Islands