In 1865, an Iowa judge by the name of John Dillon ruled in the case of Clark v City of Des Moines:
It is a general and undisputed proposition of law that a municipal corporation possesses and can exercise the following powers and no others: First, those granted in express words; second, those necessarily or fairly implied in or incident to the powers expressly granted; third, those essential to the declared objects and purposes of the corporation, not simply convenient, but indispensable. Any fair, reasonable doubt concerning the existence of the power is resolved by the courts against the corporation, and the power is denied.
This ruling became known as the Dillon Rule and most states soon adopted it. Virginia was one of them and remains one of a few states to continue to narrowly interpret it. Localities cannot do anything the Virginia code does not expressly allow them to do. It is a one-size-fits-all, top-down approach to government.
So what does this mean? Take real estate. Recently, residential real estate values have been increasing at a rapid rate. Localities, in an attempt to reduce the burden on homeowners, are looking for solutions. One such solution is a homestead exemption, whereby a certain portion of the assessment goes untaxed. Another solution would be a different rate for residential assessments than for commercial assessments. Neither of these options are available under Virginia law, which requires all property to be assessed at the same rate and at 100% of fair market value.
The alternative to the Dillon Rule is Home Rule. Home rule allows localities to make decisions that fit their situations. Under home rule, Norfolk could exempt a certain portion of residential assessments from tax, apply different rates to different types of properties, or any combination you could think of that would best fit the city’s needs.
Delegate Kenneth C. Alexander (D-89th) introduced legislation in this year’s session of the General Assembly to allow Norfolk and other localities to be able to tax residential property at a lower tax rate than that imposed on the general class of real property by creating a separate classification for taxation purposes (HB155). The bill was continued to 2007.
Under the Dillion Rule, the state knows what’s best for Norfolk. Under home rule, Norfolk know’s what’s best for Norfolk. Whichever you prefer, make sure your state legislators know what you think.