Can the next Board of Supervisors fund the county’s government and school operations on a real estate tax rate below $1? It’s getting close.
Thanks to a spike in commercial property values fueled by the data center market, the county’s tax rate has dropped by more than a dime over the past four years. That hasn’t necessarily translated into significantly lower tax bills for residents, but it has helped county leaders address continued growth with relatively little pocketbook pain.
During their meeting Thursday night, supervisors directed the county staff to develop the FY 2021 budget based on the projected equalized tax rate that would keep average real estate tax bills level next year. That would reduce the tax rate from $1.045 to $1.02 per $100 of assessed value. But following what has become standard practice, County Administrator Tim Hemstreet also was directed to offer options for increased service levels funded by a rate 2 cents higher and to provide a list of reductions that would be needed to adopt a tax rate 2 cents lower.
The prospect of getting a $1 tax rate sparked the possibility of even cutting the rate to two figures for the first time since 2008, when land values reached their pre-recession peak.
“So do you guys want to do 99 cents just for kicks and giggles? Get below a dollar? Supervisor Ron Meyer (R-Broad Run) asked. “It would be kinda fun, right? We’re so close.”
The rise in property values has allowed supervisors to largely fund the School Board’s budget requests in recent years, but, at this point in the budget season, an equalized tax rate would leave a $78.6 million shortfall in funding on Superintendent Eric Williams’ projected needs list, which requires $96.4 million more than the current budget. Typically, that gap narrows before supervisors are presented with a formal budget proposal in February, after the School Board completes its budget work and revenue projections are refined.
The general county government expects to need $57.7 million in additional funding, with about $22 million of that total earmarked for staffing and raises.
Debt service payments are expected to increase by $35 million.
Each penny of the tax rate is expected to generate $9.2 million in revenue next year.
With a total expected need of additional funding at $189.1 million for county government and school operations, holding at the current tax rate leaves a projected $33.5 million shortfall and the equalized tax rate of $1.02 brings the deficit to $48.7 million.
A shot at 99 cents? That would require reducing funding expectations by more than $76 million.
The decisions won’t be made until next year, when a new Board of Supervisors has been seated. Thursday was the board’s final meeting before the Nov. 5 election. Starting Jan. 1, there will be at least three new faces on the board as Vice Chairman Ralph Buona (R-Ashburn), Supervisor Geary Higgins (R-Catoctin) and Ron Meyer (R-Broad Run) are not seeking reelection.