Board of Supervisors leaders had the annual budget talks in the month ahead top of mind during a virtual breakfast meeting with the Loudoun County Chamber of Commerce on Thursday, Feb. 18.
Three county supervisors took part in the Chamber’s annual breakfast meeting with the county board, part of its PolicyMakers series: finance committee Chairman Matthew F. Letourneau (R-Dulles), Transportation and Land Use Committee Chairman Michael R. Turner (D-Ashburn), and County Chair Phyllis J. Randall (D-At Large). They met with the chamber only a few days before the first public hearing on the next annual county budget, scheduled Tuesday afternoon, and in a year when the COVID-19 pandemic has complicated that discussion.
“Our folks really have come together, and in a way, as the county administrator says, we’re almost running two different operations: we’re running our normal county government, and then we have a whole separate COVID-19 operation,” Letourneau said.
The pandemic has shown the divides in the county’s prosperity. While tourism and hospitality businesses have been hit hard, data centers have flourished even more. While commercial property values have largely sunk, the cost of residential real estate in Loudoun continues to climb. And for the county government, all of that impacts tax revenues.
Supervisors pointed to a concern that has been raised in years past, and only become more obvious during the pandemic—the scale of the data center industry’s tax revenues, which this year comprise fully a third of local tax revenues, enough to cover all of the county government’s operational costs other than schools.
“That does concern us a little bit because you just don’t want to be that reliant on one particular source of revenue,” Letourneau said. “So obviously, diversifying our economy, continuing to bring in businesses of all stripes, whether that’s aerospace or biomedical or others, is going to be very important. But we also may need to look at some of the ways that our tax policy is set up overall to try to address those issues.”
He suggested using some of that windfall for one-time expenses in the county’s Capital Improvement Program, so that if data center tax revenues start to dry up the county doesn’t come up short on continuing expenses like payroll. Supervisors have already in years past used a similar strategy to mitigate that risk.
The difference in commercial and residential property values also presents a challenge by putting more of the tax burden on homeowners as their property values climb—even as some have seen their incomes shrink. Supervisors offered different takes on how to decide how much those people should pay.
“I’m not sure this is the year to necessarily undertake major new expenditures on things that are going to drive the tax rate higher,” Letourneau said.
“I approach every budget cycle as, what do we need to provide effective services to our constituents at the lowest possible tax rate, whatever that tax rate might come out to be,” Randall said.
The committee chairs also offered chamber members a glance at what they’re working on in the longer term. Letourneau mentioned the problem of funding large transportation projects on major routes, pointing to plans for Loudoun County Parkway and Rt. 50 interchange.
“That particular project is several hundred million dollars, and one of our challenges is, just how does a locality like ours fund something like that that’s just so big?” Letourneau said. “And it’s pretty clear we’re going to need the state’s help with that, but the state system, which is called SMART SCALE, is just not set up to really address those type of issues.”
No Virginia system is; while the county is planning the project, which is still more than six years away and estimated to cost a half-billion dollars, roads are nominally a state responsibility. Transportation projects are the largest category of spending in the county’s capital program as the county board has sought to alleviate traffic in the face in state inaction.
And Turner pointed to his committee’s work on a collection of land preservation programs, including Purchase of Development Rights, Transfer of Development Rights. The transfer program, which would see developers in one area buying development rights off of land in other areas, he said, was proven infeasible and expensive.
“Additionally, with the rewrite of the 2019 [comprehensive] plan, we largely already gave away our density in the east,” Turner said.
However, the PDR program, which would see the government paying landowners for their development rights and retiring those rights, is still under development. It’s also a program that Loudoun County has used before, Turner pointed out, and one that may still have new possibilities.
“One of the things we might be able to do with the PDR program is allow small landowners—it usually requires 40 acres to do a PDR and make it cost effective—allow smaller landowners to do conservation easements, and then use PDR funding to pay for the process of obtaining the conservation easement, and possibly also step up their tax benefit from the conservation easement to market value, so that it becomes irrelevant whether they develop or just put their land in a conservation easement using PDR funds,” Turner said.
And Randall urged attendees to help get the word out about Loudoun businesses, which have gone to great lengths to weather the pandemic and keep shopping and dining safe. She pointed in particular to retail and dining businesses.
“They’re already used to having to follow all those safety guidelines, but we’re not doing a great job putting that out,” Randall said. “And so if I would say one thing to everybody in the Chamber, everybody listening to my voice right now: one, go out and support these businesses right now. Go out, and if you can tip, tip heavy. But also, help us through your social media, through your newsletters, through whatever you might put out to say that our restaurant industry, our hotel industry, our touch industry overall really is doing over and above all that is required.”