Slower Business Tax Revenue, Big School Ask Could Stretch County Budget

Lower-than-forecast data center tax revenues, a slew of new Board of Supervisors spending and a larger-than-ever request from the school division are combining to present a significant FY 2022 budget challenge for the county.

County budget officers told the Board of Supervisors’ finance committee last month that their very preliminary budget forecasts show the county will likely come up short for funding at the current real estate tax rate, even under the most optimistic estimates.

Currently, the Department of Finance and Budget is estimating $75 million to $110 million in new revenues at the current tax rate of $0.98 per $100 of assessed value, but anywhere from $160 million to $225 million in new expenditures. That leaves a gap anywhere from $50-150 million.

That gap is in part attributed to money the county hasn’t gotten this year—such as a shortfall in the expected revenue from data centers. And it is in part caused to a lot of new spending—for example, supervisors are contemplating sending some real estate tax revenue directly into the Housing Trust Fund in an effort to pay for programs to help address housing affordability concerns. Dedicating a half-penny of the real estate tax to the housing fund would redirect around $5 million a year.

Additionally, the first planning-level estimates from the school system show a request to grow by even more than usual—somewhere from $100 million to $125 million more than last year, where on average in the past that budget has grown by $65 million to $75 million, said County Administrator Tim Hemstreet.

“So one of the questions off the bat is, is the board expecting us to put these additional items and fit it into the budget within the current tax rate, which is the traditional guidance we get?” Hemstreet said. “Or is the board looking for us to have some of these additional things, such as a dedicated funding source for affordable housing, to have that be on top of the current tax rate?”

Last year’s surprise requests from Commonwealth’s Attorney Buta Biberaj for large increases in her budget could also mean tighter scrutiny for budget requests from constitutional officers this year. Finance committee Chairman Matthew F. Letourneau (R-Dulles) said the first step will be to meet with those officers, as well as the School Board, sooner and more often to set expectations about what the county coffers can accommodate.

And despite the Board of Supervisors funding every county department’s budget request last year, adding around 160 new positions, there could still plenty of growth in county government this year.

“In a lot of ways, COVID has exposed service level issues that may have been preexisting, and that will continue past COVID,” said Department of Finance and Budget Assistant Director Caleb Weitz.

Letourneau pointed out that the most preliminary estimates—made almost a year before the next fiscal year begins—tend to be more pessimistic than reality.

“The good news is I’ve been on the board for 10 years and for 10 years, there’s been a gap between at this stage between what our anticipated needs are, and what our revenue is,” Letourneau said. “Albeit this is a and probably more serious issue than we’ll be typically facing at this time.”

5 thoughts on “Slower Business Tax Revenue, Big School Ask Could Stretch County Budget

  • 2021-08-10 at 4:08 pm
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    The BoS has been smoking money faster than a meth head for years. That whole data center shortfall story was a set up. Come on homeowners… you don’t need your money. Harrison Street knows way better how to waste, er, “invest” your money than you do.

  • 2021-08-10 at 4:09 pm
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    Maybe we can have the echo chamber get their tax wants in exchange for a reduction in infrastructure access. Then those of us who realize we live in a society can get want we need and cuts would be made to people who apparently don’t need it.

  • 2021-08-10 at 7:08 pm
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    Uh, here is a tip…with school budgets in the crosshairs, I suggest that the BOS does not approve not one more house, namely the huge, massive development that another greedy developer is trying to push through on Evergreen Mills. I read that it will have 1200 homes and right now the land is zoned as AR-1! That is not what this county needs now! Where would those kids go to school? Tough it up BOS, we know that houses cost us money, not save us money or helps the bottom line.

  • 2021-08-11 at 4:32 pm
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    I missed that one. Would you tell me more regarding who is asking and where the development would be?

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