Homeowners could see their taxes go up and data centers could get a tax break next year as Loudoun supervisors wrestle with a tight budget year and concerns about an over-reliance on data center revenues.
The board’s finance committee has recommended directing County Administrator Tim Hemstreet to propose a budget based on a real estate tax rate five cents above the equalized tax rate at which the average real estate tax bill is the same dollar amount despite climbing property values. And it also directed him to plan for a five-cent cut in the county’s personal property tax rate, currently $4.20 per $100 of assessed value, in 2023.
That would be the first rate change since 1987 to the tax that affects both residents’ possessions like cars, campers and boats as well as businesses’ assets like the computer equipment inside data centers, the major source of data center revenue. And county budget staff members have warned for years that the county is becoming too reliant on that revenue, which now accounts for roughly a third of the county’s local tax revenues. They have advised supervisors that most Virginia counties get most of their revenues from real estate taxes, which are considered a more stable source of revenue than business taxes. And they are recommending supervisors not allow real estate taxes to shrink smaller than 51.5% of the county’s revenues, where it is now.
And estimates for construction and new growth, drivers of county revenue growth outside of tax increases, suggest that the equalized rate will not be enough to fund the county government’s needs, according to the budget staff.
Preliminary figures suggest that budget will mean a $291 annual real estate tax bill increase, to $5,732, on the average home assessment of $609,800.
The county’s real estate portfolio projections remain very much in flux. Between the Thursday before the meeting, when the county published meeting materials, and the actual five days later, the projected equalized rate dropped five cents based on new information from the Commissioner of the Revenue, indicating stronger growth in property values.
The final assessment figures from that office will be published in January.
“I think the numbers are going to keep moving all the way into January,” Hemstreet said. “What we haven’t seen any movement on is the amount of dollars of new construction, which is what would change that relative five penny [increase over the equalized rate] number.”
And a half-cent of the county’s tax rate is likely to be taken out of the picture for the general operating budget, being directed instead to the county’s Housing Trust Fund.
Finance committee Chairman Matthew F. Letourneau (R-Dulles) pushed for more aggressive cuts to personal property taxes.
“We’re really not changing those percentages much, so if there’s a way to accelerate that and still fund just about everything we would want to fund, I think that would be a better thing to do if we can do it,” he said.
The finance committee voted 3-2 to send that recommendation to the full Board of Supervisors, with Letourneau and Supervisor Caleb E. Kershner (R-Catoctin) opposed. The Board of Supervisors will take it up Dec. 7.