Much of N.Va. to Raise Tax Rates
Monday, April 16, 2007
After seven fat years, elected officials in Northern Virginia are grappling with their first lean one, and tax increases are looming almost everywhere.
Swollen by surging real estate assessments, area budgets have ballooned, rising sharply from a cumulative total of more than $3.7 billion in 2000 to more than $6.3 billion for the coming fiscal year. Loudoun County's budget tripled in that period, Alexandria's rose 76 percent, and Fairfax County surpassed the $3 billion mark.
Now, however, with the housing market in a slump, politicians are caught between raising taxes or reducing high-quality services that residents have come to expect. Even though many officials are up for reelection this fall, they are choosing tax increases.
"The good times are over," said R. Scott Silverthorne, a nine-term veteran of the Fairfax City Council, which voted Tuesday to raise real estate and personal property tax rates. "This is the first time in recent memory that we have had a slowdown in the real estate market. This is a challenging era. It's the most difficult budget we have had in 16 or 17 years."
Municipal revenue is more volatile in Northern Virginia than elsewhere in the region because Maryland and the District get more of their budgets from income taxes and because they reassess properties only every three years, which has the effect of moderating market peaks and valleys. In addition, the District and Maryland have laws that place caps on property assessments, which means a booming real estate market gives them more money but not as much as in Virginia.
Almost all Northern Virginia counties and cities -- except Fairfax County -- are raising taxes. The cities of Alexandria and Falls Church are signaling property tax rate increases. Loudoun's rate is climbing 7 cents. Arlington County will not raise its property tax rate, partially because of increases in commercial assessments, but officials are proposing a new utility tax on residences.
Even officials in tax-averse Prince William County are swallowing hard and raising taxes after hearing from scores of residents urging them to keep the level of services high. After a bruising battle that included a debate over whether to shut community pools one day a week, county officials voted to give themselves the option of raising taxes when they adopt a final budget this spring.
"There is no way we can operate this budget without a tax increase," said Supervisor John D. Jenkins (D-Neabsco), who said he thought taxes should rise even more than the 78.7 cent rate the board approved, up from 75.8 cents for each $100 of assessed value. Even most of the Republicans on the board favored raising the rate to cover police, fire and education services, although they looked for other places to make cuts.
The one noticeable exception is the area's largest county, Fairfax. The county, in which all supervisor seats are up this fall, probably will avoid tax increases because its budget was bolstered by $27 million in unspent funds that it carried over from the previous year. This year's budget also got a boost from the continued growth in the value of apartment buildings and commercial and office property.
Elected officials in Fairfax and elsewhere say increases won't hurt taxpayers much because actual bills have fallen as home assessments have declined. Some have trumpeted the rate increases as triumphs of careful fiscal management.
"To cut taxes in a bad year is an absolute accomplishment," said Prince William Board of County Supervisors Chairman Corey A. Stewart (R), who is serving a one-year special term and faces voters Nov. 6.
Area officials say that the infusion of cash in the first half of the decade was hardly a gravy train but represented a badly needed fiscal recovery from the 1990s, when the real estate market sagged and governments found themselves without the money for critical infrastructure improvements, leaving governments and schools operating in decaying and overcrowded buildings.