NORTHERN VIRGINIA TRANSPORTATION
2 N.Va. Counties Reject Tax Hike
Tuesday, December 4, 2007
Prince William and Loudoun counties have decided not to impose higher taxes on commercial office buildings and shopping centers, reducing the amount of money made available to them by the General Assembly to pay for road and transit projects.
Fairfax and Arlington counties are moving forward but could tax themselves at a lower rate than lawmakers first considered. The increase in the commercial tax was a key part of the landmark agreement reached this year after a political battle in Richmond between Republicans and Democrats over how best to pay for vitally needed road and mass transit improvements in Northern Virginia and Hampton Roads.
The differences in approach reflect the internal politics of each jurisdiction. Fairfax, for example, receives less money per pupil from the state than other counties and needs additional revenue sources to pay for transportation projects.
"It's working exactly as we expected," Del. David Albo (R-Fairfax) said of the commercial tax plan. "Everyone can do what's best for their jurisdiction."
Lawmakers voted to allow Northern Virginia governments to levy a surtax on office and retail buildings. If local officials in Arlington and Fairfax approve the tax increase, it could raise up to $147 million annually for transportation projects, but it now appears the amount might be lower.
The state-brokered plan allows local governments to impose a surcharge of up to 25 cents for each $100 in assessed valuation on commercial buildings. The state previously required governments to impose the same rates for residential and commercial properties. Business leaders urged lawmakers to set the rate at 25 cents to ensure that enough money would be raised to help get traffic flowing because, they said, congestion was sapping economic vitality in urban areas.
The most serious concerns about the tax are being voiced in Prince William, which is reeling from a projected $51 million budget deficit caused by a decline in property tax revenue related to the slumping real estate market. Although the growing county has huge transportation needs, some Prince William officials are balking at implementing the commercial tax, saying it might hurt their effort to attract business and jobs.
"There's no interest at this time from our board" in implementing the higher tax for transportation, said Dana Fenton, the county's director of legislative affairs. "It would hurt our competitive position against outlying counties" such as Stafford and Fauquier, which were not permitted by legislators to impose the additional tax, he said.
Loudoun, where officials have challenged the constitutionality of the transportation tax and fee increases in the state Supreme Court, has also decided not to impose the tax. The Board of Supervisors that takes office next month could reverse that.
"The current board has stated clearly that it has no interest in doing that," said Ari Sky, Loudoun's budget officer. "It's a question of the tax burden. . . . The board believes that unrepresentative taxation is contrary to the state constitution."
Alexandria is moving cautiously. The City Council recently decided to create a committee to consider implementing the tax instead of proceeding quickly to establish it. Mayor William D. Euille (D) said residents need a chance to "weigh in" on the tax. He will appoint a five-member committee to review it, which will include transportation advocates and business leaders.
Fairfax forged ahead of the rest of the region in August, moving to implement the tax next year. But county officials recently reduced their expectation of the income the tax could generate.