Loudoun Approves Jump in Tax Rate

Housing Downturn, Schools' Growth Prompt 19% Rise

The Loudoun County Board of Supervisors, struggling with a sudden downturn in the housing market and a population that grows ever larger, approved a 19 percent increase in the property tax rate yesterday that will send the average bill soaring by more than $300 this year.

Driven by a new Democratic majority, the board narrowly approved a $1 billion spending plan that requires an 18-cent increase in the tax rate to $1.14 for each $100 of assessed value. The plan is expected to result in a 6.5 percent increase in the average homeowner's tax bill. The budget year starts July 1.

The tax-rate increase is necessary to make up for an unexpected drop in assessments across the county, as well as the rest of the Washington area, that has resulted in a $25 million shortfall this year. It is also to accommodate the needs of the fast-growing Loudoun school district, which is expected to swell by more than 3,000 students in the fall, officials said.

The board's two Republicans and Chairman Scott K. York (I) supported a more modest increase. The approved tax rate and increase in the average bill is an untenable amount for a population grappling with higher gasoline and utility costs and an ailing economy, York said.

"What I am trying to do is simply help those that are in desperate straits," York said, after reading a series of e-mails from residents saying they would not be able to afford the increase. "Unfortunately, the averages don't even begin to tell the story. . . . These people are in a world of hurt."

York had instead proposed withdrawing $36 million from the county's rainy day fund and instituting a tax rate of $1.10, which would have yielded an increase in the average tax bill of about $175.

However, in a memo to supervisors Monday, County Administrator Kirby M. Bowers warned that dipping into the $108 million reserve could threaten Loudoun's fragile credit rating. That in turn could increase by millions of dollars the amount of interest that banks charge on the county's debt.

Fairfax County officials are considering drawing on their reserves to bridge a budget gap of at least $152 million, also exacerbated by the decline in housing values. However, Bowers noted, Fairfax has had a top credit rating for three decades, while Loudoun has had one only since 2004.

"The approaches we use to manage through this period will be watched very carefully by all three of the rating agencies," Bowers wrote.

Withdrawing from the reserves would be a one-time fix that could come back to haunt the county if the economy worsens, said the board's vice chairman, Susan Klimek Buckley (D-Sugarland Run).

"I fear that next year we'll be sitting here looking to raise taxes -- being forced to raise taxes -- just to repay the rainy day fund," she said. "This is a tempting answer, but I was not elected to make a series of annual decisions. Rather, I was elected to make decisions in the best interests of Loudoun's citizens over the course of my term."

Buckley joined York and the board's Republicans in voting against the budget. However, she supported a higher tax rate than the one approved. A former schools activist before being elected to the board last year, Buckley had proposed a tax rate of a little more than $1.15, which would have delivered an additional $10 million to the school system.

However, it still would have resulted in significantly less than the $104 million increase the school district had requested. The approved budget gives schools about half their requested increase.

In part, Loudoun's problem is the pace of growth. Although growth has slowed since 2004, when Loudoun was declared the nation's fastest-growing large county by the U.S. Census Bureau, the county has struggled over the years to keep up by investing enough in public safety and its overburdened schools.

This fall, the school system is expected to grow by 3,270 students, enough to nearly fill a high school, a middle school and an elementary school, district officials have said.