Supervisors have set county’s budget staff aiming for a 3-and-a-half-cent real estate tax cut for next fiscal year.
In October, supervisors voted narrowly to instruct County Administrator Tim Hemstreet to prepare a draft budget at the equalized real property tax rate—the rate at which the tax bill on the average home value stays at the same dollar figure despite increasing property values. They also directed Hemstreet to give them options to increase the budget to 1 cent above that rate.
At that time, real estate values were expected to appreciate less than 1 percent. That meant an equalized rate of $1.11 per $100 of assessed value, a penny-and-a-half lower than the current rate, $1.125.
The county budget staff warned at the time that even at the current tax rate, the county was facing a projected shortfall of nearly $95 million to meet what it needs to pay for employee raises, growth in county departments, the first year of fixing the county’s classification and compensation system, and an expected $100 million increase in the funding request from the school system, as it prepares to grow enrollment by 2,000 students and open three new schools. At the equalized rate, the county was projected to fall short $107 million.
While those preliminary projections are intentionally conservative, Hemstreet has warned the board that the county was unlikely to close that gap before the board’s deliberations on the next budget in March.
But new projections from the Commissioner of the Revenue’s Office show real estate property values grew by around 3 percent this year. With the average piece of property now worth more, the equalized rate is now $1.09, 3-and-a-half cents lower than this year’s rate.
At that rate, and including unspent funds from last year’s budget, the projected budget shortfall comes to only $44 million, according to county budget staff’s estimates. Each penny on the tax rate is expected to bring in approximately $8.2 million in revenue next year.
On Wednesday, supervisors instructed Hemstreet to write a first draft of a budget at the equalized rate, with options to increase or decrease tax rate by 1 cent. Supervisor Matthew F. Letourneau (R-Dulles) likened it to having “what the administrator’s hit list and cut list are.”
“The reason I like having that is then we can judge for ourselves, based on the board’s priorities, what we want to add and what we want to subtract,” Letourneau said.
County Chairwoman Phyllis J. Randall (D-At Large) said she could not support a proposal that comes with a projected funding gap of $38.8 million from the school system’s expected funding request. The School Board has not yet voted on a budget request to the county; Superintendent Eric Williams is scheduled to unveil the first draft of the school system’s budget Tuesday.
Supervisor Ron A. Meyer Jr. (R-Broad Run) suggested providing options to cut the budget by 1 cent on the tax rate.
Supervisors approved that budget guidance 5-2-2, with Randall and Supervisor Koran T. Saines (D-Sterling) opposed; Supervisors Suzanne M. Volpe (R-Algonkian) and Kristen C. Umstattd (D-Leesburg) were absent.