Data Centers Only Bright Spot in Local Tax Revenue Forecast

Less than a month into the fiscal year, as is customary, supervisors on the county finance committee and county staff members have begun work on the next annual county budget—one that will be shaped by the COVID-19 pandemic’s impacts on the economy and tax collections.

The county government’s main sources of funding—real estate and personal property tax revenues—could both see significant dips as the county and country navigate the pandemic’s fallout. In particular, said Assistant Director of Management and Budget Caleb Weitz, commercial real estate values could be vulnerable. In addition, homes prices and property values are both expected to take a dip in the next fiscal year while unemployment is expected to stay up.

But one source of tax revenue is still growing at record rates: data centers.

In 2019, according to county staff members, Loudoun’s data center industry had one of its biggest years yet, with an estimate 6.4 million square feet of space added. Weitz said that amounted to about a 50-percent increase in square footage.

The $4.20 per $100 of assessed value tax that the county levies on the computer equipment, including the acres of server racks inside Loudoun’s data centers, accounts for nearly $395 million in the current fiscal year’s $1.7 billion in local tax revenues. Next year, Weitz said, that number could be $130 million to $200 million higher yet.

Although revenue projections a year out are very preliminary and Loudoun’s budget picture unclear, supervisors have already begun to lay out where they may like to spend tax dollars. Among those are a veterans’ court akin to the current mental health docket or drug court, expanding mental health services, adding resources to the Department of Economic Development, and taking another look at body-worn cameras for sheriff’s deputies.

The last time that came to the Board of Supervisors, in 2016, Sheriff Michael L. Chapman and then-Commonwealth’s Attorney and now Judge Jim Plowman advised that body-worn cameras come with significant costs—as much as $1,200 per camera per year for data storage, maintenance, and replacement, along with a need for more attorneys to manage the increased workload of reviewing footage. Chapman at the time also said at the time he would not release all footage to Freedom of Information Act requests.

This article was updated Aug. 8 at 6:30 p.m. to correct an error in Caleb Weitz’s title.

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