Seems to Me: How Loudoun County is going to raise your real estate taxes

That’s right, Loudoun County is planning to raise your Real Estate Taxes in July 2022 while reducing the taxes data centers pay. This is not my opinion but, planning guidance given to the County staff in preparation of the FY2023 Budget by the Board of Supervisors Finance Subcommittee.

This plan was developed during two meetings, Oct. 12, and Nov. 9, 2021, after at least three hours into the meetings, when no one other than a few reporters were in the audience.

Incidentally, the County has an excellent website where you can view the video or audio of the meetings.  I urge you to confirm what I am about to tell you by viewing the meeting videos yourself.

Before we start, you will need to understand how the Real Estate and Personal Property Tax Rates are established. The Real Estate Tax rate is determined by the County staff by estimating the current assessed value of all the real estate in the County, and then applying a dollar rate per $100 of assessed valuation.

The current number is $.98 per $100 of assessed valuation. That means if your property is valued at $500,000, you will pay $.98 times 5,000 or $4,900 in taxes. When real estate values go up, as they are doing now, the Real Estate Tax Rate is adjusted downward to let’s say $.94 per $100 of assessed valuation to come up with the same tax revenue. This is called the Equalized Tax Rate. Any planned tax rate above the Equalized Tax rate will end as a tax increase on your property.

The Personal Property Tax Rate (the other major component of County revenue) is currently fixed at $4.20 per $100 of assessed valuation.  Personal Property in the County includes, cars, trucks, aircraft and business equipment. This includes equipment in data centers. In fact, data centers supply approximately 90 percent of Personal Property revenue. That 90 percent number is a very important factor in the Loudoun County tax revenue stream.

It seems that the BOS guidance given to the Staff was determined by the fact that data center revenue is now a large part of the County’s revenue. Twenty years ago, real estate taxes were about 90 percent of the total with 10 percent from other miscellaneous sources. Now data centers provide about 40 percent of the revenue with real estate at 50 percent and 10 percent from other sources.

The Staff is concerned that most communities have historically relied on the vast majority of their revenue from real estate taxes, and we do not. In order words, they are concerned that the data center revenue might go away, and they would have to go back to real estate taxes as the main source.

So the plan proposed by the Finance Committee is to put a floor or minimum of 51.5 percent on the real estate taxes and reduce the Personal Property tax rate to $4.15 or $4.10 (which has never been done before) to “rebalance” incoming revenue.

In addition, the Finance Committee wants to add additional an $.05 to the equalized rate which will be approximately a 5 percent increase in real estate taxes. So do you get it? The BOS wants to increase your taxes by at least 5 percent next FY while reducing the data centers’ taxes.

All of this is based on the assumption that the data centers will go away because of technological advances. This is an extremely unlikely situation in that data center companies have invested hundreds of millions of dollars in buildings, equipment and electrical and fiber optic infrastructure which they would upgrade with the latest technology in the future. Incidentally, the data centers are on the “Honor System” in reporting what equipment they possess, it is never physically checked out.

In my humble opinion, data centers have made a rational business decision to locate in Loudoun County, and we should take advantage of it because Loudoun County provides the infrastructure (power, water, roads, etc.) and house the employees to run the centers. Not only that, we have allowed the data centers to cover in most cases, virgin farm land with massive concrete block buildings.

We have essentially a gold mine on our land and it should be taxed according to the rules in place when they moved here. I don’t hear of any complaints from the data centers. They are making billions of dollars in internet business. Why is the BOS thinking of limiting this source of income, it doesn’t make sense? Who cares if they provide 60 or 70 percent of the County’s revenue?

Finally, in viewing the meeting videos, I didn’t hear any comments or concern from the BOS in the meetings over the current state of historic inflation of the U.S. economy.

Let me understand this, the BOS wants to raise real estate taxes by at least 5 percent while people on fixed incomes in the county are seeing price double digit increases in gasoline, food, heating, housing, etc. Even the Dollar Tree store is now a $1.25 Dollar Tree store. What are they thinking?

According to the BOS and County staff, the schools are fully funded and all the Staff Priority One projects are covered. The 2023 FY budget increases taxes while funding all the County’s requirements. Incidentally, there was no mention of the fact that public school enrolment has decreased by thousands.  It looks like the BOS and County bureaucracy has taken care of itself at the expense of the citizens.   

That’s right, Loudoun County is planning to raise your Real Estate taxes in July 2022 while reducing the taxes data centers pay. This is not my opinion but, planning guidance given to the County staff in preparation of the FY2023 Budget by the Board of Supervisors Finance Subcommittee.

This plan was developed during two meetings, Oct. 12, and Nov. 9, 2021, after at least three hours into the meetings, when no one other than a few reporters were in the audience.

Incidentally, the County has an excellent website where you can view the video or audio of the meetings.  I urge you to confirm what I am about to tell you by viewing the meeting videos yourself.

Before we start, you will need to understand how the Real Estate and Personal Property Tax Rates are established. The Real Estate Tax rate is determined by the County staff by estimating the current assessed value of all the real estate in the County, and then applying a dollar rate per $100 of assessed valuation.

The current number is $.98 per $100 of assessed valuation. That means if your property is valued at $500,000, you will pay $.98 times 5,000 or $4,900 in taxes. When real estate values go up, as they are doing now, the Real Estate Tax Rate is adjusted downward to let’s say $.94 per $100 of assessed valuation to come up with the same tax revenue. This is called the Equalized Tax Rate. Any planned tax rate above the Equalized Tax rate will end as a tax increase on your property.

The Personal Property Tax Rate (the other major component of County revenue) is currently fixed at $4.20 per $100 of assessed valuation.  Personal Property in the County includes, cars, trucks, aircraft and business equipment. This includes equipment in data centers. In fact, data centers supply approximately 90 percent of Personal Property revenue. That 90 percent number is a very important factor in the Loudoun County tax revenue stream.

It seems that the BOS guidance given to the Staff was determined by the fact that data center revenue is now a large part of the County’s revenue. Twenty years ago, real estate taxes were about 90 percent of the total with 10 percent from other miscellaneous sources. Now data centers provide about 40 percent of the revenue with real estate at 50 percent and 10 percent from other sources.

The Staff is concerned that most communities have historically relied on the vast majority of their revenue from real estate taxes, and we do not. In order words, they are concerned that the data center revenue might go away, and they would have to go back to real estate taxes as the main source.

So the plan proposed by the Finance Committee is to put a floor or minimum of 51.5 percent on the real estate taxes and reduce the Personal Property tax rate to $4.15 or $4.10 (which has never been done before) to “rebalance” incoming revenue.

In addition, the Finance Committee wants to add additional an $.05 to the equalized rate which will be approximately a 5 percent increase in real estate taxes. So do you get it? The BOS wants to increase your taxes by at least 5 percent next FY while reducing the data centers’ taxes.

All of this is based on the assumption that the data centers will go away because of technological advances. This is an extremely unlikely situation in that data center companies have invested hundreds of millions of dollars in buildings, equipment and electrical and fiber optic infrastructure which they would upgrade with the latest technology in the future. Incidentally, the data centers are on the “Honor System” in reporting what equipment they possess, it is never physically checked out.

In my humble opinion, data centers have made a rational business decision to locate in Loudoun County, and we should take advantage of it because Loudoun County provides the infrastructure (power, water, roads, etc.) and house the employees to run the centers. Not only that, we have allowed the data centers to cover in most cases, virgin farm land with massive concrete block buildings.

We have essentially a gold mine on our land, and it should be taxed according to the rules in place when they moved here. I don’t hear of any complaints from the data centers. They are making billions of dollars in internet business. Why is the BOS thinking of limiting this source of income, it doesn’t make sense? Who cares if they provide 60 or 70 percent of the County’s revenue?

Finally, in viewing the meeting videos, I didn’t hear any comments or concern from the BOS in the meetings over the current state of historic inflation of the U.S. economy.

Let me understand this, the BOS wants to raise real estate taxes by at least 5 percent while people on fixed incomes in the county are seeing price double digit increases in gasoline, food, heating, housing, etc. Even the Dollar Tree store is now a $1.25 Dollar Tree store. What are they thinking?

According to the BOS and County staff, the schools are fully funded and all the Staff Priority One projects are covered. The 2023 FY budget increases taxes while funding all the County’s requirements. Incidentally, there was no mention of the fact that public school enrolment has decreased by thousands.  It looks like the BOS and County bureaucracy has taken care of itself at the expense of the citizens.   

If you do nothing about this situation, you will pay the price in increased real estate taxes. You can email the BOS and speak out at their meetings. It’s easy, call ahead and schedule a spot on the speakers list. Just say you are opposed to this tax increase and ill-conceived revenue plan.

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