Are real estate property taxes too high this year?
That question came before the Board of Supervisors during Monday’s annual public hearing on the “effective tax rate increase” for FY 2003.
After a public hearing, supervisors deferred decision on whether to reduce the tax rate until April 29, when they will formally adopt the FY 2003 budget.
Virginia law requires that when the “effective tax rate,” the tax rate times the value of an individual home, rises more than one percent in a year, the Board of Supervisors has to first hold a public hearing, and then vote to approve the increase in the effective tax rate.
This year, the average taxpayer who owns a home in Fairfax County will be paying real estate tax bills that have increased by about 15 percent since last year — well over one percent.
While the rate of taxes on their homes — $1.23 per $100 of market value — has stayed the same, tax bills have gone up dramatically because of a 16.27 increase in the amount of assessments, driven by a rising real estate market.
The county attributes 11.72 percent of the increased value of real estate to equalization, but taxpayers will feel the effect in bills that are an average of 15.14 higher than last year.
When the tax rate is multiplied by a market value that includes higher assessments, the result is a higher bill for 95 per cent of the homeowners in the county.
The percentage of increase varies around the county from a low of 14.11 percent in McLean to a high of 19.91 in Centreville. Residents from both areas came to the Government Center Monday to protest the increase.
DURING AN ADVERTISED 3:30 p.m. hearing that started about 45 minutes late, supervisors listened to public reaction to the second consecutive year of double-digit increases in the average tax bill. For Dranesville District residents, this is the third year of double-digit increases.
While two of 21 speakers said they favored keeping the higher rate; the other 19 favored a reduction.
Many specified the rate should be cut to $1.06 per $100, an amount questioned by Board Chairman Kate Hanley. She said it would take a reduction to $1.10 per hundred to keep the “effective tax rate” from rising for most citizens.
At that rate, Fairfax County would lose $147 million in revenue that would come in at the present tax rate of $1.23. At a tax rate of $1.06, the county would lose $197 million in revenue, according to Budget Director Susan Datta.
But overwhelmingly, speakers asked for a decrease in the tax rate.
“Bite the bullet. Reduce spending,” said James Baker of Alexandria, after protesting what he said is biased methodology by tax assessors.
“Any action that this board takes, short of lowering the tax rate to $1.10 per $100, is an action that results in a real property tax increase,” said former School Board member Carter Thomas of Fairfax Station.
“I don’t have to defend tax cuts. The Board of Supervisors has to defend spending increases,” he said.
“I ask that this board really prioritize, give us a tax rate decrease, and reduce spending,” Carter said.
Referring to the loss in revenue that would come from a tax rate cut to $1.10, Gerry Connolly (D-Providence) said, “$147 million is real money.”
He asked Carter to identify cuts in spending for schools, which now face a $70 million budget shortfall.
“My salary has not doubled, but the property tax has,” Thomas said. “There is spending going on in other areas than education.”
“Lower the tax rate so it is revenue-neutral to the citizens,” he said, encouraging the board to examine its spending priorities.
CUTTING THE TAX RATE to $1.06, said Taxpayers Alliance president Arthur Purves of Vienna, “is not a tax cut. It only prevents a tax increase.” Purves hammered his central philosophy: spending by Fairfax County should increase in proportion with increased population and inflation, rather than increased revenue.
In FY 2003, Fairfax County’s revenue is expected to increase by seven percent. Its transfer to the public schools will also increase by seven percent.
Revenue from residential real estate will increase by 57 percent. The amount of the support to schools will also increase by 57 percent, in the proposed budget.
John Theon of McLean asked supervisors to “refrain from the temptation to reap a windfall at the expense of the citizens.
“You act as though you’re entitled to spend other people's money without restraint.”
But Robert Griendling of Fairfax asked the board to maintain the tax rate at the current level of $1.23. “The overwhelming majority [of taxpayers] are willing to pay for the extraordinary quality of life” in Fairfax County, he said.
Neal McBride of Springfield said he supports increasing revenue, “if not by increasing the tax rate, then by expanding the funding sources themselves.”
McBride proposed implementing a formal cash proffer system and aggressively seeking public private partnerships for education, parks, recreation, and public safety. He also suggested increasing the general bonding cap to $225 million per year.
“Direct your tax administrators to pull out all stops on collecting taxes owed, not only by going after delinquent taxpayers, but also by enforcing the mandate that all owners pay taxes on the full 100 percent market value of their properties,” he said.
That would bring in $200 million a year, McBride said, “since so many properties like mine are assessed at only 75 to 85 percent of their true value.
At that, Connolly asked McBride for his home address.