Dranesville District Supervisor Joan DuBois wanted to give her constituents the chance to ask their questions and hear some answers about the fiscal year 2006 budget for Fairfax County, so she organized a town meeting at Cooper Middle School Saturday morning.
Two dozen or so people attended, mostly county employees of some kind, questions in hand, focusing mostly on the burning issue of housing assessments, the increasing tax burden and the possibility that Fairfax County may lose some of its long-term residents as a result of the rising costs of living here.
“We’ve had a real challenge this year, and the board has accepted this,” said Fairfax County Chairman Gerald Connolly.
He reminded those in attendance that in 1975, the tax rate was $1.75 per thousand dollars of assessed value, and that the proposed rate for the FY 2006 budget is only $1.03. This represents a ten-cent tax cut from last year’s rate and may reflect an average reduction of $445 to a homeowner’s tax bill.
“The county will be returning more than half of the revenue collected in taxes to the tax payers -- somewhere around $200 million,” he said. “This is a desirable place to live. We wish it could be a more even growth pattern, but there are peaks and valleys.”
Ed Long, the county’s chief financial officer, began his presentation by saying something every homeowner in the room was thinking.
“We’re very overreliant on residential real estate taxes,” he said. However, because of the way the government is established in Virginia, “there are limits on the amount of flexibility we have in how to diversify the tax base.” The upcoming budget shows that an estimated 60.6 percent of the county’s revenues will come from real estate taxes.
The economy in Fairfax County expanded at a rate of 5.8 percent last year, he said, reflected in 25,000 new jobs and sales increases of between six and seven percent.
THE HOUSING MARKET remains one of the strongest in the nation, despite a slight increase in mortgage rates, which are expected to rise incrementally this year as well, he said.
“I don’t think the rise in mortgage rates will have an impact on the sales rate,” he said. “In a short period of time, we have become more reliant on residential real estate tax. Some of you remember when the tax rate was flat between 1992 and 2000,” he said. “We’re trying to project when trends will happen and how they take place, but it’s a difficult thing to do.”
He urged those in attendance to remember that this is an “economic cycle,” that things will “turn around. We’re going to continue to look into” whether residents in Fairfax County are “paying too much for their houses. We need to keep it in the back of our minds.”
Income has not kept pace with the increase in value of the homes, Long said. “The mean home value is currently 4.8 times the household income,” he said.
The commercial market, meanwhile, has decreased in revenue a total of 17.36 percent, which is a sign of a strong market.
“The residential side is so strong it’s driving down the commercial market,” he said. “We’ve had a record absorption rate. There are no huge amounts of square footage available for large firms, but new buildings have gone up, and 1.6 million square feet of space will be made available soon.” Currently there are 103 million square feet of office space in total in Fairfax County, the majority of that coming from the space in Tysons Corner, with the Reston/Herndon area coming in a close second.
IN ORDER TO protect the county should the economy take another downward turn, the county established the Revenue Stabilization fund, which takes in 3.9 percent of the disbursements given out by the county.
“As the economic cycle turns around there will be more places to go to and more tools to use to keep the economy afloat,” he said. The balance in the Revenue Stabilization Fund is expected to be around $49,188,000 by the end of 2005, he said, with an annual contribution of $6,629,193 from last year.
The board will “continue to be overreliant on real estate taxes, but the board will continue to struggle to balance taxes and income,” Long said in summary.
This is the sixth year for double-digit assessment increases in the Dranesville District, county executive Anthony Griffin said, the fifth year for that increase throughout Fairfax County.
“This board is committed to a high quality of life and services in the county, but also to helping give taxpayers some relief,” he said.
Other communities in Northern Virginia are also seeing a more than 20 percent increase in home values from last year, he said.
New for this year’s budget is a dedicated one cent from the tax rate being set aside toward storm water management, which could raise an estimated $17.9 million that could be used for public safety, protecting the environment and preserving home values. Setting aside that same amount could raise money for the affordable housing projects the county maintains, crucial during this time of ever-increasing home prices.
“The increase in county revenues is about 12.5 percent from real estate alone,” he said.
However, homeowners will still pay an added $500 this year over last year’s rate, but Griffin said he knew “Mr. Connolly will work to reduce that rate” before adopting the county budget later next month.
Most money that comes into the county goes out to the school system, which receives an estimated 52 percent of the county’s disbursements. In other words, the county gives out $1,561,619,263 to the county schools, more than half of the over $3 billion the county pays out in the course of a year.
The next largest recipient of money is the public service area, which takes in 12.8 percent of the money, or $385,543,408 for next year.
Following Griffin’s presentation, the floor was opened to questions from residents.
“REAL ESTATE is excellent if you’re looking to invest and sell the house but not if you want to stay here,” said Vincent Lee-Thorp of Great Falls.
His assessment went up 28 percent for FY 2006 in addition to the 28 percent it was raised in FY 2005. “I’ve done some calculations and if this continues, my house will be worth $90 million in 20 years,” he said. “My taxes will be more than $1 million per year. That exceeds, by a few dollars, my ability to pay.”
Within the next five or six years, he said, he will be forced to leave Fairfax County because it will be too expensive to live here.
“It is a concern of ours. The board is trying to find alternative sources of income, but it doesn’t have many choices,” Griffin said. “The state has control of what can be taxed and how much, and there are limitations put on taxes.”
People often come to the board with requests for services and expansion on programs, but without tax revenue those services will be reduced or cut altogether, he said.
“It’s a sad day when residents need to leave the county because they can’t afford to live in their homes,” said Merrily Pierce of McLean. “Maybe the one cent that has been dedicated to affordable housing isn’t enough. Maybe we need two cents from every dollar of the tax rate. We are losing affordable housing dwellings to condo conversions,” she said.
Currently, $25 million is available in the affordable housing trust fund, Griffin said, but most of that is dedicated to certain projects and obligations.
John Pierce asked how it is possible that the value of the land his home is on increased from last year, but the value of the house did not.
“It is difficult to split the land value from the improvements on the land,” Long said. “We’re mandated to value both the property and the structure. It’s not always easy to split, but when you sell the house, the buyer is not
going to look at both values. They’re going to look at the bottom line.”
Wade Smith asked the panel why there was no funding set aside specifically for trails and sidewalks.
“The ability to walk is something almost everyone would like to have,” he said. “This came out in the Park Authority’s assessment they did last year. It’s a top priority for residents in the county.”
He found that in the county’s transportation plan there is money set aside for trails and sidewalks, but “only 20 percent is unallocated and can be applied to smaller projects. The need still exists,” he said.
“I agree with you,” Griffin said, “we need to make sure connectors are there” for people to walk around in their communities. “In terms of trying to fund everything, we can’t fund all the things people would like us to do. Usually, if the money is not spent from the previous fiscal year, we do redirect about $1 million to be given to sidewalks and trails.”