This year’s real estate tax rate has climbed a half-cent from a proposed 87 cents per $100 of value as county supervisors go into their last budget work session Thursday night.
Supervisors are on track to a tax rate of 87.5 cents, down from last year’s 89 cents. Adjusting the real estate tax rate is the primary way the Board of Supervisors changes the amount of money in the government’s operational budget, and Loudoun’s long practice is to move the tax rate by half-penny steps.
Going into their Thursday budget work session, supervisors must trim $791,892 in spending to bring the tax rate back down to 87 cents. They can add up to $5.7 million before it climbs to 88 cents.
County Administrator Tim Hemstreet’s proposed budget with its 87-cent tax rate left $1.3 million in unallocated money. Supervisors also got a windfall of $6.7 million in revenues from interest on investments, which had come in higher than assumed in the draft budget. That meant supervisors could add up to about $8 million in spending before the tax rate would climb another half-cent step.
Across three budget work sessions so far, supervisors have added $8.7 million in spending. The majority of that was a $5 million addition to fund 35 more patrol deputies and one new lieutenant in the sheriff’s office. The sheriff also got funding for three more deputies as part of an initiative to comply with the state legislature’s 2020 Marcus-David Peters Act, establishing protocols for law enforcement responding to people experiencing a behavioral health crisis. A new Crisis Intervention Team Community Access Response or CITCAR unit will send co-responders along with sheriff’s deputies to respond to those calls during busy parts of the week.
They also added $1.6 million to add eight positions to Child Protective Services and nine positions to the public benefits team in the Department of Family Services.
Other new positions added during budget talks include a domestic violence probation officer, a business analyst and a supervising zoning inspector in the Department of Planning and Zoning, a docketing manager for the Circuit Court judges, an executive assistant for the Commonwealth’s Attorney’s office, a voter services manager for the Office of Elections, and a commercial real estate appraiser for the Commissioner of the Revenue.
Tonight, supervisors will hold their last budget work session. They are scheduled to consider the budgets for the departments of Housing and Community Development, Building and Development, and General Services, along with the office of county administration and non-departmental and Soil and Water Conservation District expenses.
Board of Supervisors meetings and budget work sessions are streamed live online at loudoun.gov/webcast.
Hemstreet’s proposed fiscal year 2024 budget, the starting point for supervisors’ annual budget deliberations, was funded with an 87-cent tax rate that was forecasted to bring in an estimated $1,094,267,200 of the county’s total $2,138,224,400in local taxes. Each half-penny of the tax rate is estimated to be worth roughly $6.5 million to county revenues. Those revenues are based on trends and forecasts of real estate values in the county for 2023. That tax rate was estimated to mean a $6,013 average homeowner tax bill. It also meant an estimated $119,382,400 growth in local tax revenues overall from the current fiscal year.
County supervisors, accustomed to booming tax revenues, this year are facing a tighter budget amid uncertainty in important revenue streams. On top of ongoing concern of a possible recession this year, new state law dictating a different formula for assessing data center values and shortcomings in the Dominion Energy grid have created uncertainty around tax revenues from the data center industry, which last year generated enough tax revenue to fund the entire county operating budget. County staff members and supervisors had already begun plans to hedge the county budget against over-reliance on revenues from data centers, seeking to avoid a shock to county finances caused by changes in a single business sector.
While it’s still uncertain what impact the General Assembly and Dominion will have on local revenues, county budget staff’s practice is to estimate revenues conservatively—state law also requires the county to have a balanced budget.
There are also new expenses in the budget, such as rapidly rising costs due to inflation. And for the first time, a half-penny of real estate tax revenues is set aside for the county’s housing trust fund.
At the end of the fiscal year, the county typically has unspent money in its general fund, often as much as $100 million or more. Much of that money is rolled over to another fiscal year to reduce the next year’s tax rate, and the rest put in the county’s fiscal reserve, used to replenish contingency funds or funds like the Conservation Easement Assistant Program, or used for one-time expenses.
Most recently, the county closed the books on fiscal year 2022 with $114.6 million left over; supervisors rolled over $40 million into the fiscal year 2024 budget, put $15 million into reserve, put $31.4 million into a contingency fund for Capital Improvement Program projects, used $25 million to create a new contingency fund for school capital projects, and added a half-million to expand a project to install public safety radio antennae on school buildings.
They spent the remaining $2.7 million on expenses like upgrading computer software, elections office expenses for a presidential primary election in March 2024, grants to businesses affected by the board’s decision to rename some roads, a project to study the lasting impacts of segregated schools in Loudoun County, and creating a countywide public arts plan.
Although Loudoun County government’s fiscal year 2024 runs a half-year ahead of the calendar year, beginning July 1, 2023, tax years align with the calendar year; county supervisors are setting a budget for fiscal year 2024, funded by tax rates they set for calendar year 2023.
Real estate tax bills are billed in two halves over the course of the year, in June and December. Tax rates are based on the Commissioner of the Revenue’s real estate assessments.
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