Support a 1 Cent Tax Rate Cut

I support the recommendation of the Arlington County Civic Federation Revenues and Expenditures Committee to reduce the County’s FY 2017 real estate tax rate by 1 cent from 99.6 cents to 98.6 cents per $100 of assessed value.

Among the facts laid out in R&E’s resolution, are the following:

  • Arlington homeowners have seen a 5-year total increase of over $1,000 per year in additional taxes and fees.
  • Arlington County ranks 3rd in median property taxes out of 134 Virginia counties;
  • To realize the same amount of real estate tax revenue as last year, the County would have to cut taxes by 2 cents instead of the 1 cent tax reduction that R&E proposes.

In addition, the regional comparison in the Revenues section of the Budget Book shows that Arlington has the highest tax and fee burden of any county in Northern Virginia except the City of Falls Church. (Book 116, Web 124).

While R&E is seeking tax relief on behalf of residential taxpayers, the effect of a tax rate reduction would fall equally on commercial taxpayers, because commercial enterprises still comprise almost half the real estate tax base.

The County Manager touts the reduction in the commercial vacancy rate by 1.6 percent in the past year, with a concomitant increase in real estate revenue of $5.4 million.

To accomplish this Arlington Economic Development (AED) hired 4 additional staff for its Business Investment Group (BIG) to retain and recruit new commercial tenants at a cost of about $500,000. The Budget Book reports the retention or addition of 5,000 jobs in 2015 half of which were attributable to the retention of one large employer, Corporate Executive Board (web 673).

But at more the 20 percent the commercial vacancy rate is still double the historic average. To attract more commercial tenants, the County Manager proposes $1.5 million in one-time grants for small startup companies. But that is just a drop in the bucket compared to what neighboring jurisdictions are spending.

For example, the County Manager’s Message to the County indicates that PG County has a $50 million incentive fund that awards $7-$11 million per year to small and medium businesses. DC awards $1 million modernization grants along with a tax rebate program that provides up to $5 million in total incentives per eligible business (Book 26, Web 34).

The only way Arlington can compete with those giveaways is to reduce the tax rate to keep its commercial tax base.

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