The Fiscal Year 2021 advertised budget presented by County Executive Bryan Hill to the Fairfax County Board of Supervisors on Feb. 25 addresses many of the board’s top priorities, bolstering investments in affordable housing, public libraries, and early childhood education services.
However, that support comes at the expense of property owners with a potential increase of three cents to the real estate tax rate.
“This year’s proposed strategic plan and budget is a positive sign that the county and board are on the same page as the community,” Board of Supervisors Chairman Jeff McKay said. “The budget is a success for FCPS and for expanding affordable housing to every corner of Fairfax. As chairman, I am responsible for all of our residents’ needs…I also am constantly working to balance these long-term needs with our residents’ ability to pay.”
One full cent of the proposed increase would go toward affordable housing penny fund, which has gotten a half-cent from the real estate tax since FY 2010 when the Board of Supervisors cut its annual funding to balance the budget.
A penny on the real estate tax rate generates approximately $26.5 million. Combined with the existing half-cent, it would triple the amount of funding dedicated to affordable housing with almost $40 million in FY 2021, according to Fairfax County’s projections.
The other two cents added to the real estate tax rate would go into the county’s general fund for other board priorities.
If adopted, the proposed tax rate increase would bring Fairfax County’s rate to $1.18 per $100 of assessed value, raising annual tax bills by approximately $346 on average.
Springfield District Supervisor Pat Herrity, the lone Republican on the board after November’s elections, expressed disappointment at the proposed tax rate increase, saying the county’s reliance on real estate taxes is “really unsustainable.”
Last year’s board of supervisors directed county staff to identify the equivalent of an additional cent on the real estate tax for affordable housing in budget guidance for FY 2020 and FY 2021 that was approved on Apr. 30, 2019.
The directive came in response to a communitywide housing strategic plan that Fairfax County started developing in 2016. Based on projected job and population growth, the county staff and advisory committee that put together the first phase of the plan determined that the county needs to produce approximately 15,000 new homes affordable to households earning up to 60 percent of the area median income over the next 15 years.
An affordable housing resources panel assembled in October 2018 for the plan’s second phase recommended to the board of supervisors on Mar. 12, 2019 that the county add the equivalent of one cent on the real estate tax to its penny fund to meet a goal of at least 5,000 new affordable units in 15 years.
However, raising the real estate tax rate to fund affordable housing could be counterproductive, since county data suggests low-income communities are seeing the highest increases in property tax assessments.
According to the Fairfax County Department of Tax Administration, residential properties make up almost 73 percent of the county’s taxable base. Commercial and industrial properties take up 19.7 percent, and the remaining 7.4 percent belongs to apartments and rental townhomes.
Countywide, residential real estate assessments are up 2.65 percent on average with an average assessment for all homes of $580,272 over 2019, when the average assessment was $562,601.
Almost 79 percent of residential property in Fairfax County increased in value over the past year due to equalization, with the Lee, Mason, and Mount Vernon Districts experiencing the biggest hikes.
While single-family detached homes have the highest average assessment at $692,409, they saw just a 2.36 percent increase, whereas townhouse and duplex properties went up by 3.43 percent and condominiums by 4.36 percent over 2019.
Real estate assessments are affected by sales, property characteristics and improvements, new construction and rezonings, and other economic and market factors.
“I am concerned that the largest increase in real estate assessment values is in our most market-rate affordable communities,” McKay said. “This exacerbates our affordable housing challenge, and we must be mindful of that.”
Under the Dillon rule, Virginia limits local governments to powers expressly granted to them by state law. Unlike cities and towns, which can tax meals, hotels, cigarettes, and other products and services on their own, counties need state or voter approval to impose most non-property taxes.
Fairfax County sought to introduce a 4 percent meals tax primarily intended to fund schools, but voters rejected a referendum on the issue on Nov. 8, 2016.
“The Commonwealth’s distinction between cities and counties no longer makes sense,” Fairfax County Federation of Citizens Associations president Bill Barfield said. “…Now’s the time for counties to also have that diverse taxation authority. Now is the time to relieve Federation community members and all Fairfax homeowners of that undue real estate tax burden.”
Legislation to give counties the same or similar taxing authority as towns and cities is currently being considered by the General Assembly.
Del. Vivian Watts (D-39th) introduced a bill to equalize the taxing authority of cities and counties for cigarettes, admissions, transient room rentals, meals, and travel campgrounds, but the House defeated it on Feb. 25 in favor of Senate legislation that just modifies existing restrictions.
Introduced by State Sen. Emmett Hanger Jr. (R-24th), S.B. 588 lets all counties tax cigarettes up to 40 cents per pack and imposes that limit on cities and towns, which currently have no ceiling on their permitted cigarette tax rate.
The bill authorizes all counties to impose up to a 10 percent admissions tax rate, a 6 percent or lower meals tax on prepared food and beverages, and a transient occupancy tax up to 5 percent.
It also eliminates the requirement that counties hold a referendum before instituting a meals tax, though they would have to wait until July 1, 2022 to do so if there has been a failed referendum within the past two years.
Hanger’s bill passed the Senate by a 24-15 vote on Feb. 10 and the House 58-40 on Feb. 24. It has an effective date of July 1, 2021, so it will not affect Fairfax County’s FY 2021 budget.
In the meantime, Hill proposes diversifying the county’s tax base by introducing an admissions tax, one of the few non-real estate taxes Fairfax County is already allowed to impose.
Virginia authorizes 13 counties, including Fairfax, to levy admissions taxes up to 10 percent of the amount charged for admission to certain events, including movies, theater performances, concerts, and sporting events, as well as entrance fees to museums, gardens, and zoos.
The advertised FY 2021 budget proposes a rate of 4 percent that would only apply to the sale of movie, theater, and concert tickets and dedicates the $2.31 million that the tax is projected to generate in its first year to a contributory fund for arts and tourism.
The admissions tax revenue would free Fairfax County to direct general funds to initiatives like an effort to boost Fairfax County Public Library hours and collections.
Led by FCPL Board of Trustees chair Miriam Smolen, the Coalition to Expand Library Access is seeking funding so the library system can operate up to 65 hours a week with all full-service sites open from 10:00 a.m. to 9:00 p.m. on Monday, Tuesday, and Wednesday and from 10:00 a.m. to 6:00 p.m. for the rest of the week.
The proposed FY 2021 budget covers the first phase of an envisioned three-year plan, allocating $1.15 million and 12 new positions to add and standardize hours at 11 of the county’s 22 public libraries.
The expansion would take effect on July 1 at all eight regional libraries and Patrick Henry, Kings Park, and Kingstowne, which are the county’s busiest community libraries.
The full three-year plan is expected to increase FCPL’s budget by about $3.3 million.
“Today, County Executive Bryan Hill and the Board of Supervisors agreed that library access is a priority in Fairfax County,” Smolen said in a statement that thanked Hill, McKay and several other supervisors for supporting the effort to reinforce public library funding.
Hill’s budget presentation was accompanied by a report on his proposal for Fairfax County’s first-ever countywide strategic plan.
Developed by county staff with public input from community conversations, outreach sessions, focus groups, and an online survey that received 17,355 responses, the countywide strategic plan integrates all county initiatives into a holistic vision for the next 10 to 20 years.
The proposed countywide strategic plan identifies nine priority outcome areas that were used as a framework for the FY 2021 advertised budget:
• lifelong education and learning
• health and environment
• mobility and transportation
• safety and security
• cultural and recreational opportunities
• housing and neighborhood livability
• empowerment and support for vulnerable residents
• economic opportunity
• effective and efficient government
Education and learning receives the most substantial funding in the proposed $4.6 billion general fund budget, which gives Fairfax County Public Schools $85.72 million more than FY 2020 for a total transfer of $2.4 billion.
That increase falls $4.18 million short of the $89.7 million requested by FCPS in an advertised budget adopted by the school board on Feb. 6, but the county believes the school system can make up the difference with an anticipated increase in funding from the state.
On top of the FCPS funding, the budget allocates $1.74 million and three positions to a new fund for early childhood and school readiness programs. The money would support education services for 72 at-risk children up to 5 years old and create a family child care network of providers.
The FY 2021 advertised budget adds $25 million for early childhood facilities to a county bond referendum that will be on the ballot in November, creating room for more program slots in the future.
The Department of Neighborhood and Community Services could get $700,000 and four staff positions to support three new School-Age Child Care rooms, two at Clearview Elementary School and one at the Northwest County Elementary School under construction in Herndon.
While the new funding for early childhood education and care would be welcome, it will barely make a dent in the capacity issues facing the county’s pre-kindergarten program, which has a wait-list of about 6,000 children, says Fairfax Education Association president Kimberly Adams.
“We really need to truly expand access for our youngest students to more pre-K classrooms,” Adams said. “That’s going to require infrastructure. It’s going to require additional staffing. It’s going to be a huge budget implication, but making a start on it now…is a critical first step.”
Other notable items in the advertised budget plan include:
• Full funding for Fairfax County employees’ compensation program, including a 2.06 percent market rate adjustment
• Consolidation of the Office to Prevent and End Homelessness with the Department of Housing and Community Development
• $5 million and 13 positions for the Fairfax County Police Department body-worn camera program, which the Board of Supervisors approved for full implementation on Sept. 24
• $920,000 and 7 positions to address FCPS public health nurse shortage, the first step in a six-year proposal to bring the nurse-to-student ratio up to 1:2,000
• $460,000 and three new positions for environmental projects and planning, including support staff for the Office of Environmental and Energy Coordination
• $380,000 and one position for the Department of Neighborhood and Community Services to expand its Opportunity Neighborhood initiative into the Centreville/Chantilly area
The full FY 2021 advertised budget plan, along with a schedule of town hall meetings planned for each magisterial district, can be found at fairfaxcounty.gov/budget.
The Board of Supervisors will post the advertised real estate tax rate for FY 2021 on Mar. 10.
Public hearings on the budget are scheduled for Apr. 14 through 16. The board will mark up the package and determine a final tax rate on Apr. 28 with a May 5 deadline to adopt an FY 2021 county budget.
Invest in Fairfax chair David Edelman says his coalition, which consists of county employees, families, community organizations, and other advocates for the county’s public services and its workforce, saw a lot to be pleased about in the proposed budget based on Hill’s presentation.
“I think if we need to do the three-cent tax increase to fund the program, we should,” Edelman said. “…We also really appreciate how the schools and the county are working together to come very close on the budget, and I think that, overall, the county has worked a great deal to fund our priorities.”