Others moved quickly to distance themselves from the sentiment – or at least its timing – but Arlington’s County Board chairman says 2024 may end up being a year where homeowners could expect to face a taxation double-whammy: higher home assessments coupled with an increased tax rate.
“It’s time,” Christian Dorsey said of a rise in the existing real-estate tax rate of $1.03 per $100 assessed valuation.
He was speaking Oct. 4 at the Arlington County Democratic Committee’s monthly meeting, and these weren’t off-the-cuff remarks; his take on the county’s budget situation was lengthy and accompanied by a visual presentation.
Dorsey, who has served eight years and is not seeking re-election, will not be on the County Board dais next spring when three incumbents and two new arrivals will grapple with budget issues and set the tax rate. And those who will be there were quick, when pressed by a media outlet, to put some distance between Dorsey’s comments and their own views.
Read closely, though, and they seem less disavowals and more along the lines of the time isn’t right to get into the nitty-gritty:
• “It is still a bit premature to say how next year’s budget will play out,” County Board member Matt de Ferranti told the GazetteLeader. “As we know more over the coming months, we will look at ways to cut costs first, as we work to balance the needs of our community and residents with the resources necessary to meet those needs.”
• “It is too early to discuss a change in the tax rate,” his colleague Takis Karantonis added, calling that “the last resort” and saying the “prudent, responsible and transparent way” to go about budgeting is to let the process play itself out.
• “Setting the tax rate is always a balance between keeping rates as low as possible and continuing to provide the services that our residents need and expect,” said Libby Garvey, who likely will serve as County Board chair in 2024 and like de Ferranti and Karantonis said it was too early to get into the issue.
The biggest challenge facing the county government as it attempts to forge what likely will be a $1.4 billion fiscal 2024 budget is the decline, and in some cases near-collapse, of property values in the commercial sector.
COVID-era changes in the workplace have left many commercial buildings, typically a cash cow for the county government, partially or fully empty. Owners of those properties have been aggressive in challenging county assessments on their properties, often winning reductions at the Board of Equalization, which arbitrates such disputes.
Arlington’s growth since the 1970s has been predicated on commercial properties bringing in at least half of real-estate tax revenues, lightening the burden on homeowners. But when that figure drops below 50 percent, and when the county government’s appetite for spending (and the community’s appetite for services) keeps growing, there’s a problem.
“We’ve got significant headwinds,” Dorsey told Democrats, putting some of the onus on residents.
“They expect more than you are sometimes able to deliver,” he said. “There’s going to be a mismatch between what our community expects us to deliver and what we can.”
After inquiries made of other County Board members on his remarks found their way to the chairman, Dorsey followed up with the reporter and suggested he had no regrets about his comments, but saw them as a civic duty.
“I believe it to be my responsibility to contribute to an informed community, and laying out our budget outlook, as I see it at this time, is a function of that,” he wrote in an e-mail.
The current tax rate of $1.03 per $100 assessed valuation has been held steady by the current County Board since the onset of the pandemic. In contrast, most Northern Virginia localities over the past five years have cut their tax rates to somewhat offset higher home values. Arlington real-estate prices have grown, too, but taxpayers have not seen a cut in the rate.
The owner of a single-family home valued at $1.3 million – typical for the county – is paying about $13,400 in real-estate taxes this year. If the 2024 assessment rises 5 percent and the assessed valuation grows a penny, that tax will would jump to $14,200.
(The current $1.03 figure includes a small built-in surtax for stormwater, which in the coming year will be switched to a fee that is based on a property’s impervious surface.)
Bringing up the issue before the Nov. 7 election also now makes it part of the final month of campaigning.
“Arlington taxpayers should brace for a massive tax increase in 2024, unless voters reject the single-party status quo in the upcoming County Board election,” said Matthew Hurtt, who chairs the Arlington County Republican Committee. ”This will hit the pocketbooks of thousands of Arlington families.”
Hurtt said voters have a chance to send a message through the upcoming County Board race, where Democrats Maureen Coffey and Susan Cunningham – whom he predicts will be rubber-stamps if in office – are on the ballot with Republican Juan Carlos Fierro and independent Audrey Clement.
“Democrats want to demagogue and nationalize the race for County Board, but these issues are kitchen-table issues – family budgets, affordability, crime and public safety, and education,” he said. “They cut across party lines and across Arlington County neighborhoods.”
While commercial property values are down, residential values and most other revenue sources for the county government are up, some by substantial margins. But in his remarks to Democrats, Dorsey suggested most expenses are “not discretionary” – pointing to recently enacted labor agreements.
Higher interest rates are making it more costly for the county government to borrow money for capital projects, even with its AAA bond ratings, although it also will bring in more revenue from the hundreds of millions of dollars’ worth of government funds that are invested at any given time.
Those parsing the tea leaves will note that none of the three incumbents who will be making budget decisions next year actually ruled out a rate increase. Instead, they seemed to be choosing their words carefully.
“In Arlington, we have a track record,” Karantonis said, of being “cautious, considerate and far-sighted in crafting our budgets.”
“We have numerous other issues before us now, and months of economic developments and data ahead,” de Ferranti added.
As for Garvey? “Quite possibly we will need a combination of both cuts and rate increases to make that balance of lowest possible tax rates and meeting the needs and expectations of our community,” she told the GazetteLeader. “But perhaps not. Bottom line: It’s too early to tell.”
Updated-for-2024 property assessments will come out in late January. County Manager Mark Schwartz will propose his draft budget shortly thereafter, with adoption of a final budget by County Board members set for spring. The budget goes into effect July 1, but the tax rate will be retroactive to the beginning of the year.