Fairfax County supervisors on Monday set in motion a potential 3-cent tax increase on homeowners that would raise nearly $70 million to offset an accelerating economic crisis.
Proponents of the increase said it wouldn’t hit the pocketbook of the typical homeowner, who on average lost 3.4 percent on the value of his or her home based on assessments released last month.
It would, however, mean the silver lining of falling home values — a smaller tax bill — would be largely negated.
The decline in home values, as well as state funding cuts andinterest rate cuts by the Federal Reserve that diminished the county’s investment revenue, have pushed the county government’s coffers into increasingly dire straits.
The county’s budget deficit for fiscal 2009, which starts July 1, was projected to be $120 million in August, but the economy has weakened considerably since then.
“We’re getting hit at the state level, we’re getting hit by our own revenue decline, we’re seeing it across the board,” said Chairman Gerry Connolly, a Democrat who quarreled with Republican Supervisors Michael Frey of Sully District and Pat Herrity of Springfield over the proposal. “To actually pretend that this is a momentous decision — we’re talking about three
pennies.”
Each additional penny added to the county’s current rate of 89 cents per $100 of assessed value would bring in $22.8 million a year.
The decision to advertise the tax increase sets up public hearings for March 31, April 1 and April 2. The vote Monday means the final tax rate can be less than the proposed 3 cents, but not more.
A Republican move to keep the tax rate the same lost 8-2, with the two dissenters saying a tax increase would sour already negative public perceptions of local government and raise suspicious of why the increase didn’t come last year — during election season.
“To me, it’s a question of our credibility, and our believability, and the ability of the public to have any confidence in what we do,” Frey said.
Originally, the board sold the tax rate increase solely as a contingency should the economic forecast worsen in the coming months, but that outcome now seems increasingly likely. County staff predicts a further decline, but has not specified by how much.
“From the time the county executive put his budget to bed, sent it to the printer and then got it back, the budget was out of balance by $32 million, and that happened in a matter of weeks,” said Supervisor Sharon Bulova, the board’s budget chairwoman. “I’m advocating for the flexibility to react.”
