Despite a frail real estate market nationwide, the District nearly doubled its property tax haul in July compared with the same month in 2006, setting the city on pace for a stunning increase in tax collections this year.
Through July, D.C. collected $778.3 million in real estate taxes for fiscal 2007, a 29 percent jump over the $602.5 million garnered during the same 10-month period last year. The District took in $60.5 million in July alone, up 92 percent over July 2006.
All told, the city expects to collect about $100 million more in fiscal 2007 than Chief Financial Officer Natwar Gandhi predicted in his most recent revenue projections, released in May. Gandhi will make that announcement next week. The bonus cash should ease impending fiscal troubles in several government programs, among them financing basic school repairs and keeping the D.C. Healthcare Alliance afloat.
Or, as Ward 2 D.C. Council Member Jack Evans suggested, the city can put it away. “I wouldn’t spend it, but that’s just me,” said Evans, chairman of the finance and revenue committee. “I’d like to reduce taxes, but I’m in the minority on that kind of thing.” D.C. finance officials chalked up the revenue increase to a strong commercial market. A 20 percent bump in commercial property values will result in another $100 million in tax revenue.
The new U.S. Department of Transportation building, worth about $400 million, will generate nearly $8 million a year. And significant development citywide will result in another $20 million to $30 million in bonus tax collections. Despite the obvious fiscal impact — hundreds of millions a year — it’s time to cap assessments on commercial properties, Evans said.
That’s the only way to protect small-business owners, who pay the tax bills passed down by the developer. But to do that, Evans said, “you’re going to have to have a city that stops spending like a drunk sailor.” Officials warn that the good times are coming to an end, as the housing market crashes, foreclosures soar and commercial activity slows.
Gandhi’s projections from May expected real estate taxes to increase 18.5 percent in 2007, 16.5 percent in 2008, 7.8 percent in 2009 and 7.2 percent in 2010.
