Thursday, March 18, 2010

Spotsy Professor and Economic Development Authority Chairman Offer Plan to Lower Taxes in FY11 Budget

by D.J. McGuire and Steven Thomas


Last month, Spotsylvania County Administrator Doug Barnes presented his recommendations for the Fiscal Year 2011 (FY11) budget to the Board of Supervisors. Mr. Barnes’ budget recommended a property tax rate of 86 cents per $100 valuation, which would be an increase of three cents over the equalization rate of 83 cents per $100. Earlier this month, the Board of Supervisor advertised a rate of 88 cents per $100, or five cents above equalization. However, one Supervisor who voted to advertise the higher rate – Emmitt Marshall of Berkeley District – expressed hope for a lower rate.

This report is meant to be a part of that effort. Amidst the many voices from county officials, politicians, and voters, this report shows the way for the Board of Supervisors to maintain vital services to the county as much as is humanly possible without imposing a tax increase in the property owners of the county.

The voices in favor of setting the tax at the equalized rate of 83 cents will be numerous, but possibly muffled. They will be the voices of homeowners already feeling the strain of plummeting home values not seen since the Great Recession. In this environment, many of them are wondering why they are being asked to give more and do with less by their local government in these trying times. Unfortunately, most of them will be constrained by obligations of work and family from making their voices heard.

The voices of some of these most vulnerable homeowners who will be hurt by the proposed tax hike will be among the most important in our community. They will be elderly on fixed incomes forced to decide between food and tax payments. They will be families pushed past the breaking point by the extra $50 a month paid to the county. The last property tax increase in 2008 drove many of them away; it should be no surprise that Spotsylvania proceeded to lead all of Virginia in the rate of foreclosures.

Furthermore, a tax increase will greatly damage the business community in the county. Unlike with residential property, commercial property values were almost perfectly stable on average. This means any rate higher than the current 62 cents – even the equalized rate – will be a large increase in cost for both commercial land owners and the businesses who rent from them. A rate of 86 or 88 cents will even more egregiously balance the budget on the backs of our business community.

The business community is one of the key factors to lead localities out of recession, yet businesses will be disproportionately hurt even by an equalized tax rate, let alone a net tax hike. Moreover, while commercial property values have remained steady during the downturn overall, the value of industrial land has actually increased. This means that the very businesses we depend on to keep our citizens employed – and out of foreclosure – will be suffer the most from a property tax hike. Many will move from Spotsylvania or close down, taking their jobs with them; many more simply won't come here in the first place. The recommendations we present in this report may cost the county government the equivalent of 51 jobs (7 of which are unfilled), but it may well save hundreds, if not thousands, of jobs in the private sector, along with many businesses generating activity – and local revenue. Otherwise, we risk being the only locality in the region to consider a tax hike during the Great Recession, with all the economic damage that comes with such a dubious honor.

We developed this report to prevent this damage. If the recommendations set forth in this report were fully implemented, it would actually lead to a rate below equalization. More likely, they provide the Supervisors with a number of choices from which they can build several budget alternatives at the equalized rate. This will require the Supervisors to make choices and set priorities for the county, but it will also make clear that the county’s elected officials do not intend to exacerbate the economic conditions by forcing homeowners to pay more, and businesses much more, in these trying times.


D.J. McGuire
Republican Nominee for Lee Hill Supervisor – 2009

Steven Thomas
Spotsylvania Economic Development Authority Chairman and Member for Livingston District

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