Tax Policy Information & Considerations and Revenue Estimates Presented by: Michelle L. Attreed, Director of Finance/CFO BOCS Meeting| March 10, 2020
Overview of the County’s Revenue
FY 2020 Adopted Revenues – All Funds and All Sources Non-Revenue Receipts Miscellaneous Other Localities 5.0% General Property Taxes 0.6% 2.5% 39.8% Commonwealth 26.8% Other Local Taxes Federal Government 5.8% 5.1% Permits & Fees 0.8% Fines & Forfeitures Charges for Services Use of Money & Property 0.1% 0.9% 12.7% 3 $2,414,648,748
FY 2020 Adopted General Fund Revenues Other Use of 0.4% Transfers In Other Local Taxes Money & 4.1% 11.1% Property Other Localities 0.7% 1.2% Commonwealth 6.2% Federal 1.6% Charges for Services 1.2% Permits & Fees 0.2% Fines & Forfeitures 0.3% General Property Taxes 73.1% $1,239,254,589 4
FY 2020 Adopted General Revenue Sources All Other Investment Consumer 1.0% Communications Income Utility Tax Vehicle License Fee 1.3% Sales Tax 1.4% 0.9% 1.4% Recordation Tax BPOL Tax 0.7% 2.6% Sales Tax 6.4% Personal Property Tax 19.4% Real Estate Tax 64.9% 5 $1,068,994,000
FY 2020 General Revenue Update General Revenue Source Adopted Q1 Revised Q2 Revised Real Property Tax $694.1 M $694.1 M $694.4 M Personal Property Tax 207.2 M 207.2 M 211.9 M Sales Tax 68.2 M 68.2 M 71.4 M BPOL Tax 28.0 M 28.0 M 27.6 M Communications Sales Tax 15.5 M 15.5 M 14.9 M Consumer Utility Tax 14.6 M 14.6 M 14.6 M Investment Income 13.9 M 13.9 M 11.2 M All Other 10.2 M 10.2 M 11.1 M Vehicle License Fee 9.4 M 9.4 M 9.4 M Recordation Tax 7.9 M 7.9 M 8.5 M TOTAL $1,069 M $1,069 M $1,075 M 6
• The County will strive to maintain a diversified and Diversification stable revenue Principle system to shelter it (Principles of Sound Financial from short-term Management – Section 3.01) fluctuations in any one revenue source 7
Equity Principle (Principles of Sound Financial Management – Section 3.02) • Major revenue sources should provide for the following four principles: ✓ Vertical Equity – Revenue sources should provide for appropriate treatment of taxpayers at different income levels ✓ Horizontal Equity – Revenue sources should treat taxpayers with the same income or wealth equally ✓ Neutrality – Revenue sources should not unduly influence economic decisions by consumers or businesses except for targeted economic development or redevelopment programs approved by the BOCS ✓ Administrative and Compliance Costs – Revenue administration and enforcement should not absorb an undue percentage of revenue collected 8
Comparative Tax Burden & Affordability
History of Real Estate Tax Rate and Average Residential Assessed Value $500,000 $1.60 $429,745 $450,000 $1.40 $400,000 $372,400 $1.20 $350,000 $1.00 $300,000 $250,000 $0.80 $200,000 $0.60 $150,000 $0.40 $100,000 $0.20 $50,000 $0 $0.00 FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Average Assessed Value Tax Rate 10 Note: Fire Levy Not Included
Current Average Residential Assessed Value FY 2020 Average Residential Assessed Value $372,400 • 1/1/19 Land Book; CY 2018 Activity Residential Appreciation 3.94% FY 2021 Average Residential Assessed Value $387,073 1/1/20 Land Book; CY 2019 Activity • 11
Assessed Value Average Change in Real Estate -35% -30% -25% -20% -15% -10% 10% 15% 20% 25% 30% -5% 0% 5% CY85, FY87 CY86, FY88 CY87, FY89 13.13% CY88, FY90 CY89, FY91 CPI % Change (Balt/Wash metro area) Average Residential Real Estate Appreciation Forecast: FY21-25 Actual Residential Appreciation -1.79% CY90, FY92 CY91, FY93 CY92, FY94 CY93, FY95 1.40% CY94, FY96 CY95, FY97 CY96, FY98 CY97, FY99 CY98, FY00 17.47% CY99, FY01 CY00, FY02 CY01, FY03 CY02, FY04 CY03, FY05 CY04, FY06 CY05, FY07 27.20% CY06, FY08 CY07, FY09 CY08, FY10 4.62% CY09, FY11 -29.35% CY10, FY12 5.24% CY11, FY13 CY12, FY14 7.62% CY13, FY15 CY14, FY16 CY15, FY17 CY16, FY18 CY17, FY19 CY18, FY20 3.94% CY19, FY21 CY20, FY22 CY21, FY23 3.00% CY22, FY24 CY23, FY25 12
History of Average Residential Assessed Value Compared to Average Real Estate Tax Bill $450,000 $4,500 $4,000 $400,000 $3,500 $350,000 $3,000 Average Assessed Value Average Tax Bill $300,000 $2,500 $250,000 $2,000 Flat tax rate since FY 2018 of $1.125 $200,000 $1,500 $150,000 $1,000 $100,000 $500 $50,000 $0 FY89 FY91 FY93 FY95 FY97 FY99 FY01 FY03 FY05 FY07 FY09 FY11 FY13 FY15 FY17 FY19 13 Avg. Assessed Value Avg. Tax Bill 13 Note: Fire Levy Not Included
Growing Land Book Values Real Estate Tax Base Continues to Experience Growth Assessed Value Exceeds $60 Billion (62% Increase in Value Since 2010) $70 $1.40 $60 $1.20 $50 $1.00 $40 $0.80 $30 $0.60 $20 $0.40 $10 $0.20 $0 $0.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Billion Residential Apartments Commercial Land Public Service Tax Rate (Includes fire & mosquito levies) 14
Land Book Composition Comparison Taxable Assessed Value of Real Estate, Residential vs. Non-Residential 100% 18.1% 90% 20.1% 24.2% 24.6% 27.1% 80% 5.4% 6.3% 3.6% 70% 19.0% 60% 21.4% 50% 40% 76.5% 73.5% 71.8% 30% 56.9% 51.5% 20% 10% 0% Prince William (2019) Fairfax (2019) Loudoun (2019) Alexandria (2019) Arlington (2019) Residential Apartments Non-Residential 15
Average Residential Tax Bill Comparison $7,000 FY 2020 FY 2009 $6,724 - Arlington $6,500 $4,836 - Loudoun $6,470 - Fairfax $4,831 - Fairfax $6,306 - Alexandria $4,501 - Arlington $6,000 $5,100 - Loudoun $4,227 - Alexandria $3,649 - Prince William $5,500 Prince William $4,190- Base Real Estate $ 298 - Fire Levy $5,000 $4,488 - Total $4,500 $4,000 $3,500 $3,000 $2,500 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 16 Note: All tax information taken from various jurisdictions websites
Comparative Tax Bill / Median Household Income Average Real Estate Tax Bill and Median Household Income $6,272 Alexandria $93,370 $4,488 Prince William $101,059 $6,757 Arlington $112,138 $6,470 Fairfax $117,515 $5,100 Loudoun $129,588 $- $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 Average Bill Median Household Income Sources: Adopted FY 20 Budgets 17 Household Income: American Community Survey
Comparative Tax Burden Average Real Estate Tax Bill as a Percentage of Median Household Income 7.00% 6.72% 6.03% 6.00% 5.51% 5.00% 4.44% 3.94% 4.00% $117,515 $101,059 $112,138 $129,588 $93,370 3.00% 2.00% Loudoun Prince William Fairfax Arlington Alexandria Prince William County Percentage is based on Adopted FY20 real estate tax rate of $1.125, fire levy tax rate of $0.08, and average tax bill of $4,488. 18 Median Household Income Source: U S Census Bureau American Fact Finder 2017 American Community Surveys 5-Year Estimates
Real Estate/Personal Property Tax Revenues per Capita $445 Prince William $1,491 $354 Alexandria $2,880 $526 Arlington $3,406 $369 Fairfax $2,483 $1,096 Loudoun $2,076 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 Personal Property Revenue per capita Real Estate Revenue per capita 19 Sources: Adopted FY 20 Budgets
FY 2021 Revenue Estimates
FY 2021 Proposed General Revenue Sources All Other Investment Consumer 1.0% Communications Income Utility Tax Vehicle License Fee Sales Tax 1.0% 1.3% 0.8% 1.3% Recordation Tax BPOL Tax 0.8% 2.5% Sales Tax 6.5% Personal Property Tax 19.4% Real Estate Tax 65.4% 21 $1,137,426,000
FY 2021 Proposed General Revenue Details % to Total FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 ($ in 000s) (FY 21) Forecast Forecast Forecast Forecast Forecast Real Estate Tax Rate: $1.145 $1.145 $1.145 $1.145 $1.145 Real Estate Taxes 65.41% $743,946 $773,804 $802,390 $831,706 $862,450 Personal Property Taxes 19.44% $221,060 $231,170 $242,180 $253,400 $264,810 Sales Tax 6.50% $73,949 $76,167 $78,452 $80,806 $83,230 Consumer Utility Tax 1.29% $14,700 $14,810 $14,920 $15,030 $15,140 Communications Sales Tax 1.28% $14,530 $14,170 $13,820 $13,470 $13,130 BPOL Tax 2.50% $28,430 $29,280 $30,160 $31,060 $31,990 Investment Income 0.97% $11,030 $12,280 $12,650 $14,010 $15,100 All Other 2.62% $29,781 $30,450 $31,072 $31,694 $32,334 Total General Revenue 100.00% $1,137,426 $1,182,131 $1,225,644 $1,271,176 $1,318,184 School Portion $645,987 $671,474 $696,274 $722,229 $749,029 County Portion $485,009 $504,097 $522,680 $542,117 $562,195 Transportation Fund $6,430 $6,560 $6,690 $6,830 $6,960 Total General Revenue $1,137,426 $1,182,131 $1,225,644 $1,271,176 $1,318,184 22
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