Tax tightrope
County Executive Craig Gerhart told members of the Prince William Board of County Supervisors and School Board this week that money for schools should be adequate as long as the real estate market remains strong. Let’s hope he’s correct considering the task that remains.
The county’s school population is expected to increase 28 percent by 2013. That translates into a need for 15 new schools including three new high schools and eight elementary schools.
While the county school system has not had the easiest time keeping up with population growth we still have trailers popping up on school grounds Prince William has handled the burden better than most other growing counties in the commonwealth. A revenue sharing formula that hands over more than 56 percent of tax revenues to the school board allows better planning and less squabbling with county supervisors.
The money raised by the county has come in large part from increases in real estate assessments. Homeowners are seeing their home values increase (which allows the county to take more in taxes) with the extra money going into two endeavors. Part of the new money goes to the schools while another portion is used to lower the real estate tax rate which is currently at $1.23 per $100 of assessed value. The lower rate mitigates some of the higher assessments. Fairfax residents on the other hand pay higher assessments with almost no tax relief.
The worst thing we can experience at this point is the bottom falling out of the real estate market similar to what occurred a decade ago. Like the dot.com economy proved, nothing is recession proof. Lower home values will lower the amount of money coming into the county which means less will be available to be transferred to the school system. That is, unless the county increases the real estate tax rate.
The only way for the county to hedge its bets (sorry Park Authority) is to remain aggressive on the economic development front. This means trying to increase the county’s non-retail tax base. While the telecommunications and biotech industries are downsizing, there are still some great prospects out there. There are also opportunities to lure government agencies, including those related to the new Homeland Security Department.
Shoring up this sector of the tax base is the best insurance to a drop in housing assessments. It also takes some of the burden off local homeowners by keeping real estate tax rates at or below their current levels.