Reading the Local Tax Revenue Cereal Box

By Neil Williamson, President

Feet-on-treadmills-e1325683225938Many people make New Year’s resolutions to live healthier.  Some of these folks fill the local gyms for the first couple weeks of the year.  You know the type, hyper-energized to make a difference by adding exercise to their routine as they strategically park their car closest to the health club entrance.

However, those individuals who are most successful with their healthy resolutions recognize not only exercise (output) is important but what, andcerealboxesnutrition how much, you eat has a direct, dramatic impact on wellness levels.

How does this possibly relate to local government? 

Please let me explain.

The local government budget season is now upon us.  The annual, and often substantiated, cries of unfunded state mandates echo from Palmyra to Lovingston.  While “equalized” tax rates and assessment accuracy continue to be annual topics of controversy, The Free Enterprise Forum is examining the local tax revenue cereal box to see if there is anything we can learn from the revenue types and trends.

In the City of Charlottesville, for instance, almost 12% of all FY2013 General Fund revenue comes from the City/County Revenue Sharing agreement.  This is the second largest source of revenue behind only Real Estate Taxes which, at $50,074,178, make up just over 34% of General Find revenue.

house redIn the County Administrator’s proposed budget, Fluvanna County anticipates their real estate tax revenues will exceed $20.7 Million for FY2013.  This is more than double their actual collections for FY2011.  Real Estate Taxes are projected to make up more than 50% of their Local General Fund revenue.    

This compares favorably with Greene County where FY2013 Real Estate tax revenue is projected to be just over $12.5 million and represents just over 50% of total local revenueNelson County Real Estate Tax Revenue makes up 62% of its local revenue.

In Albemarle County FY12/13 Budget totals $311.7 million dollars.  According to the proposed budget the largest portion of revenue is coming from Real Estate taxes which is expected to generate $111.9 million or 50.4% of all local revenue.

Louisa County has the highest percentage of local tax revenue from property taxes with 87% of all local revenue represented by property taxes.  Interestingly in Fairfax County, 60.1% of Local General Tax Revenue comes from property taxes; to the tune of $2.1 Billion dollars. 

It is important to note that all of the above numbers include both residential and commercial real estate taxes. 

So of all of these localities, Charlottesville has the lowest percentage of General Fund Revenue from Real Estate at just over a third of local revenue. 

In addition, based on our initial analysis it seems that the recession is actually causing local governments to be increasingly dependent on local property taxes. 

Just as your doctor might suggest just exercising won’t make you fit, should we be looking at our local revenue sources?

While the budget battles wage on the Free Enterprise Forum asks rather than jockeying for what specific spending program should be increased or decreased what if localities worked to grow the revenue side of the ledger?

Just an idea.

Respectfully Submitted,

Neil Williamson

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20070731williamson Neil Williamson is the President of The Free Enterprise Forum, a privately funded public policy organization covering the City of Charlottesville as well as Albemarle, Greene, Fluvanna, Louisa and  Nelson County.  For more information visit the website www.freeenterpriseforum.org

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2 responses

  1. Mr. Williamson, are you suggesting simply that having more revenue will make woes go away? It seems that if applied correctly to needs more $ = less pain. But when we had more money due to the skyrocketing real estate market we just found ways to spend more and more. That ‘raising of the revenue’ was what caused this mess with spending on inocrrect line items.

    During the fat times Albemarle stopped watching the books agreeing to blindly send 60% of real estate taxes to Charlottesville, Albemarle even gives about 5.5 million dollars ro local charities that are now dependent on getting their fix. More money through more revenue is like solving a craving for crack by giving the addict more drugs. Isn’t it most important to fix the core problem first?

    And my apologizes if I misunderstood. Respectfully,
    James Stern – Chairman – Albemarle Truth in Taxation Alliance

    1. Mr. Stern,

      Thank you for your comment. Rereading the post I can see how one might believe The Free Enterprise Forum was advocating additional revenue; this was not my intent.

      In terms of their total tax revenue, I fear Albemarle County’s reliance on property taxes is significantly increasing. By diversifying the tax base with increased economic development, the dependency on property taxes could be reduced.

      In terms of the appropriate tax rate, the Free Enterprise Forum has never advocated for or against any rate only for transparency and efficiency.

      Thank you again for your thoughtful comments

      Neil Williamson, President

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