Residential real estate taxes remain the backbone of Fairfax County income, according to Edward L. Long Jr., chief financial officer of Fairfax County. That was the message he delivered at Mount Vernon District Supervisor Gerald Hyland’s recent Town Meeting.
Speaking to an audience of 400-plus district residents, Long noted, that while the “value of residential property rose from $208,126 in fiscal year 2001 to $444,766 in fiscal year 2006” the tax rate was reduced only 23 cents per $100 of assessed value in the same time span. This means the “typical household will pay $4,448 in real estate taxes in 2006, and increase of $365, or 8.9 percent over 2005 and $1,560, or 54 percent over 2002.”
Long stated, “Without tax cuts, typical households would have paid an additional $1,665 in real estate taxes since FY 2002.” The mean assessed value of residential property rose from $208,126 in FY 2001 to $444,766 in FY 2006, according to Long.
The percentage of homes sold in Fairfax County by price range rose significantly in the two higher brackets while the lower bracket dropped. Sales in the $200,000 to $500,000 range increased an estimated 26 percent. Sales in the $500,000-plus range increased 21 percent. Sales in the $200,000 range decreased by 44.5 percent, according to Long’s presentation.
He also predicted, “The residential real estate market will continue to grow in value, interest rate will remain low to moderate and the demand for housing will remain high due to job growth.” He also foresaw “no local housing bubble.”
When it came to homeowner tax relief, Long said, “The current program provides relief on a graduated scale for seniors and disabled persons with a household income up to $72,000 and assets up to $340,000.” Participation in this program is expected to increase by nearly 2 percent in fiscal year 2006, according to Long.
On the plus side, Long saw a continuation in office vacancy reduction.
Office vacancy declined to 7.6 percent as of mid-year 2005, a decrease of one percent from 2004. This was accentuated by a rise in rental rates, Long noted.
“Job growth will continue to increase the demand for office space. And, nonresidential property values are expected to increase by double digits again in fiscal year 2007,” Long said.
The nonresidential real estate commercial/industrial percentage of the total real estate assessment base will continue to decline as it has since 1990, according to Long. In Fiscal year 1990 that category accounted for 26.76 percent of the base. As of Fiscal Year that had dropped to 17.6 percent.
“That percentage will continue to fall as residential values increase more rapidly that nonresidential values,” according to Long.
AS FOR GENERAL FUND disbursements, schools lead with 51.7 percent. The closest competitor is public safety with 12.8 percent. Other categories and percentages are: Health and welfare 11; non-departmental 5.9; other transfers 5.7; county debt 3.3; general services and parks/recreation and libraries both with 2.3; public works 1.9; community development 1.4; and legislative executive functions at .8. This was based on a $3 billion-plus General Fund distribution.
Long’s appraisal is that “The county’s economy remains strong with good job growth and a continued strong real estate market.” There will be “robust federal spending” through 2006 and “interest rates are projected to remain moderate.”
He also noted, “Inflation is anticipated to remain moderate with no local housing bubble.” On the negative side the “revenue base lacks diversity” and the county remains “too dependent on real estate taxes” for its primary revenue stream.
There is a “continual challenge to balance real estate tax rate reductions while maintaining critical services and the county’s quality of life,” according to Long.
According to Long’s presentation, “In 2004 and 2005, over 47,000 new jobs were created in the county. Another 20,000 are projected for 2006.”
The 2007 budget schedule (also available on the county Web site at www.fairfaxcounty.gov/dmb) is: County Executive budget release Feb. 27; Budget public hearings April 3-5; Budget mark-up April 24; and budget adoption May 1.