Study quantifies benefit of businesses to county funds
By Anne Keisman
Democrats, independents and Republicans who ran for local public office this fall did not agree often, but most saw eye to eye on the need to increase Loudoun’s commercial tax base.
The stronger the commercial tax base, the less dependent Loudoun is on residential real estate taxes to pay for the costs of rapid growth. More Loudoun-based businesses also create more jobs, shorter commutes and are generally seen as a sign of a jurisdiction’s robust economic health.
A group of local business leaders decided to go beyond the political rhetoric to define and quantify Loudoun’s commercial tax base. The results of this endeavor culminated on Nov. 2 at the monthly meeting of Loudoun’s Economic Development Commission, with a presentation entitled, "Unpacking Loudoun’s Commercial Tax Base."
This year, the EDC’s Policy and Implementation Committee met with the heads of county government departments who deal with tax collection, property assessment, county budgeting and economic development.
The main goal was to identify the major sources of county revenue and expense, estimate the contributions from Loudoun businesses to the tax base and suggest ways to boost that contribution.
“We don’t want to be a bedroom community for Fairfax County,” said EDC member Shaun V. Kelley, who led the committee’s study. He is an executive vice president with Pennsylvania-based PNC Bank.
The county’s school system eats up a majority -- 65 percent -- of the county’s annual budget. The remaining 35 percent must fund the Sheriff’s Office, social services, public works, recreational facilities and many other public services.
Using data from July 1, 2005, to June 30, 2006, the study showed that Loudoun’s businesses contribute about 26 percent to total county revenue. That percentage includes not only real estate taxes, but also an assortment of other taxes and fees, including personal property taxes.
The study quantified what has long been assumed in local government and business circles: Commercial property contributes far more to the county’s coffers than it consumes in services. Specifically, businesses provide 26 percent of the county’s revenue, yet use only 7 percent of it.
In sharp contrast, homeowners contribute 56 percent of the county’s revenue, but use up 93 percent of the funds for schools and other services.
Moving forward, the EDC will discuss possible ways to boost Loudoun’s commercial tax base. While an unpopular political move, the county does have the ability to levy up to a 1 percent income tax as well as a food and beverage tax.
The committee recommended that the county keep closer track of what percentage of county revenue is business generated versus resident generated.
Now that the tax base has been more adequately defined, the EDC can move forward with plans to enhance Loudoun’s attractiveness to businesses seeking to relocate.