Bacon's Rebellion

Democracy Thrives in Sunlight

Fairfax Taxes: Feel the Pain

—

by

James A. Bacon
in

I never cease to be amazed at the passivity shown by the million-plus citizens of Fairfax County in the face of higher taxes. But as onerous as the tax burden is now, it will, in all likelihood, get even worse.

A couple of straws in the wind… First, this from the Times-Community newspapers:

Fairfax County is anticipating an even tougher 2009 budget year than previously expected, after revised housing market analyses and fiscal forecasts show a potential shortfall of $120 million because of flat revenue growth. …

Long said county planners anticipate a 4-percent drop in value for residential properties and, as better numbers are available, that figure may even worsen. …

To make up the combined county and school deficits – which planners estimate to be around $250 million – an increase of 10 cents would be required on the real estate tax rate.

“I can assure you, we ain’t gonna do that,” board chairman Gerry Connolly told the newspaper. So he says. But the pressure for a combination of spending cuts and higher taxes of lesser magnitude will be intense.

Meanwhile, there’s this news from the Washington Post:

The Fairfax County Board of Supervisors is planning to vote next month on a proposal to raise the tax rate on retail, office and warehouse properties to pay for up to $110 million a year in transportation improvements.

It looks like we have the makings of a perfect storm in commercial real estate. According to the Times-Community acrticle cited above, the commercial real estate sector is way overbuilt. Only 13 percent of the seven million square feet of new office space has been leased. In the Dulles corridor alone, 97 percent of office space under construction has no future occupant. Add to that, the slowdown in federal spending on defense, intelligence and homeland security means businesses won’t be expanding as fast as they have been since 9/11.

A lot of people are feeling a lot of pain. A couple hundred million dollars in higher taxes will only make it only worse.

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18 responses to “Fairfax Taxes: Feel the Pain”

  1. Anonymous Avatar
    Anonymous

    Right. And Arlington might be right behind.

  2. Miles Avatar
    Miles

    What would you propose to balance the budget instead?

  3. Anonymous Avatar
    Anonymous

    Just got a flyer in the mail from Devolites-Davis bragging about “holding the line on taxes.”

    She and her tag team husband have been nothing but non-stop cheerleaders for higher taxes. Keeps the WaPo endorsements coming.

    These people are shameless.

    They are running scared now.

  4. Tobias Jodter Avatar
    Tobias Jodter

    miles: cut spending

  5. Anonymous Avatar
    Anonymous

    I have cited this blog before so please forgive me, but it’s worth a view:

    http://novabubblefallout.blogspot.com/

    Read it and weep!

  6. Accurate Avatar
    Accurate

    I would have posted this in an email to Jim Bacon but I couldn’t find a place to send him an email. While this is a bit off topic, in two weeks I’ll be taking my first trip back to your area of the country. My daughter graduates from Basic Training at Fort Jackson, South Carolina. I don’t know how much South Carolina is like North Carolina; or either of them like Virgina or Kentucky. However it will be interesting to me, to see that part of the country and maybe get an inkling of what y’all are talking about. I know it won’t be a good picture, it’s like the commenters here who have been in my neck of the woods (Portland, Oregon) and think we’re doing a great job. We’re doing a great job ONLY if you don’t have to live here. Light rail is a joke regardless of what the fellow who’s son learned urban planning up here thinks.

    I don’t mean to lump all the states I mentioned into the same ‘bag’, but my time will be limited and will be focused on my daughter. I look forward to seeing your area of the country.

  7. Groveton Avatar
    Groveton

    The passivity of the voters up here is unbelievable. I have personally contacted all the candidates running for state office in my district and asked them to specifically adress the question of tax fairness for Fairfax County residents. They have steadfastly refused to comment (in any way) on the matter.

    I’ll repeat my philosophy:

    1. Virginia has a “perferct storm” of political issues – a relatively small percentage of teh population which generates an economic surplus consumed by others. The fact that this surplus is essentially generated by the federal government is largely true and largely irrelevant.

    2. Many of the people who generate the surplus are transient membersof the community and politically naieve. They couldn’t name their state deleagte on a bet.

    3. The candidates from Northern Virginia (in particular) can win by simply following the lead of the state Democratic or Republican Party.

    4. The state Democratic and Republican Parties like the economic subsidies and have no intention of doing anything to make people question those subsidies. Therefore, any talk of tax fairness by any candidate from Northern Virginia puts that candidate at odds with the state party.

    5. Only a true economic crisis will wake up the voters of Northern Virginia.

    6. A true economic crisis is very likely within the next 24 months.

    7. Once the economic crisis occurs there will be a meltdown of confodence by the residents of Northern Virginia against the incumbents and their parties.

    8. If the republican Party really wanted a long term future in state politics in Northern Virginia – the best thing they could do would be to “throw” the 2007 elections and let the Democrats take the blams as the economic crisis unfolds.

    This is a sad state of affairs.

  8. Anonymous Avatar
    Anonymous

    I was with you up until #6. My Mom has been predicting a true economic crisis ever since the Great Depression.

    I think there are other scenaios a little less dire. NOVA presently has tremendous amounts of discretionay spending, both public and private. We can do a lot of belt tightening without starving.

    Also, changes in the economic environment also mean opportunities: jackals will cull the weeker members of the herd. Some banks are already profiting from the tighter credit environment. Inflation may mean that those that borrowed early on the cheap will be paying back with cheaper inflated dollars.

    If we have to settle for what we need instead of what we want, that is still a long way from not having what you need. We just need to ensure that what we do spend on has a real payback in the near term.

    That may preclude investing in social engineering.

    RH

  9. Anonymous Avatar
    Anonymous

    If Arlington and Fairfax have problems, with all their “urban efficiencies” and commercial advatages, what is going to happen to the bedroom communities?

    If Arligton and Fairfax are subsidizing other areas, won’t it be to their advantage to try to keep more of that money at home, even if it puts them at odds with the rest of the state? Demographics are increasingly in their favor.

    RH

  10. Groveton Avatar
    Groveton

    The “crisis” I see is more along the lines of the 81 – 83 recession. Overall, I believe that energy prices have permanently increased in the last 2 years and that permanent increase will not return to the historical growth rate for energy – ever. This has profound effects for the entire US economy. I also think, specifically in Northern Virginia, the burst of the housing bubble will put heavy pressure on revenue generation as land prices depreciate to more reasonable levels. Of course, local government spending in Northern Virginia will not abate much so the rate of tax on real estate will have to go up.

    The bedroom communities are probably going to bear even more of the recessionary brunt. They do not have a commercial base to leverage although Jim Bacon correctly points out that this commercial base is pretty sick in Northern/Western Fairfax County.

    It is definitely to Fairfax and Arlington’s benefit to keep more money at home. Loudoun as well in my opinion.

    Demographics favor Northern Virginia but the real effect will not be felt until after the 2010 census and the 2012 state redistricting. Even then, Northern Virginia legislators will need to form a coalition with politicians from the Richmond suburbs and parts of the Tidewater area to have any real clout. This coalition is possible in my opinion. However, it will take a pretty serious economic downturn to catalyze this association of odd bedfellows. Fundamentally, the 3 major urbanizing areas in Virginia will have to see the SOL “county welfare transfer program”, the “rural roads uber alles” transportation allocation program and the general mismangement of the public university system as rallying causes to band together. The item that could galvanize these long abused areas is my expected significant rise in real estate tax rate required to compensate for the bust of the housing bubble. This will lead to tough questions as to where the state actually raises it taxes and where it actually spends it taxes. I would not want to be a state politician from a rural area in 2012. I believe that a perfect storm of events will have those politicians bring home a lot of bad news to their constituents in or around that time frame.

  11. Anonymous Avatar
    Anonymous

    “the burst of the housing bubble will put heavy pressure on revenue generation as land prices depreciate to more reasonable levels.”

    Only if there is more land actually available. And the counties control that. One thing you can count on is that if revenue from new homes decline, counties will be more generous about permitting building, and more reasonable land prices will only help.

    Nationwide, we practically give houses away. Almost all the profit comes from the land under the house being subdivided.

    In a (much earlier) post EMR questioned how it was that Fauquier increased revenues in a year when tax rates didn’t increase. The answer was new revenue on new assessments that came from new houses.

    If I tried to build the Alexandria house that I built in 1989 today, the (current) rules would prohibit it. But if the county is frantically looking for more money, then plan on those rules being “reinterpreted”.

    RH

  12. Anonymous Avatar
    Anonymous

    “Jim Bacon correctly points out that this commercial base is pretty sick in Northern/Western Fairfax County.”

    I don’t think that is what he said. What he said was that much of the new construction does not yet have tenants.

    Those commercial interests that exist and are moving to Northern and Western Fairfax, and even as far as PW in Manassas seem to be doing quite well.

    the construction and management companies may have excess inventory of office space, but that’s different from saying the commercial base is sick.

    To see a sick commercial base, look at DC, where jobs have been declining in quantity and quality.

    RH

  13. Toomanytaxes Avatar
    Toomanytaxes

    I’m not of the impression that commercial real estate in Fairfax County is troubled. A good friend of mine who builds and owns commercial real estate has told me that Fairfax County buildings are selling for $200 sq ft empty and $250 plus sq ft if rented.

    Trouble will come only when the impact of federal spending cuts hits the contractor market, short term.

  14. Groveton Avatar
    Groveton

    RH:

    Fair point on the “land prices depreciate” point. I should have said “housing prices depreciate”.

    I could also add the almost certainty of higher interest rates as another “popper” of the housing bubble. Finally, the sub-prime lending and sudden rise in forecloures all but guarantees further home price reductions in my mind.

    I’ll let Jim speak for himeself regarding commercial development. However, I was reacting to his quote from the Times – Community article that commercial development is way overbuilt.

    I believe that’s true. Partly because there has been a lot of commercial building but partly because I see a national economic recession on the horizon. For whichever reason – I see the supply as too high and the demand as too low.

    Commercial base in DC?

    It never occurred to me to comapre Northern Virginia to DC. Being better than the city of Washington is faint praise indeed.

  15. Jim Bacon Avatar
    Jim Bacon

    Accurate, We welcome you to the East Coast. South Carolina, North Carolina and that portion of Virginia outside the Washington metro area has a lot in common geographically — Tidewater low country, rolling hills in the piedmont, mountains far inland — and culturally: the Bible Belt, Southern accents, guns and pickup trucks, nostalgia for the Lost Cause, lots of mill towns, punctuated by the occasional urbane metropolis. But we tend to emphasize the differences. South Carolina? We Virginians aren’t anything like them at all!

    Have a good trip.

  16. Groveton Avatar
    Groveton

    Jim:

    Have you ever been to Charlotte?

    Research Triangle Park?

    I know you’ve been to Charlottesville.

    I guess these are your occasional urbane metropolises.

    And, “…nostalgia for the Lost Cause…”.

    Please don’t tell me you mean the civil war.

    The war to preserve slavery?

    The war that needlessly killed more Americans than any other war (in fact, all other wars combined as I recall).

    The war whose losing general was from Alexandria, Virginia (clearly within the Washington metro area).

    Please don’t tell me the Lost Cause is the Civil War. Please say it’s something else.

    Because if it’s the Civil War I’d have to ask:

    Do you know any black people at all?

    There are many black people in South Carolina, North Carolina and that portion of Virginia outside of the metro Washington metro area.

    And I doubt many of the African-Americans from those areas feel much of a nostalgia for the Lost Cause.

    Accurate – there are many Virginians who see the Civil War as the greatest act of racism and treason in the history of the United States. We recognize the confederacy as the absolute and unconditional loser in an immoral war it had no chance of winning from the outset.

    And that includes many of us from Robert E. Lee’s hometown of Alexandria who know that Lee’s Army of Northern Virginia kept fighting in the futile cause right up to the bitter end.

  17. Jim Bacon Avatar
    Jim Bacon

    Groveton, nostalgia for the Lost Cause, i.e. the Civil War — is a widespread attribute of Southern culture, or at least white Southern culture, regardless of whether you or I happen to agree with it. That’s all I was saying. I wasn’t endorsing the nostalgia, merely remarking upon its existence as something that “Accurate” would encounter.

  18. Groveton Avatar
    Groveton

    nos·tal·gia /nɒˈstældʒə, -dʒiə, nə-/ Pronunciation Key – Show Spelled Pronunciation[no-stal-juh, -jee-uh, nuh-] Pronunciation Key – Show IPA Pronunciation
    –noun 1. a wistful desire to return in thought or in fact to a former time in one’s life, to one’s home or homeland, or to one’s family and friends; a sentimental yearning for the happiness of a former place or time: a nostalgia for his college days.

    I understand your pointing out the difference between the views in the South and your personal views.

    I guess that I had hoped people in the South would have lost their “nostalgia” for the Civil War.

    To me, it is about the same as saying that people in Germany still have nostalgia for the Nazis.

    In my opinion, regarding the Civil War, your comments would have to be modified with words such as regretabbly, sadly, or “to our unending shame” in order to be morally acceptable.

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