Arlington homeowners will pick up an increasing percentage of the county government’s $1.4 billion budget tab over the coming year, as home-value assessments saw another significant increase while assessments on the commercial side were flat.
The end result? Unless Arlington County Board members cut the existing real-estate tax rate for the coming year, homeowners will be seeing bumps up in their tax bills.
Arlington officials on Jan. 13 reported an increase of 5.8 percent in overall value of residential real estate in the county, on top of 5.6 percent in 2021 and 4.3 percent in 2020 – both years where the real-estate tax rate of $1.026 per $100 remained untouched by county officials happy to have increasing amounts of cash flowing in.
Without a decrease in the tax rate this year, many owners of single-family homes will have seen their tax bills increase about 15 percent (to a typical $10,500 a year) in the past three years.
Just under three in four Arlington homeowners will face higher assessments in 2022, with the others either seeing a decline or no change. Assessments by law are supposed to be based on 100 percent of market value of homes, and generally have tracked recent growth in average sales prices across the county.
While average sales prices as tracked by the Northern Virginia Association of Realtors were up in Arlington last year, the pace slowed from the 12-percent jump recorded a year before.
That slowing may suggest that the market has hit a ceiling, but that’s not necessarily so.
“In December, the average price of a single-family detached home in Arlington jumped from $1,075,647 in 2020 to $1,258,648 in 2021 – a 17-percent increase,” said Reggie Copeland, 2022 chair of the Northern Virginia Association.
The lack of inventory definitely played a “huge” role, Copeland said, leaving many sellers with the ability to choose from a number of offers, with multiple buyers waiting to see their home as soon as it hit the market.
“I met some buyers to view a home that went on the market with a short window for viewings. Fifteen minutes prior to the open house starting, there was a line at the door. At the peak, there were a total of 50 people standing outside in a line to view this home,” Copeland said.
While residential assessments were up, the total value of commercial property rose just 0.6 percent, with some rebound in the apartment and hotel sectors largely offset by lower assessments in office and retail properties.
As a result, the split between residents and commercial assessments, which for years held in the vicinity of 50-50, has grown to 54 percent residential, 46 percent commercial. Couple that with increasing spending on schools, public transit, employee compensation and debt service, and there has been no space in budget deliberations to ease the burden on homeowners.
County Board members as yet have given no indication, as their Fairfax County colleagues informally have, that they plan to cut the tax rate to help homeowners who find themselves increasingly priced out of the community in order to pay for an increasingly ravenous local government. In remarks earlier this month, new-for-2022 County Board Chairman Katie Cristol said government funds should be used to pay for major staff raises, but was more muted on giving taxpayers relief.
While the county government budgets on a July-to-June fiscal year, property assessments are established on a calendar-year basis, with two equal installments due in late spring and early autumn. Whatever tax rate is adopted for 2022 – higher, lower or unchanged – will be retroactive to the start of the year.
Final action on the budget and the setting of tax rates by County Board members will come later in the spring.
Over the past half-century, Arlington’s real-estate tax rate has varied widely, from 76.5 cents per $100 assessed value for several years in the early 1990s to $1.532 per $100 for several years in the early 1970s. But that’s only half the equation, as the tax burden is dependent both on the rate and a property’s assessed valuation.
Whether the prospect of a higher tax burden on homeowners will even be part of the political discussion in coming months remains to be seen, as Arlington homeowners seem resigned to annual increases and those who live in rental apartments are generally disinterested in the debate.
The death in 2018 of Tim Wise, the linguistically florid longtime president of the Arlington County Taxpayers Association, meant the silencing of one of the few independent voices still standing up for restraining the tax burden on county residents.
Since his demise, nobody has stepped up to take up the mantle, at least not on a consistent basis. Both the Arlington County Civic Federation and the county government’s own Fiscal Affairs Advisory Commission, which decades back could be counted on for robust pushback when they perceived government spending was getting out of whack, largely have been neutered as factors in the annual budget dance that will take place when County Manager Mark Schwartz proposes a fiscal 2023 budget in coming weeks.
The last time the local equivalent of a tax revolt roiled Arlington came in 2014, when voters elected independent John Vihstadt on a platform that included, in addition to killing the Columbia Pike streetcar project, more fiscal restraint on pricey capital projects.
His election had consequences: The streetcar plan lost the support of several County Board Democrats and died; the money-bleeding Artisphere arts center was shuttered; “million-dollar bus stops” along Columbia Pike were redesigned at a lower cost; and planners went back to the drawing board to cut costs on the Long Bridge Park aquatics center.
But Vihstadt was defeated for re-election by a Democrat in 2018, returning all political power in the county to that party. Little by little, the current County Board has been adding to the budget, albeit largely on less-visible projects than those that snagged their predecessors of a decade ago.
One remaining friend of taxpayers appears to be state Sen. John Cosgrove (R-Chesapeake), who has introduced legislation that would require a local government to hold a referendum if the net effective tax burden on individual property owners grew by more than 1 percent on a year-over-year basis.
Currently if the tax burden increases, local governments are only required to hold and sit through a public hearing. (In Arlington, those hearings typically see many more people asking for more government spending than for less.)
The measure has been sent to the Committee on Finance and Appropriations, chaired by state Sen. Janet Howell (D-Reston-Arlington).