taxes

Morning Notes

By ARLnow.com

Major Orange and Silver Line Issues — Orange and Silver line Metro service has been restored but significant delays remain from an earlier disabled train at the Ballston station. [Washington Post, Twitter, Twitter]

Legislature Considering Expanding I-66 Tolls — Del. Tim Hugo (R), the state lawmaker who proposed a bill that would slash Arlington’s tax revenue from country clubs, is now also proposing legislation that would require I-66 to be tolled in both directions. “If you live in Arlington, D.C. or Maryland, and you are going to Tysons Corner or west, you pay no toll in the morning and you get a free ride home,” Hugo said. “We will even it out by getting some people in Arlington to pick up the freight.” [Washington Post]

County Board Members Lobby Against Country Club Bill — Both Libby Garvey (D) and John Vihstadt (I) were in Richmond yesterday to lobby against HB 1204, the bill that would provide a “windfall tax cut” for Arlington’s two country clubs. [Twitter]

Vegas Bunnies Arrive in Arlington — “Six furry, floppy-eared cottontails dubbed the ‘Las Vegas bunnies’ have arrived at an animal rescue center in Arlington after many others were poisoned in Nevada.” [Washington Post]

Arlington School Board Bill Passes — A state bill that would ensure that Arlington County has the legal standing to have an elected School Board, after questions arose about the School Board’s legality, has passed the state legislature and is now heading to Gov. Ralph Northam (D) for his signature. [InsideNova]

State Bill Would Provide Big Tax Breaks to Arlington Country Clubs

By ARLnow.com

A state bill targeted at helping country clubs in Arlington would cost the county more than $2 million in tax revenue, an internal county report says.

HB 1204, patroned by Fairfax and Prince William County Del. Tim Hugo (R), passed the House of Delegates last week by a vote of 65-33-1. The bill would “reserve to the Commonwealth the power to classify golf courses as land dedicated to open space for assessment and tax purposes,” according to an internal Arlington County fact sheet.

More from the bill’s summary:

Requires the assessing official in any county that experienced at least a 14% increase in population from 2010 to 2016 to specially and separately assess real property that is devoted to open space and contains at least five acres based on the actual physical use of the property, if requested to do so by the owner. The measure is effective for taxable years beginning on or after January 1, 2018.

The bill only would apply to Arlington and Loudoun counties, we’re told, and it would primarily affect the tax assessments of two entities: Army Navy Country Club and Washington Golf and Country Club, both in Arlington.

The country clubs are currently suing the county, challenging their respective assessments. Arlington assesses each based in part on their potential value as developable land, meaning that the assessments — and yearly tax bills — are much higher than if the clubs were assessed only on the basis of their current use.

Army Navy Country Club, near Pentagon City, was assessed at $149 million this year, and paid $1.5 million in taxes last year, according to county records. Washington Golf and Country Club, located along N. Glebe Road near Marymount University, is assessed at $79 million and paid about $839,000 in taxes last year.

The internal county report says that the country clubs are both currently assessed as “large acreage parcels,” valued at about $12 per square foot. By comparison, some residential property near WGCC is assessed at nearly $100 per square foot. Should the legislation pass, the assessed value of the clubs is expected to drop to around $0.50 per square foot, costing the county nearly $2.4 million.

“This is a bad bill for Arlington County government and for Arlington County property owners,” said County Board Chair Katie Cristol, adding that it would set a “damaging precedent.”

The Virginia Municipal League is opposing Hugo’s bill, which is currently being considered by the state Senate. In an email, the organization urged localities to take action.

“Notwithstanding the arguments posed by the bill’s proponents, the measure shatters existing state policy,” the email said. “If approved, nothing will prevent future General Assemblies from giving away local tax dollars and disregarding land use and tax policy decisions that belong to local governments. And, for the record, HB 1204 does not obligate the Commonwealth to reimburse local governments for the resulting lost revenues.”

The state Senate’s Finance Committee is expected to discuss the legislation at a hearing Tuesday morning.

At its meeting Saturday, two County Board members supported advertising a higher property tax rate, based on the risk of lost tax revenue from the bill. A majority of the Board, however, voted against raising the rate.

County Board Advertises No Tax Rate Increase for FY 2019

By ARLnow.com

Arlington County’s property tax rate will not be increasing in Fiscal Year 2019, though many homeowners will be paying higher taxes overall.

The Board advertised a tax rate of $1.006 per $100 in assessed value, including the stormwater tax, which is unchanged from the current fiscal year and in line with County Manager Mark Schwartz’s recommended budget. Even if the rate stays the same when the Board adopts its final budget on April 21, taxes for homeowners will be going up.

“Schwartz pointed out that even without a tax rate increase, the average Arlington homeowner will see an increase in taxes and fees of $297 a year, a 3.5 percent increase over taxes and fees in FY 2018,” according to a county press release. “The increase is due largely to the 3.8 percent increase in residential property assessments in Calendar Year 2018.”

The vote was 3-2, with Chair Katie Cristol and Board members John Vihstadt and Erik Gutshall in favor, and Vice Chair Christian Dorsey and Board member Libby Garvey opposed. Dorsey and Garvey advocated for an extra half cent in the tax rate, citing state legislation that could reduce Arlington’s tax revenue by around $2 million.

During a public comment period, school advocates called for a higher advertised rate, which could provide more money for the Arlington Public Schools budget.

More from the county press release:

The Arlington County Board today voted to advertise no increase in the tax rate for Calendar Year 2018. The Board’s action came after the County Manager proposed a Fiscal Year 2019 Budget that requires cuts in services and staffing to close an estimated $20.5 million revenue-expenditure gap within the existing tax rate.

“The demands on our budget are growing, and with continuing challenges in our office vacancy rate, our revenues are not keeping pace,” Arlington County Board Chair Katie Cristol said. “The Board, with the community, will spend the next two months evaluating and prioritizing how to deliver quality services within our existing tax rate.”

As cost pressures from Metro and new schools grow, Cristol warned, the Fiscal Year 2020 and 2021 budgets will require additional fiscal discipline.

“Tough choices lie ahead for our community,” she said. “But by taking these steps now to rebalance in County government spending, we aim to ensure Arlington’s fiscal sustainability in the years ahead.”

The Board voted 3 to 2 to advertise a real estate tax rate of $1.006, (including stormwater tax,) per $100 of assessed value, the same as the Calendar Year 2017 tax rate. Cristol and Board Members John Vihstadt and Erik Gutshall voted yes and Vice Chair Christian Dorsey and Board Member Libby Garvey voted no, saying they preferred to advertise a tax rate of $1.011 per $100 of assessed value.

“Arlington is at risk, with legislation pending in Richmond, of losing nearly $2 million in revenue that will affect both the County government and Schools budgets,” Dorsey said. “Revenue reductions of that magnitude will require eliminating essential programs and services, or raising the tax rate. Advertising a slightly higher tax rate would have allowed the Board to engage with our community on the best way to meet this potential fiscal challenge.”

By law, the County can adopt a real estate tax rate equal to or lower than what is advertised, but cannot adopt a higher rate. The Board also voted to advertise higher rates for some fees.

JUST IN: Proposed County Budget Would Trim Programs, Keep Tax Rate Steady

By ARLnow.com

Community paper shredding events. Arlington’s poet laureate. The Citizen newsletter.

Those are a few of the relatively small cuts that add up to enough savingsin County Manager Mark Schwartz’s new proposed budget to bridge Arlington’s $20 million budget gap.

The proposed $1.27 billion budget, which is being presented to the County Board today (Thursday), keeps the county’s property tax rate steady — at $0.993 per $100 in assessed value, per the County Board’s earlier guidance — while generating some new revenue through slightly higher utility taxes and additional paid parking hours, rates and fines, among other measures. It includes $775.9 million for the county’s operating budget and $498 million for schools.

Schwartz says his budget cuts 50 county programs and eliminates 48 jobs, including 29 currently filled positions. It includes $8.4 million in spending reductions, $6.6 million in fee and tax increases and $5.5 million in “funding realignments.”

The cuts are necessary, in part, due to budget pressures from Metro and the need to raise employee salaries, particularly in the police and fire departments, to remain competitive with nearby jurisdictions. Arlington’s fast-rising home values, which have helped the county keep up with rising expenses, were offset this year falling commercial property values caused by higher office vacancy rates.

Among the ways the proposed budget increases county revenues:

  • Commercial utility taxes increased by 5%
  • Residential utility tax increased to $3/month per utility (revenue earmarked for schools and the county’s Affordable Housing Investment Fund, which is proposed at $13.7 million, matching last year’s AHIF proposal)
  • Parking rates increased by $0.25/hour
  • Parking meter hours extended to 8 p.m.
  • Parking fines increased from $35 to $40
  • Household Solid Waste fee up $2/year

Among the proposed cuts and “realignments:”

  • The Citizen printed newsletter, sent to all county residents ($82,000/year)
  • Lee Highway planning process scaled back ($500,000)
  • ART routes 54 and 92 eliminated ($350,000/year)
  • Snow blower loaner program eliminated ($30,000/year)
  • Free community paper shred events eliminated ($20,000/year)
  • Arlington Initiative to Rethink Energy residential rebate program cut ($555,000)
  • Poet laureate eliminated along with other humanities programs ($77,000)
  • Long Bridge Park Fourth of July event entertainment eliminated ($50,000)
  • County window washing reduced from twice to once per year ($48,000)
  • In-house pharmacy and lab services cut from Dept. of Human Services ($625,000)
  • Reduction in DHS employment services staffing ($825,000)
  • Eliminate the Office of Community Health in the Dept. of Parks and Recreation ($483,000)
  • Eliminate a youth boxing program ($85,000)
  • Eliminate a parks volunteer office ($197,000)
  • Reduce money earmarked for Crystal City infrastructure, originally intended for the streetcar project, as generated via Tax Increment Financing (about $1 million)
  • Reduce the parks department vehicle fleet ($52,000)
  • Cut county funding for Arlington Independent Media by 20 percent ($91,000)
  • Eliminate the county cable administrator, who receives complaints about cable service from residents ($181,000)

The budget includes raises for many county employees, and even higher raises for most public safety personnel. Police officers, from the rank of sergeant on down, will see an additional 2.5 percent increase in pay, while firefighters will get an extra 4 percent bump over other county employees. Schwartz acknowledged that the departments have been having trouble filling open positions due to competition from other jurisdictions.

Schwartz said he and the county’s economic development office are determined to reduce Arlington’s office vacancy rate, which is back to nearly 20 percent after ticking down a bit from its previous high water mark. Schwartz expects office vacancies will put pressure on the budget for the next several years.

“It remains my primary focus to work on that vacancy rate, to get it down,” he said in a budget briefing with reporters. “We need to work through this problem. We have a lot of economic projects that are coming into the county, but this is the underlying problem that is going to challenge us in coming years.”

The Arlington County Board will advertise a property tax rate on Saturday, setting a ceiling on what the rate may go up to, and will hold various budget work sessions and hearings between now and final adoption on April 21.

Morning Notes

By ARLnow.com

Career Center Redevelopment Could Be Big for Pike — County and school officials are moving forward with a redevelopment of the Arlington Career Center site, which holds the possibility of helping to shape the future of Columbia Pike. “We see this as a huge opportunity to create a crown jewel of Columbia Pike. The only question is the amount of money that might be invested,” said Columbia Pike Revitalization Organization Executive Director Cecelia Cassidy. [InsideNova]

N. Va. Real Estate Continues Upward Trajectory — As illustrated by a table showing the past four decades of Northern Virginia real estate sales and average prices, the local real estate market has been on a long-term upward trend. Last year continued the trend, with a 4.1 percent increase in prices and a 6.9 percent increase in total sales. [InsideNova]

Five Guys at DCA Closed for Renovations — The Five Guys burger restaurant in Terminal C of Reagan National Airport is reportedly closed, temporarily, for renovations. [PoPville]

TechShop Evicted in Crystal City — Financially troubled makerspace chain TechShop has officially been evicted from its location in Crystal City. [Washington Business Journal]

Some Experts Say Prepaid Property Tax Will Be Deductible — Don’t ask for a refund of your prepaid property taxes, say some tax experts. Despite the IRS stating that taxes prepaid to jurisdictions like Arlington County will not be deductible on your taxes this year, before a cap on state and local tax deductions goes into effect, some experts believe that legal challenges to the IRS determination will prevail. [Washington Post]

Applications Accepted for ‘Neighborhood College’ — “Learn how to become a neighborhood advocate and effect change through Arlington County’s free Neighborhood College program, which meets on eight consecutive Thursday evenings, beginning April 12, 2018.” [Arlington County]

Arlington Property Values Rise at Slower Rate in 2018

By Chris Teale

(Updated at 5:15 p.m.) Property values in Arlington County rose at a slower rate this year compared to last year, according to the latest tax assessments, and slower than projected by staff.

The value of all residential and commercial property rose by 1.9 percent over the past year, compared to 3 percent the previous year. Homes went up in value by 3.9 percent, compared to a rise of 2.5 percent last year.

It means the average home value in Arlington, including condominiums, townhouses and detached homes, is now $640,900, up from $617,200 last year.

“Year after year, we see through our rising residential property values that Arlington is a place people want to live,” said County Manager Mark Schwartz. “At the same time, we’ll have some challenging budget decisions in the months ahead, given that our overall property values did not grow as much as projected.”

While residential real estate continued to rise, the value of office buildings was down significantly.

“Office properties, which represent 17.6 percent of the County’s total property tax base, saw significant declines — down 6.9 percent since last year,” the county said in a press release. “This decrease was driven primarily by office vacancies as well as rent concessions.”

The slower growth overall will mean a budget shortfall for Fiscal Year 2019, with debate on county spending levels to continue this year. Staff initially projected a 3.2 percent increase in the value of all real estate, so with actual growth of 1.9 percent the county will need to find savings to balance the budget.

Schwartz and Arlington Public Schools Superintendent Patrick Murphy will present their respective budget proposal late next month.

The full county press release is after the jump.

(more…)

County Offering Refunds on Tax Prepayments

By Chris Teale

With uncertainty still swirling about whether taxpayers can deduct property tax prepayments, Arlington County is offering refunds for those who have already made deposits.

County Treasurer Carla de la Pava said the county has already collected around $18.2 million in prepayments from 2,300 accounts, with it still unclear whether taxpayers can deduct those prepayments from their 2017 federal taxes.

And unlike some other jurisdictions, de la Pava said, Arlington is offering refunds on prepayments for those who have changed their minds about paying early. She said around 75 people so far have requested a refund.

“This bill was passed through Congress, and it was very quick and it caused a lot of uncertainty,” she said. “I do not want that uncertainty to penalize Arlington citizens.”

Under the new GOP tax bill, State and Local Tax (SALT) deductions are capped at $10,000. For many Arlington taxpayers with pricey homes, this means they will lose part of their deduction next year and thus potentially pay higher federal taxes.

The Treasurer’s Office issued an advisory on how to request a refund on December 28, the morning after a ruling by the IRS limiting deductions to property taxes assessed in 2017.

Arlington is unable to assess 2018 property taxes until the County Board sets the tax rate in April, and de la Pava said with so many things still up in the air, it was better to give taxpayers options.

“It’s interesting, because what I’ve heard from many people is that they are certainly not going to request a refund right away because I think there’s a sense in the community that… things might change,” she said. “I even had one customer suggest that there might be something brewing in Congress that would make that IRS advisory stale information. There’s a lot of uncertainty still.”

The full advisory issued by the Treasurer’s Office is after the jump.

(more…)

County: ‘Consult With a Tax Professional’ About Property Tax Prepayments

By ARLnow.com

(Updated at 1:55 p.m.) Arlington County has collected some $11.5 million in property tax deposits for future years, according to Treasurer Carla de la Pava, but it’s unclear whether taxpayers will be able to deduct those prepayments from their 2017 federal taxes.

Following a ruling by the IRS yesterday, limiting deductions to property taxes assessed in 2017, the county issued a statement Thursday afternoon that made it clear that Arlington is unable to assess 2018 property taxes until the County Board sets the tax rate in April.

The Arlington County Treasurer’s Office and Arlington County have received multiple inquiries based on the statement issued by the Internal Revenue Service on December 27, 2017, concerning deductibility of the property taxes. Neither the Treasurer nor the County staff will be offering individuals advice on tax issues and suggest people consult with a tax professional for any IRS related questions.

Arlington County, through the Department of Real Estate Assessment issues real property tax assessments each year in mid-January. The assessments for Calendar Year 2018 will be completed in mid-January and mailed to residents at that time.

Bills for taxes owed for calendar year 2018 are generated by the Treasurer after a tax rate is set by the County Board in April.

Those bills are due and payable in two installments – by June 15 for the first portion, and October 5 for the second portion.

De la Pava says the tax office has been inundated with tax deposits this week, but the activity has slowed considerably since the IRS ruling.

Taxpayers hoping to save on their taxes before the $10,000 cap on state and local tax (SALT) deductions goes into effect next year have jammed the phone lines and the payment queues of the treasurer’s office. So far, $11.5 million in deposits have been made across more than 1,500 tax accounts, de la Pava said.

That includes some $4.5 million collected over a six hour span Wednesday, before the ruling, but it also includes $1.8 million collected today following the IRS determination.

De la Pava said that her office, which is roughly two-thirds staffed because of the holidays, handled 1,500 phone calls yesterday, while keeping wait times to around 30 minutes.

“It was crazy,” she told ARLnow.com. “They did the best they could.”

De la Pava and other county officials are being careful not to give federal tax advice to residents given the ongoing uncertainty.

“The only thing I can say is that the real estate assessments have not been made and will not be made in 2017,” she said.

Bobby Grohs of RLG Tax Advisors, an Arlington-based CPA firm, told ARLnow.com that the letter of the law suggests that deposits for Arlington property taxes will not be deductible.

“A prepayment of anticipated real property taxes that have not been assessed prior to 2018 is not deductible in 2017,” he said. “Since Arlington does their 2018 assessment in January, prepaying these taxes in 2017 will not permit you to take a deduction on your 2017 tax filings.”

But that has not stopped the tax deposits, which are continuing to flow in, though at a reduced rate. Some taxpayers believe that there will be lawsuits that may end up reversing the IRS ruling, we’re told.

Other D.C. area jurisdictions, meanwhile, are collecting prepayments that should be deductible under the IRS rules. Among them are the City of Falls Church and the District of Columbia, which have already assessed next year’s property taxes.

Morning Notes

By ARLnow.com

IRS Rules on Tax Prepayments — Updated at 12:35 p.m. — Taxpayers hoping to get an additional deduction by prepaying their local property taxes may be out of luck. The IRS ruled late Wednesday afternoon that prepayments can only be deducted in limited circumstances that may not apply to many local jurisdictions — but are, reportedly, applicable to others. The ruling comes after local residents have already prepaid millions in taxes. One tipster told ARLnow.com that there was a line of “probably forty people,” some “paying for up to three years,” at the Arlington County treasurer’s office Tuesday morning. [Washington Post]

Disabled Train Delays VRE — Virginia Railway Express trains were delayed during the morning rush hour due to a disabled freight train north of Crystal City. [Twitter]

Ebbin Proposes Multiple Terms for Va. Gov. — State Sen. Adam Ebbin (D-31) has proposed legislation that would take the first step towards allowing governors in Virginia to be elected to two consecutive terms, rather than the current one term limit. [InsideNova]

County Crews Treating Roads for Snow — Arlington County crews were out yesterday pre-treating local roadways with brine, in anticipation of a winter weather event. According to forecasters, the only snow in the forecast is an expected dusting on Saturday. [Twitter, Twitter, Capital Weather Gang]

AED and SCORE Partnering — “Beginning this January, BizLaunch and SCORE DC will formally partner on a variety of entrepreneurial workshops from advanced social media training to lead generation to how to become an 8(a) contractor and much more.” [Arlington Economic Development]

Flickr pool photo by Fritz Myer

County Has Already Collected More Than $1 Million in Prepaid 2018 Taxes

By ARLnow.com

The new GOP tax bill has prompted numerous Arlington taxpayers to prepay their 2018 taxes more than a year ahead of time.

The bill, which was just signed into law by President Trump this morning, caps State and Local Tax (SALT) deductions at $10,000. For many Arlington taxpayers with pricey homes, this means they will lose part of their deduction next year and thus potentially pay higher federal taxes.

To counter that, some Arlingtonians are planning to take a higher deduction on their 2017 taxes by prepaying their property tax for future years.

Arlington County and other Virginia localities allow residents to make tax deposits. County Treasurer Carla de la Pava tells ARLnow.com that more than $1 million in tax deposits have been prepaid by 144 residents as of Friday morning.

The Treasurer’s Office has been “inundated with people trying to pay in advance” and is expecting the prepayments to continue through the end of the year, de la Pava said. The first prepayment was made by an attorney about two weeks ago, when the bill was first passed by a narrow Republican majority in the U.S. Senate.

“It’s interesting because in Arlington [prepayments] started much earlier than anywhere else in the state,” de la Pava said, noting that it “has been a really big topic of conversation” on the Treasurers Association of Virginia email listserv.

Some prepayers are depositing more than a year of taxes in advance, while others are paying whichever potion of next year’s they can afford, we’re told.

Tax deposits have been an option for many years, but the Treasurer’s Office hasn’t seen a prepayment surge like this at any point in recent memory.

“We have never seen these volumes,” said de la Pava.

Tax deposits are invested by the Treasurer’s Office in “very safe” investments, earning a small return for the county.

De la Pava is encouraging taxpayers — particularly those paying the Alternative Minimum Tax — to consult with a CPA or tax expert before deciding whether to prepay. More from the treasurer’s website:

If you are interested in prepaying your 2018 taxes, the Treasurer’s Office can accept tax deposits on active Real Estate accounts. While our office does accept tax deposits, we are not experts in federal tax law and are not able to offer any advice, guidance, or opinion on whether or not your deposits will be deductible on your 2017 federal tax returns. If you have questions about making a tax deposit on your Arlington real estate, please email us at [email protected] or call 703-228-3090.

Morning Notes

By ARLnow.com

‘Great Chocolate Race’ Cancelled — “The Great Chocolate Race, originally scheduled to take place in Rosslyn on Saturday, December 9, 2017, has been canceled due to circumstances outside the control of Arlington County and its Police Department. Runners who signed up to participate are advised not to respond to the area as planned.” [Arlington County]

Tax Bill Could Boost N. Va. Over D.C. — The GOP tax bill currently making its way through Congress could make Arlington and Northern Virginia a significantly more attractive a place to live for higher-income residents, tax-wise, than D.C. That is due to the proposed elimination of state and local tax deductions. [D.C. Policy Center]

Decal Design Finalists Revealed — Four finalists have been chosen in the Arlington County treasurer’s annual vehicle decal design contest for high school students. The potential designs for the 2018-2019 decal include ball players atop a goalpost, a depiction of Arlington’s skyline with blossoming cherry trees in the foreground, a ferris wheel from the county fair and the Cherrydale War Memorial. [InsideNova, InsideNova]

Flickr pool photo by Bekah Richards

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