Prince William County expected to hike data center taxes while cutting homeowner's rate

The Prince William Board of County Supervisors appears likely to raise taxes on data centers in hopes of making good on the promise that data center revenue will help to offset the county's residential tax burden.

In a related move, the board unanimously agreed to cut next year's real estate tax rate to 92 cents per $100 in assessed value. At that rate, the average tax bill will be about $26 more than the current year, according to county officials.

Before the change, under the most recently proposed rate of 96.6 cents per $100 of assessed value, the average homeowner’s tax bill would have seen a 5% bump, or an average increase of $243. The 96.6 cents figure is the current rate. 

The board's moves came in preliminary votes during a budget markup session Tuesday evening. Supervisors will give final approval to tax rates and the entire $1.7 billion county budget April 23. 

On Tuesday, board members said the residential tax cuts were made possible by the data center rate increase. County officials said the data center tax increase would generate an extra $54.7 million in revenue during the next fiscal year, while the real estate tax decrease would result in a $21.1 million reduction. 

The net effect of the changes -- an extra $33.6 million -- would be split with the county school system, under a longstanding revenue-sharing agreement, giving an extra $19.2 million to the schools and $14.4 million to the county. The extra revenue represents just under 2% of the entire county budget. 

The new budget will take effect July 1.

The data center rate hike will bring Prince William County more in line with its neighbors in how it taxes the tech hubs. Data centers currently pay a rate of $2.15 per $100 of assessed value on computers, but the board in a bipartisan fashion raised that rate to $3.70.

The move was approved with the backing of Democratic Chair Deshundra Jefferson, Democratic supervisors Kenny Boddye of Occoquan, Andrea Bailey of Potomac, Margaret Franklin of Woodbridge and Republican supervisors Tom Gordy of Brentsville, Yesli Vega of Coles and Bob Weir of Gainesville.

Neabsco Supervisor Victor Angry, a Democrat, was the sole opponent to the plan.

The data center rate increase was approved in the face of opposition from the local business community, which pleaded with the board not to raise taxes so quickly for fear of destabilizing some small businesses that aren't data centers.

Prince William Chamber of Commerce President and CEO Robert Sweeney said the move will affect more than 5,000 small businesses that will have to pay increased taxes on computers and peripherals, for which they last year paid an average of $253 under the current rate of $2.15.

“As a business community, we are frustrated and embarrassed that our Board of Supervisors would take a position to hurt over 5,000 businesses for less than $1 million in added revenue with less than 90 days’ notice,” Sweeney said in a letter to the board prior to the vote.

Voicing concern for small businesses, Franklin issued a directive for county staff to push for the General Assembly to exempt non-data center small businesses that will be affected by the tax hike.

But Boddye said he's not convinced all small businesses are against the move.

“I have talked to a few small businesses and small business owners who live in my district, and frankly they have told us, ‘Hey, if you scale back that real estate tax rate while doing the $3.70,’ they’re more than happy to pay a little bit more knowing that, again, the data centers will be paying their fair share,” Boddye said.

Angry did not explain his vote against the data center tax increase during the meeting.