Local Chamber Jumps On The Tax Hike Bandwagon
By Greg L | 4 April 2008 | Local Economy, Prince William County | 27 Comments
At the same time the business community is reacting to a fairly significant commercial property tax hike in the county, the Prince William Regional Chamber of Commerce is trying to develop a rationale for advocating new taxes that would affect businesses in the upcoming special session of the General Assembly in Richmond this summer. The Chamber has recently asked members to complete a survey regarding additional taxes that would replace those imposed by regional taxing authorities in Northern Virginia and Hampton Roads which were ruled unconstitutional, and as so often happens with surveys, the questions and available answers demonstrate a clear bias. Armed with the inevitable results of this survey, the Chamber will doubtlessly be asking the General Assembly to impose even more of a tax burden on local businesses that are already bracing for the impact of property tax hikes.
The property tax rate in Prince William County doesn’t differentiate between residential and commercial property, which is the case with the majority, if not the entirety of Virginia localities. Usually this doesn’t cause much of a problem, since assessments tend to be relatively comparable between the two. The recent turmoil in the residential property market, fueled by the sub-prime mortgage meltdown and some disturbing practices in the industry have upset this typical balance, resulting in strongly declining residential assessments while commercial property assessments have continued to climb. In an attempt to keep residential tax bills relatively flat during this period, the Prince William Board of County Supervisors has advertised a property tax rate that significantly increased in order to offset these declining residential assessments. Some Supervisors clearly understood the larger picture here and fought for the lowest possible tax rate partly in order to protect the commercial sector in the county, while others didn’t quite demonstrate the same level of understanding and pushed for a $1.00 per hundred (or higher) advertised rate that doesn’t terribly burden homeowners, but significantly increases the taxes that the commercial sector will be subjected to.
The impact on local businesses, according to the MJM, could result in tax hikes of 30% or more. In the face of this the Prince William Regional Chamber is asking members how they would like to finance state transportation projects, and not only do all of the questions in this survey presuppose that increased spending is the only option, but that every possible solution involves increasing taxes. Here’s one of the questions:
The State’s Highway Maintenance Fund lacks the money to meet maintenance needs, which means more than $300 million in construction dollars in the Transportation Trust Fund are being diverted each year to pay for maintenance. The following are several proposed statewide funding alternatives and the dollar potential of each that might be used to fund necessary maintenance and possibly provide additional money for construction. All funds would be distributed throughout the state using the state funding formula.
And here are the choices:
.5% sales and use tax - $520 million/yr
1% increase in gas tax at the rack (wholesale) - $138 million/yr
1% increase in sales tax on vehicle purchases - $220 million/yr
1 cent increase in gas tax - $52 million/yr
.5% increase in vehicle titling tax - $86 million/yr
Other (please specify)
Did anyone notice that this has absolutely nothing to do with replacing the revenues that would have been collected by the regional taxing authorities? Or perhaps that the allocation of revenue that these suggested tax hikes would generate are distributed according to the current and terribly flawed state funding formula that takes money from Northern Virginia and Hampton Roads and spends it elsewhere? Perhaps astute readers will recognize that these tax hikes are being proposed now by Senator Chuck Colgan, who campaigned last year on a platform of not raising the gas tax only to call for the imposition of that very tax as soon as the General Assembly session started this year.
I find it fascinating that the Prince William Regional Chamber is trying to solicit members to advocate for tax increases at the same time these business owners are expressing legitimate concerns about the significant tax increases they’re already going to be subjected to. I really doubt their membership is all that excited about the prospect of raising their cost of doing business in Prince William County even higher, when the potential alternatives that don’t require additional taxes haven’t yet been adequately explored. If Chamber members participate in this flawed survey and provide results that would certainly give the Chamber ammunition with which to pressure our elected officials to advocate for tax hikes, instead of representing the interests of the local business community, they’d be opposing those interests.
Long-term fiscal stability for a locality depends on a strong business community, and it’s important for elected officials to fully understand and adequately address the impacts of budget decisions. Chambers of Commerce are supposed to be a significant part of the efforts to help elected officials understand these, and it’s rather disturbing that in this case they seem to have chosen to do otherwise.
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27 Comments
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Hey Greg, here’s something to get you hyperventilating.
http://latimesblogs.latimes.com/laplaza/2008/04/mexico-reconque.html
The owner of Absolut is French, apparently.
I suppose someone should send them a map of France showing it to be part of Germany.
Anonymous = works for me! Only one or two large population centers involved; larger tax base for the rest of us! It would be much easier to manage from a federal perspective regarding transportation, water, security.
Interesting dynamic between this and the “Homestead Exemption” that was killed in the GA this session. I think the GA needs to catch its breath and take a longer-term view on how to pay for the things citizens will need over the next 10 years. Discussing taxes is always riven with strife but it seems as though we have no clear direction.
Not being critical, just an observation. It is, in fact, what I’m advocating for the City to do…..
Greg Wrote
The property tax rate in Prince William County doesn’t differentiate between residential and commercial property, which is the case with the majority, if not the entirety of Virginia localities. Usually this doesn’t cause much of a problem, since assessments tend to be relatively comparable between the two. The recent turmoil in the residential property market, fueled by the sub-prime mortgage meltdown and some disturbing practices in the industry have upset this typical balance, resulting in strongly declining residential assessments while commercial property assessments have continued to climb.
The tax rate is applied to all properties equaly no matter what the zoning and all properties are supposed to be assesed at full market value. This was done years ago to stop the games counties played years ago by changing the percentage of assesed value as applied to the tax rate. If politicians can lie they always will it seems when it comes to taxes.
As neither the BOCS or you know how the assesed value of residential is different from non Residential properties there is no way they will be equal as to the impact of a tax rate. They are entirely different in how they are determined. The Chamber has no idea and what they are going to propose with be just as mucha failure as Proffers are and have been for over 30 years.
Have you ever asked what it has cost to refund the illegal taxes paid and now being refunded because of the NVTA? The public deserves the mess they are in and people like you who promote the lies of your so called conservative republicns such a Stewart, Stirrup, Frederick and Limgamfelter. There are some very simple solutions and you have heard them before but why be honest and why treat everyone the same. Enjoy the mess the politicians have created and will continue to do so as long as the public loves to elect lieing politicians.
Businesses don’t pay ANY taxes. Those costs are just passed on to the customer. The worst case would be where local tax rates differ and businesses with a higher tax burden move or go out of business because their competition in a neighboring area has a lower overhead.
Reducing or eliminating business taxes entirely would create a boom in sales tax receipts as the local businesses would be able to offer lower prices.
I own commercial property in Prince William County. At the $1.00 rate, my real property tax bill increases 37% compared to last year. My reassessment notice arrived this week.
Businesses CAN NOT pass on these increases to their customers. The market sets prices. I will have to absorb the entire increase out of my own pocket. People who claim businesses pass on cost increases to consumers and don’t pay taxes have no idea what they are talking about.
Our new slogan - Bring your business to PWC and pay our taxes.
“resulting in strongly declining residential assessments while commercial property assessments have continued to climb.”
I don’t know how commercial compares to residential in the county, but in the Park, as of 2006, the value of residential property had gone up significantly while commercial property increased by a much smaller amount.
I suspect this is because the creative financing so many used to overpay for homes was not even offered for commercial property.
You can not count on any business to pass on savings. Just look at all the companies that moved their production lines to China and kept the prices of their products the same. Imagine the profit on a handbag being sold in the USA for over $200, yet it was made in China. It is mostly about how much money they can keep in their own pockets.
Hey , all you Prince William County haters ! What a great concept to attract all those home buyers of foreclosed property ! “Prince William County Virginia, where the only crime of the future will be by white racist criminals “….Sure to attract lots of tax paying business. By the way,…how are you going to pay for your schools, teachers , police , firefighters , health services (especially for your elderly, because not many intellegent young professionals would consider the option of locating there), parks , environmental controls, trash pick-up, county road up keep, animal shelter, funding of county retirement ? ,….not to mention funding county building maintenance , school bus fleet , police car fleet , building inspection, restaraunt inspection..(oh,…. that’s right…fewer of those to inspect…out of business…due to mass emigration…..no pun intended,…my bad)…without raising your property and other taxes?…YES!
Locate to Prince William County , where there will only be white crime and BIG taxes!!!!!!
Andy H said on 4 Apr 2008 at 3:59 pm:
Interesting dynamic between this and the “Homestead Exemption” that was killed in the GA this session.
My thoughts exactly. They fought against the Homestead Exemption because it would lead to a bifurcated tax rate!
The survey is totally bogus because it intentionally slants the responses in favor or TAXES. More, and more, and more ways to take our money as if taxes are the absolute solution for everything.
The slow economy or as some say “recession” are caused by high fuel costs and too many TAXES!
Concerned,
Of course you’re passing costs on to the consumer.
The problem is that after all is said and done the amount of profit you are making after passing your costs on is diminishing.
Higher taxes will force you to raise prices, reduce your own pay, move somewhere with lower taxes or go out of business.
Ted,
We shall see who gets the last laugh. Prince William is on it’s way to becoming one of the most highly desirable places to live and do business in the entire Washington Metro area!
Our streets are free of gang violance, schools will have fewer students and less crowding so they can provide a world class education, no more long waits in hospital emergency rooms, small efficient government with low taxes, lots of parks and open space that where you can go and feel safe. We have even reduced the traffic congestion!!
As for businesses moving here, as long as the planning commission, developers and Board of County Supervisors encourage and approve Class A commercial development it will be the most desirable place to do business.
It’s not surprising the Chamber feels that way — I wonder though if this doesn’t represent the small-business community but the larger corporate entities, commercial developers, or law firms that might not feel the economic pinch as much as a small family-run business with 30-40 employees competing for every sales dollar they get and committed to keeping their employees employed because they all live in the community. I work with small businesses and they cannot pass on to their customers tax increases — increases in regulation costs — increases in health care premiums in a very competitive business environment. They are too busy trying to make a living to complete surveys and be vocal against tax increases at Chamber meetings.
Some in the Conservative movement don’t refer to it as the “Chamber of Compromise” for nothing, “Concerned.”
Dave,
I agree. If there are 13,000 business licenses and only 1,000 Chamber members the results are skewed. If only 20 take the time to fill it out it, its even worse.
In this case you have 5 or 6 representatives from large companies making all the decisions, and I bet most of them can also be found on the Economic Development Council.
Some say Corporations like Carlisle Group are the new world order, we seem to have a few fat cats around here that are trying to do the same thing and they don’t like Chairman Stewart. They’ll destroy the county before allowing him to smell like a rose.
It’s unfortunate for all the small businesses that think the Regional Chamber of Commerce is representing their interests, instead they’re lobbying on behalf of large companies like Dominion and taking a position in support of power lines!
Of course the chamber supports this chambers are always in favor of more transportation infrastructure especially in the greater NoVa region
Its easy to complain work with us to find 300 million in the budget to cut instead of raising taxes
Here is the truth about the funding formulas. NoVa breaks fairly evenly on maintanence even though we have less road miles due to the fact that we have more volume which requires more frequent maintanence and major work on interstates must be done at night
As far as new construction is concerned we also break even. I do have an issue there though because too much is being spent on trolleys bikepaths and sidewalks instead of roads and buses in my opinion
Ari Stotle said on 4 Apr 2008 at 8:59 pm:
The slow economy or as some say “recession” are caused by high fuel costs and too many TAXES!
Ari
There has been no economy for the past ten years. People have been borrowing more and more against the equity in their homes because their incomes have not been increasing. If taxes passed on to the public under the name of “Fees, Admissions, Proffers and other such devious names” were deductible on our tax returns the public would get money back from the Federal government. As long as it is not called a tax the Republicans what the public to think it is not a tax. Just another Con by the politicians. HOnesty and common sense is not part of the BOCS or the GA and especialy those from PWC. Yes high fuel prices are a major problem but lack of increase in take home salary is more of the problem. Part of it is that people just spend and spend what they know they can not pay back either.
America was built on the backbone of small business, and even in todays marketplace more jobs are created from small business. Healthcare costs are out of control, and that cuts in to jobs and decreases salaries.
The Chamber’s should make healthcare a TOP priority. I don’t see it mentioned on their web-site, was it a legislative priority in 2008?
I can’t really figure out just what the value a Chamber of Compromise provides to anyone other than BIG business interests.
Low taxes are great, but you may want to advocate throwing the FD a little help. They are understaffed and reeling from a line of duty death. A world class community should have a great FD. When locating a business in PWC, the owner should be guaranteed a properly staffed FD. This is currently not the case. Cut the taxes to far, and the situation will get worse.
Hey Greg: How ya doing! WOW what place.
I will, as a casual observer, throw my 2 cents into this discussion.
No one wants to pay more taxes than they have to. But you only get what you pay for. So the question becomes: what level of services do you want in PWC. Do you want quality schools, well maintained roads, good police protection, enforcement of zoning and building codes, etc.? These are the community qualities that attact business. The best way to attract business is by creating a community where people want to live and thst businesses want to serve. Business will go where people want to spend their money.
Business tax incentive are unnecessary, and likely harmful in the long run. The incentives transfer local infrastructure burden to the residents of the community, and once started are nearly impossible to end.
The question PWC needs to answer is what kind of community does it want to be. And once that question is answered, the rest will fall into place.
Although I don’t agree with anything I’ve read on this blog, take care old friend.
Again with the no free lunch.
We already paying for lunch, breakfast, dinner, dessert and a movie!
I have had it with Chamber and its support of tax increases. It wasn’t that long ago they supported the sales tax increase referendum that was soundly thumped by PWC voters. It really cracks me up that the tax increase folks who cry about us not getting quality services from county and state government automatically assume that our govt and schools must be operating at 100% peak efficiency and giving them more money is justified. Hogwash!
The PWCRC just lost my membership!
Very skewed. Unacceptable representation of the business community. The chamber is long overdue for competent leadership –president and chairs.
I’ve seen the full survey. The email that it came in explains that the chamber feels something must be done about transportation and wants member input before acting. It doesn’t advocate one way or the other. Every question has an open-ended “other” box, I think they really are trying to find out where their members stand, despite some design flaws in the survey.
The survey reflects previous proposals by the NVTA &/or GA, pretty much verbatim. There doesn’t seem to be an endorsement, more of a “this is what is on the table, how do businesses feel about it?” Don’t get me wrong- I’m glad that the courts did away w/ that mish-mash of hidden fees the NVTA threw together, and would LOVE to see more government efficiency (why did the BOCS max out spending as if the real estate bubble would never burst—don’t get me started!). But, I think this blog is pointing the finger in the wrong direction. Something does NEED to be done about our chronically under-funded roads. All voters should be looking at the GA that developed such a flawed transportation package instead of an organization that is actually trying to get a handle on what its members want.
If you own a business and are worried about your interests being misrepresented, fill out the survey and utilize the “other” boxes to your heart’s content instead of just complaining that you are not represented. My humble advice…
Art V,
Why wasn’t the PWRCC present to speak at Monday’s public hearing advocating a low tax rate? A tax rate across the board of $1 will drive businesses away from PWC. Home values may have dropped, but commercial assessments are fairly consistent.
Nothing like a 40% tax increase in an economic downturn.
Where was the “voice of the business community” Monday night?
When the Homestead Exemption was in the sub-comittee the Chairman of the Board of PWCRC testified against it in Richmond and it passed the House. After the Chamber lobbyed hard against it, Senator Colgan blocked it from passing. The Chamber and Colgan believed it would lead to a tiered tax rate.
We’re already paying for roads. PWC is the only county that funds their own roads. Why should we pay again. Forget NVTA, and a state wide gas tax. Give us our fair share back from Richmond.