Falls Church leaders have begun talks on a possible tax surcharge on commercial property to fund transportation improvements.
If it’s enacted, owners of non-residential parcels in the city could pay an additional rate of up to 12.5 cents per $100 assessed value each year, similar to surcharges in neighboring Arlington and Fairfax counties.
Council member Laura Downs, who requested the discussion at the Nov. 14 meeting of the City Council’s budget and finance committee, said that she doesn’t currently support a surcharge but that getting a start on the matter is beneficial.
“I learned a lot today,” she said after the briefing.
Having the option for a new revenue source is something to put “in our back pocket, that we could pull out if we really needed it,” Downs said.
State law allows localities to impose a tax surcharge, but only if the revenue goes to transportation and transit improvements. At the forum, City Manager Wyatt Shields said the funds would most likely go toward sidewalk improvements.
Shields said before any consideration took place, there would have to be “a difficult conversation with the business community.”
In some cases, the conversation might prove very difficult indeed, based on remarks from Ross Litkenhous, who chairs the city’s Economic Development Authority.
“I’m adamantly opposed to the idea,” he told city leaders. “You are shifting, disproportionately, the tax burden.”
Though any future tax would be assessed on owners of commercial property, it would then trickle down to businesses renting space, Litkenhous said.
Litkenhous argued that the city’s business community already pays more than its fair share of taxes. Adding another would be “like pouring salt on a wound,” he said.
Owners of commercial property in the city did receive some tax relief this year, when the City Council shifted costs for residential trash collection and recycling to homeowners. Previously, it had been funded out of general city coffers, spreading the cost between the residential and commercial sectors.
At the Nov. 14 meeting, Mayor Letty Hardi said any tax surcharge on commercial properties should be weighed against other options available to raise revenues and spread out the burden. Getting such a list together would be beneficial, Hardi said.
“Obviously, we have a lot of needs and wants,” she said.
Council member Erin Flynn said a surtax could help support any loss in federal transportation funding in coming years.
While some Northern Virginia localities impose the tax surcharge, Alexandria and Loudoun County do not, city staff said.
Should Falls Church opt not to impose the surtax, one meeting participant said, the city could tout the lack of one when trying to lure new businesses and development.