There will be no tax increase on data centers in Prince William County – at least for one more year -- after Corey Stewart’s request to move forward with a possible 60 percent hike in the rate businesses pay on computer equipment died in a tie vote during a special meeting Wednesday night.

Stewart, chairman of the board of county supervisors, called the meeting to vote on “re-advertising” his proposed $2.50 rate on programmable computer equipment – informally called the “tech tax” or the “data center tax” – in time to hold a public hearing on the matter Tuesday, April 30.

The current property tax on such equipment is $1.25 per $100 in valuation. Stewart, R-At Large, has called that rate a “sweetheart deal” and “corporate welfare” and has argued over the last two years that data centers must “pay their fair share” of county taxes. 

Stewart noted Wednesday that Loudoun County charges data centers $4.20 per $100 in valuation for computer equipment and Fairfax County charges $4.57, while Prince William has retained the same $1.25 cut rate it set back in 1999 to lure high-tech companies to the county. 

Both Loudoun and Prince William's data center industries continue to expand because of their proximity to an internet hub in Ashburn, Stewart said. Location is the most important factor for data centers --not the local tax rate, he said.

“Loudoun County gets $300 million dollars a year [from data centers] with which they’ve been showering their schools with revenue, and at the same time they’ve been able to reduce their [real-estate] tax rate,” Stewart said. “This is common sense. The data centers aren’t going anywhere, folks. These are the biggest, richest corporations in the world. … Apple, Microsoft, Facebook, Google …. And all we’re asking them to do … is to pay the same rate, or closer to it, that every other businesses pays in this county. That’s it.”

Stewart’s said his plan would raise about $9.6 million that could be used to shave one cent off the real-estate tax rate – resulting in a savings of about $37 on a home valued at about $370,000 – while providing about $2 million more to local schools and $1.5 million to the county. 

Stewart proposed spending $800,000 of that money to improve access to county mental health services, which would leave $700,000 for other needs, possibly to help pay debt service on a new bond issue supervisors are mulling for the November ballot.

Supervisors who opposed the plan – including Republicans Ruth Anderson, R-Occoquan; Jeanine Lawson, R-Brentsville; and Marty None, R-Coles – argued the move could have a chilling effect on the high-tech sector, which could see the county board as unpredictable and unstable.

None, who is vying for the Republican nomination for board chairman, said raising the tax rate on computer equipment just two months after they pledged in February to further study the issue could impact the county’s future economic development efforts.

After about 45 minutes of debate, Stewart’s plan died in a 4-to-4 tie vote with the board’s newest member – Supervisor Victor Angry, D-Neabsco – voting against the move along with Anderson, Lawson and Nohe.

Voting with Stewart to advertise the new rate and hold a new public hearing were Supervisors Pete Candland, R-Gainesville; Maureen Caddigan, R-Potomac; and Frank Principi, D-Woodbridge.

The final vote was a surprise because Angry was the only supervisor who had not publicly disclosed his position before the vote. 

Stewart announced his plan to raise the tax rate on Thursday, April 11, the same day Angry was sworn into office to fill the last eight months of the late Supervisor John Jenkins’ term. The move suggested that Angry might give Stewart the fifth vote he needed on an issue he’s been pushing for two years.

After the vote, Angry said he voted against Stewart’s proposal not because he doesn’t agree the data tax rate should be higher, but rather because the move came so late in the budget process and just two months after the board voted Feb. 19 to begin discussions with the data center industry about increases in the county’s computer tax rate. To change course on that plan now would not be “the right thing to do,” Angry said.

“We have to honor that, as board members, because that’s what we said. This is an integrity issue, it’s a trust issue,” Angry said. “…I think there is an increase opportunity [with] the data centers, but that is left to the discussion between [County Executive Chris Martino], the data centers, and possibly the small business owners who would be affected by this.”

Angry further said small businesses that believe their bottom lines would be impacted by a possible tax increase should weigh in on the issue as soon as possible.

The Prince William Chamber of Commerce, which lobbied against the tax increase, hailed the vote as a win for both the local business and data center communities. Chamber spokesman Ross Snare said the chamber is open to be part of the discussion about raising the computer tax rate over a number of years.

“It’s up for conversation,” Snare said. “The chamber is looking forward to playing a major part in helping to decide what the proper future tax rate is.”

The supervisors will further discuss their budget for fiscal year 2020 in a markup session, scheduled for Tuesday, April 23, and are scheduled to take a final vote on the budget April 30.

Reach Jill Palermo at jpalermo@fauquier.com

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