Vehicle Registration Fee Elimination, Lower Tax Rates Considered By Loudoun Supervisors

LOUDOUN COUNTY, VA — Early guidance on the next county budget by a Board of Supervisors committee suggests tax cuts could be considered. One action could come before the next budget as supervisors mull an elimination of the vehicle license fee.

On Tuesday, the Board of Supervisors Finance/Government Operations and Economic Development Committee voted to recommend the full board consider eliminating the $25 vehicle license fee in tax year 2025. Committee Chair Matt Letourneau (R-Dulles) said Chair Phyllis Randall, who could not attend the meeting, supported the fee removal in tax year 2025. The fee removal would have an estimated budget impact of about $8 million or $9 million.

"I think it allows us to get a sort of a win under our belts in this tax year," said Letourneau at the finance committee meeting. "What we heard at the last meeting was discussion that we really hadn't had before about the difficulties that the treasurer's office actually has collecting this fee, and the fact that this is putting some people in a bad situation who otherwise don't have tax bills at all but have to pay the fee and end up getting late because they forget about it and so on so. And then we also heard very clearly that the fee is not being used in any way to actually collect or enforce."

County Administrator Tim Hemstreet told supervisors that the county is expected to have $159 million in a leftover fund balance at the end of fiscal year 2025. That means removing the vehicle license fee would bring that balance to $150 million. There's also a fund balance of about $250 million from fiscal year 2024.

According to Hemstreet, the board would have to vote at its Nov. 19 meeting to consider the fee removal. The board would have a public hearing and vote on the proposed ordinance change to remove the fee on Dec. 3.

The finance committee opted not to pursue any limited personal property tax reduction in the 2025 tax year. However, the committee voted to request the budget be developed with a 50-cent reduction of the vehicle personal property tax rate from $4.15 to $3.48 per $100 of assessed value. The tax on other personal property would remain $41.5 per $100 of assessed value.

"It will help our residents. I believe this scenario also allows the board to appropriately consider revenue for fiscal year 26 budget process," said Supervisor Koran Saines (D-Sterling). "But ultimately the goal is to have the rate higher for — actually put it out there — data centers, and then residents would have a lower rate for their personal property."

"I think this tax, personal property tax, is the most unpopular thing," added Letourneau. "We get far more complaints about this than we do even the real property tax, probably because it's not held in escrow for anybody. It's something that hits you twice a year that you kind of know that it's coming, but you kind of forget about it, and then the bill is always more than you think it's going to be."

Saines's motion also calls for Hemstreet's budget proposal to be developed with a lower 84.5 cents per $100 of assessed value real estate tax rate. The current real estate tax rate is 86.5 cents per $100 of assessed value. County staff estimated the equalization rate to keep taxes flat for homeowners would be 84.5 cents, and the equalization rate for all property types would be 82 cents.

County staff estimated residential property value growth could be 5 percent in the 2025 and 2026 tax years, slightly above pre-pandemic levels. Commercial assessment growth is projected at 18 percent for the first half of the fiscal year 2026 and 14 percent for the remainder.

The full budget scenario recommended by the committee (attachment 4) is available to view on page 26 of the budget guidance documents.

Letourneau noted that the budget guidance is the first step in the process and could be significantly different from the ultimate approved budget.