Real Estate Tax

Towns may levy a Real Estate Tax in addition to the County’s tax. Towns may conduct their own assessment of property; however, Vienna and Herndon rely on Fairfax County’s assessment information which is provided by the County free of charge. The towns are responsible for billing and collecting the town real estate tax. The FY 2006 taxable assessed value of real property in Small District 5 is $12,076,810,635. Each 1 cent real estate tax rate per $100 of assessed value would generate approximately $1.3 million. The Reston Citizen Association proposal assumes that the town would levy a Real Estate Tax of 11 cents per $100 of assessed value. This rate would generate an estimated $13,284,492.

Personal Property Tax

Towns may levy a Personal Property tax in addition to the County’s tax. This analysis assumed that the proposed town of Reston would not levy a Personal Property Tax since it is not levied in Herndon or Vienna. In Virginia, 128 of the 189 towns levy a Personal Property Tax on vehicles; while, 49 towns levy the tax on business property such as computers and furniture. If the proposed town chose to levy the tax, revenue of $34,685 would be generated for every 1 cent per $100 tax rate levied based on the FY 2005 taxable assessed value of personal property in Small District 5.

BPOL

If the proposed town of Reston imposes a BPOL Tax, the County’s tax would not apply within the town. Vienna and Herndon impose a BPOL Tax, assess business property and collect the tax. A County revenue loss of $9.9 million is projected if Reston becomes a town and levies a BPOL tax; likewise, the town of Reston could generate $9.9 million if the BPOL tax was levied at the same rates as the County’s rates. Estimated receipts are based on BPOL taxes paid by businesses located within Small District 5 in FY 2005 and applying the projected 5 percent increase in County-wide BPOL for FY 2006.

Sales and Use Tax

The Code of Virginia sets a formula for the distribution of Sales Tax receipts for towns. For towns without a separate school district, one-half of the one percent sales tax is distributed between the county and town based on the proportion of school-age population. Based on the FY 2006 Adopted Budget Plan estimate for Sales Tax receipts, the revenue loss to the County of Reston becoming a town is estimated to be $4.1 million. School age population in Small District 5 is estimated to be 10,408, or 5.1 percent, of the County’s total school age population of 202,808.

Vehicle Decal Fee

If the town imposes a Vehicle Decal Fee, the County’s fee would not apply within the town. The towns of Vienna and Herndon issue their own vehicle decals and collect the fee. Based on the number of vehicles located in Small District 5, the County would lose $0.8 million which would be collected by the town of Reston if the town elects to impose this fee.

Consumer Utility Taxes on Gas, Electricity and Telephone Service

According to the Code of Virginia, a town may not levy a Consumer Utility Tax if the County imposes the tax. However, legislation approved by the Virginia General Assembly has exempted seven towns including Vienna and Herndon from this limitation. If a town tax is in effect, the County’s tax would not apply within the town.

Only if Reston was exempted from the limitation mentioned above would the town be able to levy a Consumer Utility Taxes. If an exemption is approved by the General Assembly and the town elected to levy this tax, the County’s revenue loss is estimated to be $6.1 million based on the proportion of households within Small District 5 to total Fairfax County households and the FY 2006 estimate for Consumer Utility Taxes. The revenue generated for the proposed town would be somewhat less because of rate limitations on telephone taxes that would apply to a new town. The Code of Virginia currently limits Consumer Utility Taxes to a rate of 20 percent applied to the first $15 of a residential telephone bill but with no ceiling on a non-residential bill. Localities with rates exceeding the statutory ceiling in effect before July 1, 1972 are allowed to levy at a higher rate. Fairfax County’s Telephone Utility rate is 22.2 percent of the first $50 of a residential bill and on the first $1,600 of a non-residential telephone bill. It is estimated that if the proposed town were to levy a Consumer Utility Tax, $4.9 million could be generated for the town.

E-911

Towns may levy an E-911 Fee if they provide E-911 service. There is no anticipated revenue loss of E-911 fee revenue since the County is currently providing this service to all County residents including the towns.

Mobile Phone Tax

Towns may impose a tax on mobile phones only if it was implemented before January 1, 2000; therefore, a newly incorporated town would not be authorized to levy this tax.

Transient Occupancy Tax

Towns may levy a Transient Occupancy Tax with no rate limit. Of Fairfax County’s 4.0 percent Transient Occupancy Tax, the original 2.0 percent tax does not apply to the towns of Vienna and Herndon and would not apply within the proposed town of Reston. However, Fairfax County’s additional 2.0 percent Transient Occupancy Tax that was implemented on July 1, 2004 applies to the towns located within the County based on State Code.

The FY 2006 estimated revenue loss to Fairfax County from the original 2 percent tax from the four hotels located in Small District 5 is estimated to be $0.9 million. Assuming that the proposed town levies a 2 percent Transient Occupancy Tax, $0.9 million would be generated for the town of Reston. Herndon levies the tax at 6 percent while Vienna levies a 4 percent Transient Occupancy Tax. These town taxes are in addition to the County’s 2.0 tax implemented in 2004.

Bank Franchise

Towns may levy a Bank Franchise Tax and counties may tax only those banks located outside town corporate limits. Information on the number of bank branches within Small District 5 is not available; however an Internet search indicated 22 bank branches with a Reston address. According to Vienna’s Finance Department, the town of Vienna has 11 branches and received Bank Franchise revenue of $0.4 million in FY 2005. A rough estimate of the loss of the Bank Franchise Tax from Reston Banks is $0.8 million. Fairfax County’s FY 2005 Bank Franchise Fees were $6.0 million.

Short-term Daily Rental Tax

Towns may levy a Short-term Daily Rental Tax in addition to the County’s tax. In FY 2005, $10,830 was collected from Fairfax County ’s Short-term Daily Rental Tax from the four businesses located in Small District 5. Since Vienna and Herndon do not impose this tax, it was assumed that the proposed town of Reston would not levy a Short-term Daily Rental Tax.

Cigarette Tax

The proposed town of Reston would not have the authority to levy a Cigarette Tax. Towns may levy the tax only if they had authority to do so prior to January 1, 1977.

ABC Licenses

If the town levies an ABC License Fee, the County’s License fee would not apply within the town. The County is expected to receive $114,868 in FY 2006. For FY 2005, receipts from ABC Licenses collected in Small District 5 were $15,600 from 38 businesses, which the County would lose if Reston were to become a town and the town would collect if it was levied.

ABC Profits

The State distributes a portion of ABC profits to counties, cities and towns based on point of sale. Fairfax County is expected to receive $547,468 in ABC profits in FY 2006 from 18 ABC stores. The County would lose approximately $30,400 from the one store located in Reston , assuming that sales are approximately equal across stores within the County.

Meals Tax/Admissions Tax

While counties may levy the Meals Tax only after approved in referendum, no referendum is required of towns. All localities may levy an Admission Tax. Since Fairfax County does not currently levy a Meals Tax or an Admissions Tax, there would be no revenue loss if the town of Reston were to levy these taxes. Data are not available to estimate the potential revenue generated from these taxes for the proposed town.