LOUDOUN COUNTY, Va. — Northern Virginia has become a hub for data center, and those centers are pushing hundreds of millions of tax dollars into local counties.
In fact, a recent post on reddit claimed data centers comprise about 30% of Loudoun County's tax revenue.
“I read the Loudoun County FY23 budget this morning," the redditor said on the NoVa subreddit. "It forecasts 30% of its $1.98B in tax revenue - or $590mm - will come from the data centers."
The redditor then questioned why their property taxes have stayed flat for 12 years, if the county is getting all this revenue.
THE QUESTION:
Do data centers make up roughly 30% of Loudoun County's tax revenue?
THE SOURCES:
- Loudoun County Fiscal Year 2023 Budget
- Buddy Rizer- executive director for economic development in Loudoun County, Virginia
THE ANSWER:
WHAT WE FOUND:
Our VERIFY researchers found that data centers are projected to pay more than half a billion dollars to Loudoun County.
"Over the years, we've been able to continue to build and grow our tax base and make it more resilient," Rizer said. "We feel like we have one of the more resilient tax bases in the country due largely to the investment by our data centers.”
In the FY2023 budget, under Personal Property Taxes, "computer equipment data centers" are expected to bring in more than $576 million in tax revenue.
We should note, that’s a slightly different number than what the reddit post said.
We did the math and that makes up 29 percent of the total projected tax revenue, which is about $2.01 billion (that's also slightly different number than what the post said).
However, that’s just money from computer equipment—the county also collects what’s called “real property taxes” from data centers, aka taxes on the land and the buildings.
That means even more revenue; although, the budget doesn’t provide specifics on exactly how much.
"So there are the real property—that's the real estate property that the data centers pay— which is a very significant number. But the biggest number is actually the personal property tax," Rizer said. "And that is the tax on the computer equipment inside the data centers. And that has been a big driver of tax revenue for the county."
So we can VERIFY, yes, data centers make up at least 29% of the county’s projected tax revenue – although it’s likely even more.
As for the second part of the post, about the redditor’s property taxes staying flat over the last 12 years, Rizer says that’s a good thing, considering property values have been going up.
Here are the numbers from previous Loudoun County budgets: in FY2011 the real property tax rate was 1.3 cents for every $100 your house was worth. In FY2022, it was just $0.98 per $100.
So the tax rate has gone down, but housing values have skyrocketed, which may explain why our redditor saw their taxes stay flat.
“I always tell people is that if the data centers weren't here, their tax rate would be about $1.43, which means that their…tax bill would actually incrementally increase," Rizer said. "So it's actually a pretty good deal.”
One last thing— a number of people commented about how data centers get a generous tax break from the state.
That's also true.
To incentive data centers to build in Virginia, the Commonwealth exempts some data centers from paying Sales and Use Taxes.
Our VERIFY researchers looked at Virginia’s most recent financial report, and found that in FY2021 that exemption totaled $124.5 million dollars.
According to the report, the exemption sunsets on June 30, 2035.