Push For Higher Data Center Tax Gains Traction In Prince William County

PRINCE WILLIAM COUNTY, VA — Prince William's Board of County Supervisors heard from some residents Tuesday that the tax on data center equipment should be higher.

In the fiscal year 2025 budget process, the Board of County Supervisors advertised a rate of $3.70 per $100 of assessed value for the personal property tax on business tangible computer and peripherals, which includes data center equipment. That is the highest rate that could be adopted during the final budget approval and would match the current personal property tax rate on vehicles. During the last budget cycle, the equipment tax rate was raised from $1.80 per $100 of assessed value to $2.15 per $100 value.

County Executive Christopher Shorter's budget recap presentation indicated every 5-cent increase to the data center personal property tax could generate $1.8 million in revenue. The budget recap outlined different options for a lower tax increase on data center equipment.

Board Chair Deshundra Jefferson, who unseated former Chair Ann Wheeler in 2023 with a platform against data centers, has pushed for an increased tax on data centers. She said the data industry expressed concern about the tax increase potentiall being approved with 90 days notice but said she has talked about it throughout her 2023 campaign.

"I know that this is going to be a tough vote. I know that people are feeling pressure from the industry, from people who have written campaign checks, but I'm going to say for me this is not a vote that I take lightly. It's a vote I'm going to take based on my own integrity, because for me, integrity cannot be bought," said Jefferson. "And for the people of Prince William County, for the people who are...disproportionately impacted by this development, should have a disproportionate amount say in what we're doing next."

The discussion on a higher tax rate comes as the board discusses budget challenges such as an anticipated shortfall for Potomac and Rappahannock Transportation Commission's OmniRide commuter buses, affordable housing funding, pedestrian and bicyclist improvements and a potential data center stabilization fund.

"We have a lot of needs in our county. But if we want to get serious about meeting them, we are going to have a meaningful raise in the [computer and peripherals] tax rate," said Jefferson.

Occoquan District Supervisor Kenny Boddye also indicated he would support a higher rate.

"I do think we need to get as high as possible with the [computers and peripherals] tax," said Boddye. "I'm in favor of us going to that max amount so we can get as much flexibility as possible to fund all these additional asks while also being cognizant that we should also be looking at lowering the tax rate a little bit more off the real estate taxpayer."

During budget public hearings, many of the speakers showed support for raising the data center equipment tax rate. Jefferson noted some of the speakers were involved with opposing the massive Digital Gateway data center development approved to be built near Gainesville.

Elizabeth Martorana, a Gainesville District resident, showed supervisors a map of all the data centers in Virginia, including 39 companies in Northern Virginia. She believes increasing the tax to $3.70 immediately is a "no-brainer." Martorana said even if federal government data centers can't be taxed, the county should get more revenues from other data centers.

"Some of you are afraid, you're afraid of what the data center is going to say to you, and I don't know why," said Martorana. "I feel like a board or two before you got us into this mess, and I think it's up to you to resolve this mess as far as the taxes go."

Bill Wright of Gainesville believed the tax rate increase is overdue after former Chairman Corey Stewart proposed the $3.70 rate in 2018. He noted Loudoun County charges a $4.15 tax rate, while Fairfax County charges $4.57 and Fauquier County has proposed $4.15.

"Why are we worried that raising our data center tax rate to only $3.70 might not be as painless as possible to big tech behemoths whose massive presence in Northern Virginia has already been fueled by generous taxpayer-subsidized incentives?" Wright said.

One possible use of increased data center equipment tax revenue could be to support affordable housing, one of the top issues in the county and Northern Virginia.

Wright believes the county should consider allowing the data center equipment tax rate to be above the car tax rate with funds supporting affordable housing or providing relief for the meals tax.

Jill Norcross, executive director of Northern Virginia Affordable Housing Alliance, pushed for the data center tax increase to provide a $5 million dedicated affordable housing fund to produce more affordable housing.

"Making financial and policy investments in affordable housing is not only the right thing to do but it's the smart thing to do," said Norcross. "Affordable housing benefits us all from an equity perspective as well as an economic development perspective."

The Board of County Supervisors will have a budget markup on April 16 and final budget adoption on April 23. For more information on the proposed budget, visit www.pwcva.gov/budget.