Prince William data center revenue hits $100M mark

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This article was written by WTOP’s news partner InsideNoVa.com and republished with permission. Sign up for InsideNoVa.com’s free email subscription today.

Data centers are projected to pump over $100 million into Prince William County coffers during the 2023 fiscal year, up 18% over last year, with more than $40 million projected to come directly from the county’s computer equipment and peripherals tax.

Michelle Attreed, the county’s chief financial officer, put the industry’s remarkable growth into raw numbers during a recent presentation to the Board of County Supervisors.

The figures come in the wake of heightened and vehement scrutiny of new data center projects and accompanying board votes.

Just 10 years ago, with the industry in its infancy, the county pulled in $6.2 million from taxes on data centers. It was the first year the county began tracking the industry’s total tax bill. Since then, data center tax revenue has grown by 1,535% to $101.41 million in the current fiscal year, according to Attreed. Over the past decade, that revenue has grown by 32% annually on average. Tax dollars collected from data centers now make up about 8% of the county’s total tax revenue.

For context, the county projects it will collect over $800 million in total real estate taxes for the current fiscal year.

The revenues still pale in comparison to those collected by Loudoun County, though, which projects over $500 million in revenue from data centers for the current fiscal year. Loudoun has over 100 data centers, whereas Prince William County had 33 in operation as of October and over a dozen under construction.

The presentation, part of Attreed’s report on the county’s general revenue estimate, also came as supervisors considered another increase to the computers and peripherals tax, which applies to all businesses but is mostly paid by data centers. A final decision on that matter hasn’t been made.

In 2021, the board approved a plan to gradually raise the rate from $1.25 per $100 of assessed value to $2 by fiscal year 2025. County Executive Chris Shorter’s proposed fiscal 2024 budget was in keeping with that plan, but several supervisors have said the rates should increase more dramatically.

As the board continues to work through changes to the budget proposal, it set an advertised “peripherals” rate – the maximum that the final rate can be set at – of $2.15 for the upcoming fiscal year. Supervisors will hold a taxes and fees public hearing on April 11 and are scheduled to adopt the fiscal 2024 budget at their April 25 meeting.

According to Attreed, every 5 cents of the tax rate nets the county roughly $1.4 million in revenue, and that number continues to rise. In fiscal 2023, the county is projected to draw $40.3 million from that tax, compared to $38.81 million from data center real estate and $21 million from the furnitures and fixtures tax.

“Data centers make up a large piece on the business tangible [taxes], that’s where the big dollars are” Attreed told the board, “about 97% of the computer and peripheral and furniture and fixture revenue. … Real estate, it’s a smaller piece, but as more come on it’s a growing piece.”

Several county supervisors are hoping to see the data center’s industry contribution grow even more. When Shorter presented his budget proposal for fiscal 2024, the board’s three Republicans broached the idea of raising the computers and peripherals tax rate to as much as $2.15. According to the county’s projections, increasing it to $2.12 would be enough to reduce the real estate tax rate to 96.7 cents, keeping the average real estate tax bill flat for homeowners.

“I think it’s time to talk about increasing it in a more aggressive manner,” Brentsville Supervisor Jeanine Lawson said last month. “Things have changed dramatically, and honestly, as much as we might want to set a schedule … elected bodies change, circumstances change, business climates change. Everything is subject to change.”

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