Loudoun County administrator proposes FY2026 budget driven by data‑center revenue; cuts tax rates, fully funds schools

County Administrator Tim Hemstreet on Feb. 12 presented Loudoun County’s proposed fiscal 2026 budget, telling the Board of Supervisors the plan would set the real‑property tax rate at 80.5 cents per $100 of assessed value — one cent below the homeowners’ equalized rate — and reduce the personal property tax on vehicles by 67 cents in the second half of the year.

"I'm pleased to present to you and the residents of Loudoun County my proposed budget for fiscal year 2026," Hemstreet said, describing the document as a plan to fund county services, Loudoun County Public Schools and debt service for capital projects.

Hemstreet told the board the proposal fully funds the school board’s operating request and calls for a $47.7 million contribution to the county’s revenue stabilization fund, which was created in 2023 to manage risk tied to data‑center revenue. He recommended not lowering the real‑property tax rate further and suggested prioritizing additions to the stabilization fund if the board removes expenditures during deliberations.

Why it matters: Loudoun’s commercial real‑property portfolio rose dramatically in the last assessment cycle, driven largely by data centers. Hemstreet said commercial assessments increased about 50 percent in 2024, with data centers adding roughly $16 billion in value and now representing a large share of the county’s commercial tax base. That shift reduced pressure on the residential tax burden and made the proposed tax cuts possible, Hemstreet told supervisors.

Key figures and program highlights cited in the presentation include: total combined taxable real property near $171 billion; more than $5 billion in new commercial investment in the prior year; data centers adding about $16 billion in assessed value for a total near $41 billion; data centers comprising about 73 percent of the commercial portfolio; and 49.4 million square feet of existing data‑center space with a practical capacity estimate around 70 million square feet. Hemstreet said personal property tax revenue from data‑center equipment accounts for about 33 percent of total property taxes and data‑center real‑property taxes about 14 percent.

The proposed budget prioritizes: funding debt service and the capital improvement program, fully funding the school board’s request (a local transfer increase Hemstreet described as roughly $123.4 million), funding employee compensation adjustments across multiple departments, and allocating remaining new local tax funding on a 40/60 split between county operations and schools after stabilization and capital priorities are met. The FY2026 capital improvement program totals approximately $3.8 billion over six years, with transportation representing about 40 percent, county projects 33 percent and schools 27 percent of the total.

Supervisors responded with largely supportive comments and questions. Supervisor Kershner described the county’s situation as a ‘‘data boom.’’ Supervisor Turner called it "the most amazing budget I've ever seen." Several supervisors pressed staff for more detail on what state responsibilities the county is funding, and Hemstreet said staff would itemize those items at the board’s request. Supervisor Brixman, participating remotely, and others asked staff to provide an itemized list of services the Commonwealth has underfunded so the board and public can see specifics.

Hemstreet cautioned that 2024’s revenue growth — including the 50 percent commercial revaluation — is unusually large and should not be assumed as a new norm. He reiterated the purpose of the revenue stabilization fund: to smooth short‑term volatility in data‑center revenue and to provide budget flexibility if industry revenue declines.

Public process and next steps: Hemstreet and staff outlined public input opportunities. The county will hold a budget public input session on Feb. 22 and two public hearings on Feb. 27; both are scheduled at the Government Center and residents may sign up to speak. The board will continue budget deliberations at scheduled work sessions, with staff requesting written questions from supervisors by Feb. 21 to support efficient review.

What the presentation did not decide: Hemstreet delivered the proposal and answered questions; the board did not take a formal vote on the budget at the Feb. 12 meeting. No ordinance or tax rate was adopted during this session. The presentation begins the formal deliberation process that will include committee work sessions and public hearings before final adoption.