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Leesburg council weighs options to eliminate $25 vehicle license fee as Loudoun offers one-time grant
Summary
Councilors discussed three options for a $25 annual vehicle license fee after Loudoun County offered a one-time grant for tax year 2025 to towns that reduce the fee to $0; accepting the grant would reimburse FY2025 losses but create an approximate $900,000 FY2026 revenue shortfall unless the council reintroduces the fee or offsets the cut.
Town staff outlined options for the town’s $25 annual vehicle license fee and the county’s one-time grant-in-aid offer during a work session discussion led by a finance staff member. The fee applies to motor vehicles, motorcycles and trucks registered in town.
The county’s offer: staff explained that Loudoun County’s treasurer and the Board of Supervisors moved the county fee to $0 effective for tax year 2025 and offered towns a one-time grant equal to their lost vehicle-fee revenue for tax year 2025 if the town opts to reduce its fee to $0 for that tax year. The grant covers the fiscal year ending June 30, 2025; it does not extend into FY2026.
Options explained by staff - Take no action: keep the $25 fee. The town would retain about $900,000 in annual revenue included in the FY26 proposed budget. - Reduce/eliminate the fee for tax year 2025 and accept the county’s one-time grant in aid: for FY25 the grant would reimburse about $900,000 and produce no net impact for the current fiscal year; for FY26 (the manager’s proposed budget) the town would face a roughly $900,000 revenue shortfall because the grant is not available for that year. - Reduce the fee for FY25 to accept the county grant and then reassess or reinstate the fee in a future year. Staff noted the county’s grant is a one-time offer and that Loudoun cannot legally bind future town councils to keep the fee at zero.
Why it matters: the manager had included the $900,000 in FY26 revenue assumptions; eliminating the fee without replacement funds would require cuts to the proposed budget or identification of alternative revenues. Council members debated whether to accept the one-time county aid for FY25 to gain temporary relief while preserving the option to reinstate the fee later.
Council discussion highlights - Several council members favored taking the one-time county reimbursement to avoid immediate revenue loss in FY25 and use the time to plan for FY26. Council Member Steinberg said accepting county money for one year and reconsidering the fee for FY26 was a viable option. Council Member Kotowski supported accepting the county grant-in-aid for the one-year relief.
- Council members asked whether the town could accept the county’s offer and later re-implement the fee. Staff advised that accepting the grant for the 2025 tax year would not legally prevent the town from reinstating the fee in subsequent years; council direction could change in future budget cycles.
Next steps Staff noted a county deadline to provide notice of the town’s decision (council discussion referenced a late-February deadline). Council did not take a formal vote at the work session; members discussed bringing the matter to the next meeting to give staff direction. The manager cautioned that a permanent elimination of the fee would require reductions equal to roughly $900,000 in the FY26 budget if not offset.
Ending: Council discussion continued without formal action; staff will return with a formal agenda item and any requested clarifications before the county’s opt-in deadline.
