ANALYSIS: A First Look at Potential Fiscal Impact of Data Centers
By Martin Davis
EDITOR-IN-CHIEF
Budget season has been trying in Stafford County over the past decade, as the demands placed on government to fund public safety, schools, transportation, and other government services have soared owing to a rapidly growing population.
To this point, higher property taxes have often been the solution.
Tonight’s Board of Supervisors Work Session will focus on the General Fund Five Year Financial Plan, and there’ll be a familiar refrain. Government services, and the money needed to pay for them, will continue to grow.
The discussion, however, comes with a fiscal silver lining — data centers.
Over the next five years, the county’s general fund is projected to grow by $163.6 million.
Nearly half of that total — 45%, or about $74.2 million — will come from data centers.
This won’t be an instant fix to all that ails the county’s finances.
This same report projects that school expenditures are going to need to rise significantly over the next five years.
Shannon Eubanks, Community Engagement Program Manager for Stafford County, told the Advance via email that “Overall school increases, as presented in the FYFP are $89.2M, or 54.5% of all new revenue. The forecast of data center revenue, again if this comes to fruition in this structure, is $74.2M.”
But without these funds, the county would find itself in a significant bind.
According to the report to be discussed this evening, the increase in education costs comes mostly from debt service increases ($27.1 million) and operating expenses ($60.7 million).
Other increases will come in county salaries (projected to rise $17.1 million over the next five year), new positions ($23.3 million), as well as capital and other investments ($9.8 million).
Eubanks stresses that these figures and projections are still subject to change.
This is a speculative forecast. Actual revenues will be determined by the rate of development and the rate at which these buildings are occupied and built out. This shows what the opportunity may be if developed at this rate.
She also notes that “The Board has not yet grappled with the use of revenues. The FYFP discussion will be the beginning of creating policy decisions to support the community.”
What is clear is that data centers are going to alter Stafford’s financial future for the better. What isn’t clear at this point is that the institutions that citizens tend to care most about — education and public safety — benefit appropriately from the rise in income.
Consider the state’s lottery. This year, the lottery will send $934 million for education. That represents about 10% of education funding in the state, Gov. Glenn Youngkin said.
But critics say there’s a problem. Bob McNab, professor and chair of the economics department at Old Dominion University, told WTKR channel 3 last year that: “Instead of the lottery doing a one-to-one supplement, they (lawmakers) basically take money out of the education budget and put lottery money in its place. … In other words, here’s my budget, I take some money out of that, I replace it with lottery money, and go, ‘Look at how the lottery is funding education.’”
The problem is hardly new. A 2012 column in the Washington Post made the same observation. “[I]nstead of using the money as additional funding,” writer Valerie Strauss wrote, “legislatures have used the lottery money to pay for the education budget and spent the money that would have been used had there been no lottery cash on other things. Public school budgets, as a result, haven't gotten a boost because of the lottery funding.”
The boards of supervisors in Stafford, Spotsylvania, and Caroline counties will ultimately decide how this influx of data center funds is spent. The shell games that Virginia and other states play with lottery funds should be a powerful reminder to citizens that accountability is key to ensuring this windfall will strengthen the county’s most important institutions, not simply reduce the pressure on taxpayers for paying for schools without providing this institution with the funds it needs to be successful.
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