updated june 2020
D.C. Mayor's Budget Anticipates Decrease In Tax Collections Due to COVID Pandemic
Last month, the Mayor of the District of Columbia released a proposed budget for Fiscal Year 2021 that specifically referenced the COVID pandemic’s anticipated effect on property taxes over the next few years. The Mayor’s report acknowledged that “collections are expected to be affected by the COVID pandemic in two ways.” First, the Mayor is anticipating an increase in property tax appeals. Second, according to the Mayor, the next Tax Year – Tax Year 2022, which has a date of value of January 1, 2021 – “will reflect the recession impacts on real property values, particularly commercial.”
The budget anticipates that the “2020 pandemic is expected to have a bigger impact on [commercial] property taxes than” residential property. To that end, the Mayor is expecting commercial property taxes to “decrease by 0.5 percent in FY 2021 and by 2.3 percent in FY 2022, before returning to growth in FY 2023.” Not surprising, a reduction in property tax collections will be “particularly driven by reduced assessments of hotels, retail and restaurants – the industries mostly affected by the pandemic.”
Based on the Mayor’s analysis, the implication is that while retail and hotel assessments will decrease, the assessments of office properties will remain relatively flat, resulting in a lower overall reduction in collections of 2.3%, as opposed to a scenario where there is a greater decrease in collections from commercial property taxes.
Jonathan L. Cloar, Esquire
Wilkes Artis, Chartered
American Property Tax Counsel (APTC)