Why does Virginia have such an also-ran economy? Perhaps one reason, among many, is that its combined state and local corporate tax rate is higher than that of 24 other states. We’re not hostile to business like, say, Illinois or New Jersey, but we’re not welcoming either. — JAB
by Barbara Hollingsworth
Most Virginians are painfully aware that it’s becoming much more difficult to make ends meet. Prices for food, housing, gasoline and other necessities have soared. Inflation hit a 40-year high of 9.1 percent in June, the largest yearly increase since January 1982. And a recent study from the University of Iowa found that a typical American had to pay $669 more for basic living expenses than they did just two years ago.
All while the Commonwealth of Virginia was pocketing $2 billion in “surplus” revenue that was not anticipated and therefore not included in the two-year $165 billion state budget the General Assembly passed earlier this year. Most of that windfall was the result of the Federal Reserve’s monetary inflation, which made the prices of consumer staples soar because there were suddenly a lot more dollars chasing the same amount of goods and services.
But inflation had another unwelcome effect. It also pushed Virginia taxpayers into higher tax brackets despite the fact that their actual living standards went down, not up.
Governor Glenn Youngkin wants to set aside $400 million for tax relief in his revised budget, which he will present to the state legislature in December. But that’s less than a quarter of the total surplus. The budget signed by Youngkin also includes $450 million to pay for potential cost overruns on the commonwealth’s capital projects due to … you guessed it …. inflation. Continue reading
by Jon Baliles
One story you will be hearing about and living through in the next week or so (if you live in the City) is that the new assessment notifications are arriving in people’s mailboxes. And they are literally though the roof.
Some areas are up from 18% in the Westover Hills area and Scott’s Addition to 20% increases in the East End, to 41% in the Fan. Sales of homes in the last year are running super high which is driving valuations.
Richie McKeithen, Richmond City Assessor, says:
Richmond is seeing an influx of people moving here from New York, DC and Philadelphia. The normal vacancy rate for homes in the city is usually between 15% and 20%. Right now, it’s around 1%.
And they’re coming here, and they’re buying property, and they have resources to buy properties at a higher value than what we have them assessed for.
Secretary of Finance Stephen Cumming’s slide showing most of the final surge of unexpected revenue before June 30 came from payments from business owners and investors. Click for larger view.
by Steve Haner
First published this morning by the Thomas Jefferson Institute for Public Policy.
Does last week’s glowing report on Virginia’s state tax collections presage additional tax relief for struggling families? The first question is, was the news really glowing? Continue reading
The Commission on Local Government has published its 2022 update on the fiscal condition of Virginia localities. No surprises here — the same geographical patterns hold as in the past. The most stressed localities are uniformly cities, and the most stressed are small cities. The least stressed are counties in Northern Virginia and on the metropolitan fringe of Richmond. Two remarkable outliers, Bath and Highland counties, seem to be in great shape relatively speaking. View the report for details of your jurisdiction.
Of greatest interest is the change in revenue capacity between 2019 and 2020, the latest year covered. The biggest winner: Sussex County, with a gain of 14.5%. The biggest loser: Prince George County, with a loss of 4.o%. Continue reading
A 2020 Rav4.
by Bill Tracy
Fairfax County just mailed out its 2022 Car Tax bills, and the tax increase is substantial.
The Board of Supervisors granted us a 15% discount off of the inflated 2022 Blue Book vehicle values. That’s nice, but it looks like the Board failed to mention that the car tax was increasing for a second reason: the “subsidy” was reduced for the first $20k value of the car.
Here are some car tax facts for my personal vehicle.
Base Case last year (2021):
Bill’s 2020 RAV4 Value 2021: $ 23,725
Tax Before Relief: $1,084
Tax Relief/Subsidy (under $20k Value): $525
Net Car Tax Owed 2021: $558 Continue reading
Posted in Taxes
Tagged Bill Tracy
by Dick Hall-Sizemore
Although gas prices have receded substantially from the levels that sent everyone into a tizzy earlier this year, Governor Youngkin has not given up on his proposal to lower gas taxes. Now, however, his rationale for the cut is different.
According to veteran reporter Dave Ress, in an article that appeared in the Richmond Times-Dispatch, the Governor told a group of supporters in Virginia Beach recently that the gas tax should be decreased because it brings in too much money for the state transportation fund. The governor said that some level of tax needed to be retained as a use fee.
If the governor really believes that the state brings in too much money for the transportation fund, it seems strange that he let go unchallenged the General Assembly’s budget proposals to use $554 million in general fund appropriation to fund highway and bridge construction projects as follows:
- Widen I-64 between the Bottoms Bridge exit in New Kent to James City County–$539 million (Item 447.10, Chap. 1 (HB 29) and Items 452 and 485, Chap. 2 (HB 30))
- Extend Nimmo Parkway, Virginia Beach–$10,000,000 (Item 447.10, Chap. 1 (HB 29))
- Replacement of Robert O. Norris Bridge–$5,000,000 (Item 452, Chap. 2 (HB30))
by Kerry Dougherty
Got a gangster in your family? How about a dominatrix? An altar boy?
Well, good news for all of them. Starting today and running through Sunday at midnight they can buy items they desperately need like bandanas, corsets and altar outfits. All without paying Virginia sales tax.
Yep, it’s the commonwealth’s annual Sales Tax Holiday weekend. Actually, it’s the “combined” sales tax holiday. A few years ago Richmond merged the spring “Hurricane Preparedness” tax break with August’s “Back to School” event, turning this into an extravagant weekend that allows you to shop anywhere from Home Depot to Victoria’s Secret. Tax free.
Combining the two holidays was smart. As someone who’s lived in hurricane country since 1984, I can tell you that absolutely no one shops for batteries, generators or even toilet paper until they see Jim Cantore lashed to a telephone pole in front of their house. Continue reading
by James A. Bacon
Governor Glenn Youngkin’s popularity in Virginia was the top-line story from a new Virginia Commonwealth University poll. The survey, published yesterday, found that 49% of Virginians polled approve of his job as governor compared to 38% who disapprove. It’s not surprising to see his popularity holding up so well. Virginians tend to be favorably disposed toward governors not caught up in scandal, and Youngkin is no exception.
The more interesting data from the poll was buried in the VCU press release. Two points stand out: attitudes of Blacks toward taxes, and attitudes of Whites toward Historically Black Colleges and Universities (HBCUs).
Leaving the plantation on taxes. Youngkin’s tax cut on gas is more popular among African-Americans than the electorate as a whole. The three-month elimination of the motor vehicles fuel tax garnered a 58% approval rating from all Virginians but 76% from Blacks. (Elimination of the state portion of the grocery tax was broadly popular across the partisan divide, with seven out of ten Virginians in favor. VCU did not break out the results for Blacks on that question.) Continue reading
by James A. Bacon
There’s good news for Virginia on the fiscal front. We need to make the most of it.
The Old Dominion closed fiscal 2022 with a $1.94 billion General Fund revenue surplus, Governor Glenn Youngkin announced yesterday. Total revenue rose 16.3% from the previous fiscal year.
“Fiscal 2022 was an extraordinary year for revenues and finished strong,” Secretary of Finance Stephen Cummings said. While the state has yet to recover all the 133,000 jobs it lost during the pandemic, job growth has been strong this calendar year — 3.5%. And, while competitor states all exceed their pre-pandemic employment levels, Virginia has scored some economic-development coups — LEGO, Raytheon and Boeing most notably. Over the first four months of 2022, Virginia ranked 15th nationally among the states in employment growth.
Youngkin makes a case for giving some of the revenue surplus back to taxpayers, who are getting clobbered by 9% inflation. I’m sympathetic. Taxpayers are getting the shaft. But I have bigger concerns.
In all likelihood, Virginia’s economic and budget surges are unsustainable. They are byproducts of economic recovery from the COVID-19 shutdowns and massive federal stimulus. The effects of COVID recovery are largely spent, and the federal stimulus is unsustainable. Washington’s political class may delude itself that it can continue ramping up deficit spending with economic impunity, but history suggests that it cannot. Continue reading
by Arthur G. Purves
Around June 28 Fairfax County homeowners will get their real estate tax bill, which is due July 28. The typical homeowner’s real estate tax bill will increase by $484, or 6.8%, from $7,159 to $7,643.
Around Sept. 5, Fairfax County car owners will get their personal property tax bill, which is due Oct. 5. The typical household’s personal property tax will increase by $151, or 36%, from $420 to $571.
Combining real estate and personal property tax increases, the typical household will have a $634, or 8.4% tax increase. This is the largest increase since Gerry Connolly’s 9.7% increase in 2006, at the end of the housing bubble. (When he was county chairman, Congressman Connolly increased taxes 15% in 2003, which makes him the record holder for the largest tax increase since 1982.)
However, if you read county chairman Jeff McKay’s April 26, 2022, newsletter about next year’s budget, you’d think your taxes are going down. Continue reading
Posted in Taxes
Tagged Arthur Purves
by Steve Haner
Virginia’s gasoline and diesel taxes will rise 7% on July 1, about three more cents per gallon when all the elements of the tax are combined. This is the inflation-driven cost of living adjustment which Governor Glenn Youngkin (R) and most legislative Republicans tried to short circuit, but which was preserved by a vote in the Virginia Senate last week.
The new gasoline tax will be 28 cents retail, 8.2 cents wholesale plus another 0.6 cents per gallon to fund a program for removing old underground tanks safely. That’s a combined tax of 36.8 cents per gallon. The taxes on diesel will be 28.9 cents retail, 8.3 cents wholesale plus the same tank fee, a total of 37.8 cents per gallon. Continue reading
by Steve Haner
The gas tax in Virginia today is 33.8 cents per gallon and the diesel tax is 34.7 cents per gallon. The fresh proposal from Governor Glenn Youngkin (R) for a 90-day suspension of those taxes does not eliminate Virginia’s full fuel tax bite. The oft-ignored wholesale tax will remain while only the retail tax goes away.
Bacon’s Rebellion has plowed this ground before. The Division of Motor Vehicles’ posted information on taxes remains intentionally misleading, listing the retail taxes in one place and mentioning the wholesale taxes somewhere else. These taxes are also set up by different sections of the Code of Virginia. Youngkin’s proposal would amend only one of those Code sections. Continue reading
by Steve Haner
Are you enjoying paying more for gasoline? Have you noticed how that works its way through and inflates the price of just about everything else you buy? The other shoe drops in July when Dominion Energy Virginia increases its prices to reflect the rising cost of fuel. It will also spread more inflation virus throughout the economy.
The cost of fuel and purchased electricity is a separate charge, designated Rider A, on every monthly electric bill, residential and commercial. The annual fluctuations are usually small, and can go either way, but the increase this time will hit everybody hard and may hold for years. (Here is the case file.) Continue reading
by Chris Braunlich
Cruise over to the website of Cristo Rey Richmond High School, and you’ll learn that all of the students there are from low-income families.
You’ll also read about scores of national and local partnerships, providing hundreds of work-study opportunities to teach students the art and science of working in an office environment and the soft skills of communications, customer service, office etiquette, and team building – the sort of skills employers highly value and that make young people highly employable.
What you won’t learn is that those positive programs – and the future of their scholars — may now be in severe jeopardy.
The school came to Virginia because of the Education Improvement Scholarship Tax Credit (EISTC), a program offering donors to qualified scholarship programs serving low and moderate income children a 65% state tax credit. Last year, more than $600,000 in scholarships helped Cristo Rey serve students who needed a better educational placement, and whose family incomes come in at less than $65,000 for a family of four. Continue reading