Raise My Tax, Please

Photo credit: WDBJ 7

by Dick Hall-Sizemore

The voters in one of the most conservative and rural parts of the state recently acted contrary to stereotype and voted to raise their taxes.  Furthermore, that action was made possible by legislation sponsored by their Republican delegate in the General Assembly

Halifax County has been wrestling for several years with the issue of replacing the county’s lone high school. The general consensus has been that something needed to be done, either renovation or replacement. The daunting question was the projected cost: $88 to $99 million, depending on the option chosen. The county already had committed (under court order) to incurring substantial debt to substantially renovate the courthouse.  Therefore, it was felt that the current tax base could not support the debt needed for the high school project, without a substantial, and politically unlikely, increase in the tax rate.

At the request of the county, Del. James Edmunds (Republican) introduced legislation authorizing a referendum on increasing the local sales tax that the county could levy. Over substantial opposition from his fellow Republicans, Edmunds got the bill passed. The legislation authorized the county to have a referendum on increasing the local sales tax by up to one percent, with the proceeds dedicated to school construction or renovation. (To illustrate the reluctance of the General Assembly to give localities more discretion on taxation, the bill had to be narrowed substantially from its original authorization of any county or city to levy an additional unlimited sales tax for school construction.)

At the general election in November, 71 percent of the voters voted in favor of the sales tax increase.

The increased sales tax revenue will not be sufficient to cover the entire projected debt service on any bonds issued to finance the school construction. Therefore, the Board of Supervisors will still be facing some hard choices, including a possible increase in the property tax rate. But the voters made the upcoming decisions much easier.

Summary: As has been discussed at length in this blog, rural areas of the Commonwealth face many challenges. The residents of at least one conservative county have chosen to increase their taxes in order to improve their educational facilities to benefit their children and, hopefully, make the area more attractive to business in the future. Other areas may follow their example.

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13 responses to “Raise My Tax, Please

  1. re: ” (To illustrate the reluctance of the General Assembly to give localities more discretion on taxation, the bill had to be narrowed substantially from its original authorization of any county or city to levy an additional unlimited sales tax for school construction.)”

    So… Republicans in Virginia refuse to allow citizens in a county to vote in a referendum to pay for needed infrastructure?

    This is why we need Citizen-initiated referendum in Virginia.

    It’s pretty bad when the guys in Richmond decide that it’s an “abuse” to let citizens decide their own needs and how to pay for them.

    I’d like to see a list of the GOP guys who support denial of a local right to decide.

    • To be fair, the opposition in the House was not exclusively from Republicans.
      Of the 23 “no” votes, 7 were from Democrats, 5 of whom (Carroll Foy, Gooditis, Guzman, Reid, and Tran, are from NoVa, by the way). The Republicans were:

      Bell, Richard
      Bell, Robert
      Bloxom
      Brewer
      Cole
      Collins
      Fowler
      Freitas
      Gilbert
      Landes
      McGuire
      McNamara
      Miyares
      Orrock
      Poindexter
      Ware
      To provide some perspective, legislation affecting only named localities is called special legislation and needs 2/3 vote in each house to pass. In the House, that amounts to 67 votes. So this was closer than it looked on the surface.

      In the Senate, all the opposition came from Republicans:

      Black
      Chase
      Hanger
      McDougle
      Newman
      Obenshain
      Peake
      Reeves
      Stuart
      Sturtevant
      Suetterlein

      In the Senate, 27 votes were needed to pass; the bill got 29, passing even more narrowly.

      • Just a thought –

        I think it is increasingly hard to declare that someone is from NoVa. In my mind, there are three NoVa’s – Beltway, inner and exurban. By my count, the 5 Democrats opposing the bill were 0 Beltway, 2 inner and 3 ex-urban. We will increasingly find it more and more difficult to predict the future of Virginia politics without understanding the differences in the three areas of NoVa.

  2. I’m not one who says that all tax increases are evil. Sometimes they are necessary. On the other hand, I’d like to see that all avenues have been exhausted to avoid them. Perhaps in the case of Halifax County’s new high school, all other avenues wereexhausted. I’d like to know more.

    • I don’t know a lot about the county budget. The current budget calls for about $95.5 million in expenditures. The projected debt service on the bonds needed for the new schools would have been about $5.4 million, which would have been a 5.5 percent increase in the budget by itself. It was estimated that the property tax rate would have to be raised by 21 cents, or more than 40 percent, to raise the revenue to cover that debt service. The Board of Supervisors raised the property tax by 2 cents, about 4 percent, last spring to cover increased costs, including debt service on the courthouse capital project.

      Localities used to get low-interest loans for school construction from the state Literary Fund, but those days are past.

      One advantage of using an increase in the sales tax as a major source of revenue to finance the schools is not all the money will come from residents. The county estimates that as much as 20 percent would come from folks passing through or other non-residents.

      • Halifax County has a residential real estate tax rate of $.50 per $100 assessed value. Adjacent Campbell County is $.52, Charlotte County is $.56, Mechlenberg County is $.45, Pittsylvania County is $.62

  3. But the important point is that people who live in a locality should have the right to decide if they want to pay to build needed infrastructure for their own county – in a referenda …..

    and it’s outrageous that the GA would have a general rule that applies to all localities that they cannot do this without “special permission”.

    Thanks for the list and I’m surprised that some of them are Dems and that counts against them in my mind.

    It’s NOT that we would favor tax and spend policies – or not – and we actually do have elections to decide that but to have elections for people to decide then prevent them from local decisions they (and their elected BOS) deems THEIR issue – to group them into ALL localities and say that NONE of them have the basic right to decide on a referenda basis on things that affect them – is just a “KING knows best” mindset – a vestige of when Kings did rule Virginia and apparently an integral part of the so-called “Virginia Way”.

    The one area where there might be some valid argument is when the tax is also put on others outside the county but that aspect doesn’t seem to stop the State from allowing it to happen for the sales tax in general or meals taxes, etc.

    Jim wants all avenues exhausted. Fine – if that means it’s a county issue where the elected BOS and county citizens decide what avenues are “exhausted” – it’s NOT for another county representative to decide which is what we’re doing when we have a statewide rule that prevents ANY locality from deciding their own needs!

    We get all this talk about the counties not being fiscally responsible for their own affairs .. the rural counties are accused of abusing the urban counties on the composite index, etc – and the rural counties are dinged for not doing as much for education as the urban ones do – and here we have a rule that prevents them from improving their own system even as other localities have additional taxing authorities that they don’t have and can’t have with “approval”.

    GRUMP!

    Dick – thank you for your articles even if they get folks spun up! The interesting thing is that you bring up issues that most of us are unaware of – that we ought to be aware of!

    • Jim Bacon better start wishing for a dilution of Dillon’s Rule in Virginia now that the Democrats control the General Assembly. Maybe let localities decide if they want to enact a plastic bag tax for example.

      • There has been talk on this blog and in the main stream media about Virginia ridding itself of the Dillon Rule now that the Democrats will be in power. Doing so would not be as easy as waving a magic wand or a piece of legislation. Some aspects of the Dillon Rule are baked into the state constitution, such as the requirement that counties have a referendum before issuing general obligation bonds, the cap the amount of general obligation bonds that cities may issue, and, of course, the stipulation for constitutional officers. The General Assembly could amend the Code to authorize localities to take some actions now prohibited, such as the banning of firearms in public buildings or banning the use of plastic bags. Of course, the Dillon Rule would still be operative: localities could exercise those powers because the General Assembly authorized them to do so.

        • Re “localities could exercise those powers because the General Assembly authorized them to do so.” Yes, exactly so; but it is the GA’s narrowly drawn set of permissions to the counties that is the problem. The GA retains nearly all of the power in a “Dillon Rule” state. However, in Virginia it grants permission by statute, and that at least can be amended.

          There are states where the presumption is the reverse: the localities have all the powers granted generally to the State except as expressly withheld by the State government. Maybe DJR can supply a list.

          • Dick Hall-Sizemore

            Surprisingly, Virginia is in the majority of states on this issue. The concept of home rule vs Dillon’s Rule is a little complicated. From the sources I consulted, it seems that only 9 states are pure “home rule”, that is, the localities can exercise any power unless expressly prohibited by state law from doing so. They are: Alaska, Iowa, Kansas, Massachusetts, Montana, Nevada, New Jersey, Ohio, and Oregon. Of the remainder, 30 are Dillon Rule states and 11 are mixed, meaning either there are some limitations or home rule is limited to specified areas.

  4. “The voters in one of the most conservative and rural parts of the state recently acted contrary to stereotype and voted to raise their taxes.”

    Halifax County, what a breath of fresh air. An entire county of American people who care about educating their children.

    Lets hope those folks are equally determined to ensure their kids get a real education in school, whether it be new or old, instead of today’s typical drivel.

    Hopefully, they’re working hard every day on that systemic problem too.

  5. Home Rule versus Dillon Rule. Almost all states have State Level law that applies to all subordinate jurisdictions.

    I don’t think any of them can do anything they want unless the State specifically prohibits it.

    Simple things like how a crime is defined and the process and procedures for trying crimes like Murder or regulations on insurance or state inspections of vehicles, etc, etc, etc.

    Another thing I noticed is that at the local level – there are codes and ordinances where the State allows the locality to write them – within the constraints of state law – but when State law changes – the locality has to then update it’s own ordinances to stay consistent with the state.
    Seems like this is an annual process in Spotsylvania when laws and codes are changed at the state level. It actually happens more often because changed laws at the State level have to “flow” down to the State regulations and implementations.

    I don’t have a problem with State Level laws and regulations promulgated statewide – that’s appropriate – but when State can prevent a locality from having a referendum on taxes – that the citizens in that locality think they need to do – and the rationale at the state level is that tax increases in general – even at the local level are to be denied without state level approval – that seems to be Dillon on steroids.

    I suppose that one could claim that the locality always has the ability to increase the property, real estate tax rate to pay for things like schools but still if some counties have the ability to increase the sales tax and other counties have to get “permission” – and it’s really not a simple permission – it has to have the approval of a majority of the entire General Assembly – that seems pretty onerous.

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