Additional Local Revenues for School Capital Costs – the Halifax Model

July 2, 2020

Sources of funding for K-12 school renovation, modernization, and construction costs continue to be a challenge for many localities in Virginia. However, one locality in Virginia has taken an innovative approach to raising additional local revenues for school capital needs that does not involve raising property taxes. Legislation enacted during the 2019 General Assembly session granted Halifax County unique additional taxing authority to address their school construction needs and is estimated to provide the county with $3.3 million annually in additional dedicated revenues.

As reported at the time, HB 1634 (Edmunds) as originally written would have authorized all counties and cities to impose an additional local sales and use tax at a rate as determined by the governing body, if initiated by a resolution of the local governing body and approved by the voters at a referendum. Revenue from the tax would be used solely for capital projects for the construction or improvement of schools. The version of the bill that was enacted was scaled back during the course of debate to only apply to Halifax County, and limited any approved increase of local sales and use tax to 1 percent.

Empowered by this new revenue raising authority, the Halifax County Board of Supervisors unanimously passed a resolution in August of 2019 to place a referendum on the November 2019 ballot. The resolution language was as follows:

“Should Halifax County be authorized to levy a general retail sales tax at a rate to not exceed one percent, provided the revenue from the sales tax shall be used solely for capital projects for the construction or renovation of schools in Halifax County and that the sales tax shall expire by September 30, 2051?”

In November of that year, approximately 70 percent voters in Halifax voted in favor of the referendum.

During the 2020 General Assembly, additional legislation was enacted that grants the same authority conferred upon Halifax County to several additional localities. HB 200 (Wright)SB 943 (Ruff) gives the additional 1 percent revenue raising authority to Mecklenburg County. HB 486 (Marshall) does the same for Henry County, Northampton County, Patrick County, Pittsylvania County, and the City of Danville. HB 1631 (Edmunds) does the same for Charlotte County. Lastly, SB 224 (Norment) grants this authority to Gloucester County as well. These bills passed each chamber by wide margins before being signed by Governor Northam.

One June 24 of this year, Halifax County Administrator Scott Simpson, Halifax County Public Schools Superintendent Mark Lineburg, and Halifax County Chamber of Commerce President Mitzi McCormick gave a presentation to representatives from localities with this authority and VACo staff on their journey from legislation enactment to passage of the voter referendum. This process involved significant communication between the board of supervisors, school board, and members of the community. The presentation can be viewed here.

The condition of the facilities in which children are educated has a direct impact on their ability to learn. Issues like inadequate climate control, lack of modern electric circuitry and internet capacity, and leaking roofs can negatively affect student assessment performance and staff morale, as well as posing major equity concerns. These challenges are further amplified as local school divisions develop and consider reopening plans for the 2020-2021 school year that must account for social distancing and non-traditional methods of instruction as a result of COVID-19.

VACo supports legislation maintaining and enhancing local authority and autonomy including matters pertaining to revenue measures and supports additional state resources and additional funding options for localities for capital and school construction costs.

VACo Contact: Jeremy R. Bennett

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