Revenue fairness bills headed to the Governor’s desk

March 16, 2020

HB 785 (Watts and Kilgore) and SB 588 (Hanger and Favola) passed the General Assembly on Sunday, March 8, and are headed to the Governor for final action.  The bills, which incorporated related measures by Delegate Krizek and Senators Lewis, Locke, and Mason, are now identical after a compromise was negotiated in a conference committee.

Key provisions of the bill as passed by the General Assembly:

  • Authorizes all Counties to levy a tax on admissions at a rate not to exceed 10 percent, with the exception of Counties in the Historic Triangle where an additional state sales and use tax is imposed.
  • Authorizes all Counties to levy transient occupancy taxes at rates exceeding 2 percent. The revenue derived from rates greater than 2 percent would be spent either (1) for purposes previously authorized or (2) for rates between 2 and 5 percent, for tourism promotion (as is currently required for the Counties that secured the authority to impose taxes up to 5 percent under Virginia Code 58.1-3819).  Revenue from rates greater than 5 percent could be used for general purposes.
  • Authorizes all Counties to impose cigarette taxes at a rate not to exceed 40 cents per pack. This authority would take effect July 1, 2021.  In the interim, the Department of Taxation is required to convene a stakeholder workgroup to make recommendations to modernize the process for collection of cigarette taxes.  Cities and Towns with rates higher than 40 cents per pack would be grandfathered at the rates in effect as of January 1, 2020.
  • Authorizes all Counties to impose meals taxes at a rate not to exceed 6 percent and eliminates the referendum requirement. A locality in which a meals tax referendum failed prior to July 1, 2020, would have to wait six years after the date of the failed referendum to impose the tax.
  • The Division of Legislative Services is tasked with convening a workgroup of stakeholders to recommend any additional technical amendments necessary to effectuate the bill’s provisions and to review the legal authorities and responsibilities of Cities and Counties and report by October 31, 2020.
  • The bill’s provisions (with the exception of the cigarette tax) take effect July 1, 2020.

VACo is extremely grateful for the hard work of the bill patrons and for the support of our members who contacted their legislators on behalf of additional revenue options for Counties.

VACo Contact: Katie Boyle

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