Statewide “Halifax” Taxing Authority Effort Ends for 2022 Session

March 1, 2022

On February 25, legislation giving local governments additional voter referendum approved revenue raising authority was laid on the table in the House Finance Committee’s Subcommittee #3. As previously reported, SB 472 (McClellan) would permit any county or city to impose an additional local sales and use tax of up to 1 percent, if initiated by a resolution of the local governing body and approved by voters at a local referendum. The revenues of such local tax would be used solely for capital projects for the construction or renovation of schools. Any tax imposed shall expire when the costs for capital projects are to be repaid and shall not be more than 20 years after the date of the resolution passed.

Currently, this authority is limited to the qualifying localities of Charlotte, Gloucester, Halifax, Henry, Mecklenburg, Northampton, Patrick, and Pittsylvania Counties and the City of Danville. SB 37 (Norment) would expand this authority to Isle of Wight County and is also supported by VACo, while SB 298 (Deeds), would do the same for the City of Charlottesville. These bills expand on the authority first given to Halifax County in 2019 and passed the Senate by wide, bipartisan margins. Unfortunately, all three bills were defeated in subcommittee by a vote of 4-3.

Though the outcome was not necessarily surprising given the similar fate of the House companion bills in the same subcommittee earlier this session, it is nonetheless disappointing. Both the House and Senate budget proposals contain $500 million or more in dedicated funding to support local governments with school renovation and repair. These proposals are certainly welcome and appreciated. However, given that more than half of K-12 school buildings in Virginia are more than 50 years old and the amount of funding needed to replace these buildings is estimated to cost $24.8 billion, additional local funds will need to be leveraged if the Commonwealth has any hope of addressing this issue in a timely manner. The problem is that many localities face significant challenges in raising sufficient funds to undertake these projects. These challenges include over-reliance on real property taxes to generate revenue, which can have vastly different yields depending on the locality and disproportionately burden a subset of taxpayers within a jurisdiction. This raises concerns over equity and diversity of revenues.

The defeat of these bills ends any chance for a change to the Code of Virginia expanding the special authority this session. Though some members of the subcommittee raised concerns about these proposals at the meeting on the 25th, it must be noted that at no point was there any public testimony in opposition to any of these proposals. Furthermore, in addition to strong in-person public testimony in favor of the bills, numerous written public comments were provided in support.

VACo sincerely thanks Senator McClellan and Delegate Hudson for carrying the statewide authority bills. VACo also would like to thank its members who responded to our Action Alerts for these bills. We will continue to advocate for, and provide updates on, other legislative actions related to the issue of school construction.

VACo Contact: Jeremy R. Bennett

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