Thirty-five percent of Virginia’s municipal governments will be holding a referendum this November on whether to add a 1% sales tax to any transactions that take place in their county or city.
The General Assembly approved amendments to Sections 58.1-605.1 and 58.1-606.1 to allow all Virginia cities and counties to put forth a referendum to their voters to give the locality the power to impose an additional 1% sales and use tax in the locality, provided the revenues from the additional tax are used only for school capital projects.
These are sadly some of the least transparent segments of municipal-government spending. Allocations are often requested late in school board meetings with an attendance ranging between zero and five citizens, and they generally go along something like this:
“Madam Chair, the last agenda item is a $100,000 appropriation for maintenance operations at ‘Joe Thomas Middle School’ for upgrades required by the latest inspections by the school administrator.”
At this point, the school board will generally vote unanimously to fund the allocation and adjourn. No debate, no discussion, no school board members trying to find out who is going to receive the $100,000, nothing.
Research done by the Cicero Institute found that “Public school capital budgets are not universally transparent.” That’s gently put and mostly based on the fact that they are posted online to varying degrees of clarity. Also, the calls to each school board meeting are often vague regarding how the bidding process for these projects was conducted.
The most egregious bait-and-switch instance happened in Henry County. The county received permission from the General Assembly to impose a 1% sales tax in 2021 for new school construction and renovation. Then, in 2022, the school board did not get the money. It seems that the board of supervisors decided that it would take the money raised from the sales tax and pay some of the debts incurred for work done on another elementary school, Meadow View Elementary.
We’re not against paying bonds and making sure your bond rating is as high as it can be, but the voters were told that the $2.6 million that was raised in that first year of the 1% sales tax would be used for school construction and renovation, with the implication being that it would fund future projects, not pay bills for school construction that happened years earlier.
This year’s statute provides that the revenues can be used for new projects, not existing debt service.
OK, so all that does not sound promising, but what about all the money it will raise?
Benjamin Franklin once said, “If you want less of something, tax it.” Research done by the Journal of Risk and Financial Management found that “taxes exert a negative influence on local economies. For example, a 10 percent augmentation in sales taxes leads to a 4.5 percent decrease in the nonfarm proprietor’s employment rate.”
Translation: The more taxes you enact, the more people who will need government assistance because they lost their jobs.
Many of the cities, like Richmond, Staunton, and Martinsville, argue that they will be getting taxes “from the other people,” the ones that come to the city for business but live elsewhere.
The “make the other guy pay” argument is also on the Republican side of this issue. Sen. Ryan McDougle, R-Hanover, told Channel 8 News, “We’ve been able to take money from casino operations and, over a three-year period, put almost $500 million, that’s half a billion dollars, toward school construction. That’s the way we tackle the problem, not raising taxes on Virginians.”
The biggest question that isn’t being answered is, “Where is all the other money going?” In March alone, tax collections went up 14%!
Faster than you can say, “Taxed Enough Already,” 2025’s take was $40 billion, but Virginia says it needs a consumption tax to pay for one of the few things Republicans and Democrats agree on (mostly): the existence and need for public schools.
So, the question remains to Virginia voters: Vote in favor of the ultimate regressive tax, meaning that the tax on any item is a higher percentage of a lower-wage earner’s take-home pay, or say “No” and wonder if the roof over the gym will be able to get fixed because your delegate and state senator had $40 billion worth of more important things to spend their “revenue” (they like to call it that so it sounds like they earned something) on.
Remember, Virginia’s political leadership ran under the “affordability” banner.
Let’s do a quick score sheet on that:
Electric bills are going up because of the Virginia Clean Economy Act closing power plants just as demand was increasing.
Electric bills are going up because of Virginia’s return to the Regional Greenhouse Gas Initiative.
Now they want the cost of goods in our communities to go up by 1% to fund one of the least transparent parts of our government budgeting. (While they run off with the $40 billion that we already sent them?)
Makes one wonder what they would be doing if they hadn’t been the “affordability party.”
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