Sales tax bill passes the Assembly, with a twist. What changed?

Published 3:40 am Thursday, February 29, 2024

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It took several years, but Prince Edward County officials finally got their wish this week. On Monday, Feb. 26, the Virginia House approved the county’s sales tax bill by a vote of 68-28. Del. Tommy Wright was one of those voting in favor of the proposal, which had already passed the Virginia Senate a month earlier. 

Before we mention the twist, as referenced in the headline, let’s go over what this bill exactly would do. The request is to raise Prince Edward’s sales tax by 1%. In Virginia, a city or county has to first get permission from the General Assembly, then citizens have to vote on the concept before it can happen. Previous Prince Edward County Administrator Wade Bartlett floated the idea in 2019. In 2021, 2022 and 2023, supervisors pushed to get a bill filed and approved in the Assembly, but each time it died. This year, supervisors hired a lobbying firm to help push the bill forward. 

“We caught some flack on spending the money and nobody wants to admit that’s the way the game is played, here’s the result,” said Prince Edward Board of Supervisors member Cannon Watson. “I think that’s shed more light on the ridiculous way the General Assembly gets to pick winners and losers.” 

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The money would be earmarked to help cover renovation costs at Prince Edward Elementary. The current agreement, which county supervisors agreed to last August, stands at $43.3 million. Money from the sales tax increase would help pay the yearly debt service on the project. 

But it’s not just Prince Edward County affected by this bill. That’s the twist. The Assembly took Prince Edward’s request and merged it with another bill, one that would allow any and all counties in Virginia to raise their sales tax to help fund school construction. 

Sales tax bill was needed 

Now just because the bill passed the House and Senate, that doesn’t mean it goes into effect. First, Gov. Glenn Youngkin has to sign it into law. Then, if he does, it goes to a vote in November. Residents will be asked to vote on it. Do they want to increase sales tax by 1% to help the school? 

To be clear, this is a situation where extra funding was needed. As we’ve covered many times before, Prince Edward County Elementary has multiple roof leaks, problems where some classrooms are unusable due to mold and traffic problems due to the current design, just to name a few of the issues. And supervisors have already signed off on the renovation plan, with construction expected to begin in late summer. But the question has already been how will the county pay for it? 

Approval of SB14/HB805 has the potential to be transformative for Prince Edward County,” said Prince Edward County Administrator Doug Stanley. “The question that we have been struggling with, and one that all smaller communities like Prince Edward face, is how do we generate  enough revenue to cover the annual debt service for school construction projects.” 

Taking advantage of traffic

The key part, Watson added, is this would take advantage of the traffic coming through Prince Edward to make things easier on residents.   

This is the classic case of many hands making light work,” Watson said. “You allow your visitors to help pay for your new elementary school. We have a lot of visitors, we have a lot of day trippers. Look at Hampden-Sydney, we’re gonna have a big influx of people for the NCAA basketball tournament.”

Prince Edward has Hampden-Sydney College, Longwood University, a number of festivals that take place in downtown and other events throughout the county. All of those things, Watson pointed out, means visitors coming in. 

“This way, those people would be helping build our elementary school with every purchase,” Watson said. 

What’s the alternative?

Based on the current real estate tax base, if the sales tax increase isn’t approved, supervisors would have to raise real estate tax by 20-25% to cover the $2.3 million debt service created by school renovations. 

“For a locality with a poverty rate of 23.6% that ranks among the highest in the state, with 35% of the taxable real estate exempt from taxation, and about 20% of our total population college students, that is a big ask,” Stanley said. “Such an increase would eliminate any opportunity to fully fund the multitude of much needed capital projects on our CIP and/or future improvements to our Middle and High School in the foreseeable future.” 

And Prince Edward isn’t the only county in this situation. The Virginia Commission on School Construction and Modernization found that a number of school districts reported crumbling buildings. In fact, more than half of the K-12 school buildings in Virginia are currently more than 50 years old. The commission found that the amount of funding needed to fully replace all of the crumbling school buildings in Virginia is estimated to be $24.8 billion. 

Expansion of sales tax bill

That’s where the expansion comes in. Rather than just approve Prince Edward’s request, the Assembly decided to give the same opportunity to every county in the Commonwealth, again, assuming that Gov. Youngkin signs this into law. But nothing will be forced. Each county’s officials would have to put forward the request and then residents would vote yes or no. 

“We believe the 1% local sales tax represents the best opportunity for our community to fund these needed school improvements without overburdening our land owners,” Stanley said. “We are pleased that the General Assembly has heard us and has voted to allow Prince Edward, and all the other localities in the state, the opportunity to put this question before our voters through a referendum. The voters of Prince Edward will ultimately make the decision on whether this is the correct path for our community.”