Commentary: Are sales taxes the fairest way to fund improved schools? 47 localities are asking voters to decide.

Amid lingering inflation from high fuel prices, 47 Virginia localities are about to ask their residents to vote on Tuesday for a ballot question that will make every retail purchase they make near their homes costlier.

Interesting timing to say the least. But that doesn’t make it wrong.

If voters approve the proposed tax increases, which are capped at 1%, their proceeds would by law be directed toward capital improvements for public schools in those localities. That’s a worthy purpose, ranking right up there with public safety and healthcare.

Yet the decision is not easy. Voters are being asked to weigh their current financial situations against their children’s futures. There are valid points on either side of this argument that warrant respect.

Still, it’s hard not to feel it’s a shame that it’s come to this.

Virginia localities weigh 1% sales tax for school construction as voters decide on expansion

The sales tax is the most regressive form of taxation there is, burdening most those who have the least. 

The person who works all day then moonlights as a rideshare driver to cover rent, grocery and utility bills with no capacity to save anything pays as much tax on a new refrigerator as a Fortune 500 CEO with a summer house on Martha’s Vineyard and a fleet of Teslas.

It’s a shame because as a commonwealth, our state leaders have preened and posed and positioned themselves as champions of making our schools — in affluent communities and poor ones — safe, modern and excellent, turning out graduates who can hold their own anywhere. You know, the literal definition of a “commonwealth.”

But in the end, the full measure of K-12 educational excellence was tossed back into the laps of Virginia’s 133 localities. 

Because Virginia is a Dillon Rule state — meaning local governments are strictly limited in the tax rates they can raise without legislative approval — the General Assembly empowered the 95 counties and 38 independent cities to ask their voters if they will shoulder a sales tax boost. Thirty-five percent of those localities are doing that in this election.

State approval didn’t happen through the more transparent regular legislative process. A stand-alone bill that would have authorized the extra penny of tax on every dollar’s worth of retail spending passed the House of Delegates this year, but the Senate carried it over to the 2027 session.

The authorization was buried in small type and dense legislative jargon on page 723 of the 887-page state budget enacted on June 29, one day ahead of the deadline for averting a state government shutdown.

Eight Virginia localities — Charlotte, Gloucester, Halifax, Henry, Northampton, Patrick and Pittsylvania counties and the city of Danville — got state permission to ask their voters to approve the sales tax increase before it was extended to all localities this year.

As the Mercury’s Nathaniel Cline explained in his reporting on Oct. 5, those eight localities have generated a combined $119 million through those higher taxes since 2019, but results are mixed and satisfaction is not universal.

In Halifax, the first locality to receive authorization, students enjoy a new high school and remodeled elementary and middle schools that wouldn’t have been affordable without the $20.8 million the county has taken in over the past five years.

Danville took in nearly $31 million from 2023 through last year, giving the city ample bonding authority for impressive upgrades to its facilities.

That’s not bringing much comfort, however, to voters in York County, which would see its combined sales tax rate reach 8% — the highest in Virginia — if the measure passes. Already, York is tied with two of its Peninsula neighbors, James City County and Williamsburg, for the state’s highest rate at 7%.

By no stretch is York County struggling economically. According to the Census Bureau’s American Community Survey, its median annual household income is just under $110,000, or about $16,800 greater than the statewide median. 

But that doesn’t translate to York residents gladly paying significantly more in taxes on their purchases than the statewide average of just under 6%.

York County Supervisor G. Stephen Roane Jr. opposed putting the sales tax increase measure on the countywide ballot with so little time to weigh the political and economic consequences against the benefits.

“I thought we needed time to study other options to seek money to provide for school infrastructure projects. I thought we moved too quickly,” he said in an interview.

Particularly, he said, he was concerned about the effect the state’s highest sales tax could have on merchants in his county. Within reason, consumers will travel to save money, and retailers in the cities of Poquoson and Hampton — both sharing York’s eastern boundary — could beckon frugal York shoppers to make the short drive and exploit a tax rate two percentage points lower, especially on big-ticket items.

As incomes go, York’s ranking among the top 10% of the state’s most affluent localities can be quite misleading, Roane noted.

“Affluence is an average across the board, so there are people below that average who are going to struggle,” he said. “You’ve got to be mindful of everybody in the county.”

Virginia as a whole compares favorably to neighboring states when it comes to sales tax burdens. Our average combined state and local rates are about even with those of every adjacent state but Tennessee — a state that proudly eschews an income tax yet forces consumers to pay almost an extra dime on every retail dollar spent except for groceries, which are taxed at a lower rate.

Even with the additional penny of sales taxes for schools, Virginia would still be a bargain compared to Tennessee and wouldn’t make the commonwealth inherently uncompetitive with any other nextdoor state.

The greater question for Virginians heading to the polls, however, is whether this is the most equitable way to invest in our local public schools and, by extension, the commonwealth’s future.

Fortunately, these are the most meaningful and productive questions that we as a commonwealth can and should ask ourselves — at all levels of government. And in the end, there are good answers and better answers, but no wrong ones.