Nov. 15, 2006 -- The University of Virginia’s Weldon Cooper Center for Public Service has published its silver anniversary edition of “Virginia Local Tax Rates, 2006,” a reference book on Virginia local taxes that serves as an important resource for journalists, tax analysts, businesspersons and government officials. Based on an annual survey conducted by the center’s business and economics section, the book contains detailed information on taxes levied in all of Virginia’s 95 counties and 39 independent cities and 146 incorporated towns, including all of the largest municipalities. The volume also includes summaries of major 2006 General Assembly laws that set the stage for how local governments can impose taxes and the names, phone numbers and e-mail addresses of local tax officials.
“This new study illustrates the variety and complexity of local government taxation in Virginia,” said John L. Knapp, co-author and longtime contributor to the work. “There have been many changes over the past 25 years. This edition has a page-count 61 percent greater than that of the first edition, published in 1982, and the number of statistical tables has more than doubled.” Knapp’s co-authors are William Shobe and Stephen Kulp.
When the first edition was published in 1982, the city-county average per capita tax burden was $812 in today’s dollars. In 2005, the most recent year available, per capita taxes were $1,474, an 82 percent increase. Knapp explained that several factors led to this increase: the expansion of existing programs such as public education, new programs such as emergency communications and federal and state spending mandates. Also, the commonwealth’s ever-increasing urbanization has placed spending demands on many local governments.
“Without the widespread adoption of information technology, it is likely that government spending would have grown even more,” Shobe said.
Based on the real estate property tax, the single most important local tax source, the five localities with the highest tax rates in 2006 are the central cities of Portsmouth, Petersburg, Richmond, Norfolk and Roanoke. In contrast, the localities with the lowest rates are the rural counties of Brunswick, Mecklenburg, Highland, Northumberland and Grayson.
Tax rates, however, tell only part of the story since tax bills are determined by multiplying property values by tax rates. In 2005, the localities with the highest per capita real estate tax bills were Falls Church City, Arlington County, Alexandria City, Loudoun County and Fairfax County, all located in Northern Virginiia where house prices are much higher than elsewhere in the state. The localities with the lowest per capita bills were the counties of Halifax, Russell, Lunenberg, Nottoway and Lee, all rural counties in the Southside and Southwest regions.
According to the study, the personal property tax on motor vehicles, the so-called “car tax,” is making a comeback. Thirty-four counties and eight cities have raised rates above their 1997 level, the year chosen to freeze the rate for the purpose of reimbursing localities under then-Governor James Gilmore’s tax relief program.
Knapp commented that writing the summaries of state laws that dictate how local governments can impose taxes was “a major challenge since frequently the state tax code is unclear.” He attributed the lack of clarity to the legislative practice of constant tinkering with tax laws, the haste with which some laws are adopted and the incentives that some sponsors have to use wording that obscures the full implications of new statutory language.
The center seeks to serve the people of the commonwealth. Its mission is to anticipate and forecast change and to serve as a resource to those who need to recognize and address that change.
For more information about “Virginia Local Tax Rates, 2006,” contact John Knapp at (434) 982-5604, William Shobe at (434) 982-5376 or Stephen Kulp at (434) 982-5638. To order a copy of the book, visit www.coopercenter.org/publications/ECONOMICS/Local%20Taxes.php.