Isle of Wight could be the next county to raise its local sales tax to fund school construction as legislators continue to spar over how to fund desperately needed school projects.
The Virginia Senate approved a bill Wednesday afternoon in a 31-8 vote to allow the county to raise the tax, if county voters approve it in a referendum. It was the second vote on the bill this week — the Senate defeated the measure in an unexpected move Tuesday before deciding to reconsider.
Isle of Wight would be the tenth locality in the state with permission from the General Assembly to use a sales and use tax to supplement local funds. Virginia has no dedicated state funds for school construction, despite hundreds of schools that need billions in repairs.
“Like many small counties that have a minimal tax base, it is difficult for them to raise the funds within their normal stream of revenue to build new schools if they must,” said Senate Minority Leader Tommy Norment, who introduced the bill.
The state hasn’t had a dedicated school construction fund since the 2010 school year, the victim of recession budget cuts. Even then, state contributions made up only a small part of construction funds.
In the last couple of years, several small localities have turned to sales taxes to pay for schools. The General Assembly passed legislation in 2019 to let Halifax County hold such a referendum. Later that year, 70% of voters voted to raise the sales tax 1%.
Danville and Charlotte, Gloucester, Henry, Mecklenburg, Northampton, Patrick and Pittsylvania counties got approval from the General Assembly last year. Gloucester held its referendum in November, when voters approved an increase in a 62% to 38% margin.
Don Robertson, deputy county administrator in Isle of Wight, said that the county wants to use the money raised for new buildings for Hardy Elementary and Westside Elementary. The schools are estimated to cost upwards of $60 million. The proceeds would go toward paying off the county’s debt from the projects.
If it doesn’t raise the sales tax, Robertson, said the county could need a four to five cent real estate tax increase. A sales tax, which wouldn’t cover food, would spread out the cost among more people.
“Even during COVID, we have a pretty tourism effort in the county,” Robertson said. “As people from other communities or other areas come into Isle of Wight and spend dollars here, quite frankly, they will also be paying a portion of that tax to offset that cost.”
The bill took a surprise turn Tuesday afternoon in the Senate when it was defeated in a 25-14 vote. The measure required a two-thirds majority to pass.
Norment said Wednesday that he had misspoken in the previous day’s session. Sen. Amanda Chase asked if the tax was a result of a referendum and Norment said it was not. Chase voted against it Wednesday, saying it went against her stance of not raising taxes.
Robertson said Tuesday’s vote was a surprise for the county. It hadn’t faced much opposition in committees, and the county had been told by legislators that it would likely pass.
“Quite frankly, all the votes have been overwhelmingly positive,” Robertson said.
Raising sales taxes locally, which so far has only been taken up by localities with relatively small tax bases, isn’t going to raise enough money to fund all of Virginia’s school construction needs.
A 2013 state study found it would cost over $18 billion to renovate the state’s schools that are over 30 years old. In Newport News alone, a 2017 facilities study found the city could expect over $500 million in maintenance and other projects over the next 15 years.
Shortly after defeating Isle of Wight’s referendum Tuesday, the Senate passed a bill from Sen. Bill Stanley creating a school renovation fund, an issue he’s pushed for years. The bill still needs to be passed by the House of Delegates.
But even if it passes, the fund has no money allocated to it yet.
Stanley, who has pushed for a state fund like this for years, also has introduced a bill calling for a statewide referendum on a $3 billion bond for school construction. That bill is still in committee.
“I think what we have to do is actually build the house before we even put the furniture in it,” Stanley said on the floor Tuesday. “We have now a government entity that we can actually appropriate monies to.”
The construction fund passed unanimously Tuesday, but multiple senators expressed frustration at the lack of funding. Sen. Creigh Deeds called the bill a “nice gesture” that does little to help.
Deeds introduced a bill this session proposing an income tax increase on people earning more than $150,000 a year to pay for law enforcement salaries and school construction. That bill, which the Department of Taxation estimated would’ve brought an average of $78 million a year to schools over the next six years, didn’t make it out of committee.
“I think it’s important that this bill pass,” Deeds said Tuesday. “But I don’t think anyone in here should fool themselves into believing we are doing one thing about the problem with this bill.”
