Special Subcommittee on Tax Policy
August 3, 2000, Richmond
The Senate Special Subcommittee on Tax Policy, formed this year to study state and local tax revenue issues, met on August 3 to receive a presentation on local taxing authority and local tax revenues. The subcommittee heard testimony that local tax revenues grew an average of 6.7 percent per year between Fiscal Year 1989 and Fiscal Year 1999. Over the last five fiscal years, however, the rate of growth in local tax revenues was slightly lower, at an average rate of 5.9 percent per year.
One question addressed by the presentation was whether or not Virginia's local governments have sufficient financial resources to carry out their day-to-day administrative responsibilities. The subcommittee learned that city and county revenues have outpaced inflation over the last 10 years. Additionally, the growth in city and county tax revenues has, for the most part, kept pace with the growth in Virginia personal income in the 1990s. The subcommittee was cautioned, however, that looking at local tax revenue alone might not be adequate to answer the question of whether local governments have sufficient financial resources. Other factors may need to be considered, including the level of state aid provided to local governments and a review of the ways in which local service requirements have changed over time.