Sales tax bills stall

Published 1:30 pm Friday, March 4, 2022

Two bills that would each have allowed Isle of Wight County to raise its sales tax 1% to fund school construction projects have stalled in the Virginia House of Delegates.

State Sen. Tommy Norment, R-Williamsburg, had sponsored Senate Bill 37, which would have made Isle of Wight the 10th Virginia locality authorized to enact the tax via a voter referendum. Norment’s bill passed the Democratic-controlled Senate in a 27-12 vote on Jan. 24, but failed to advance during “crossover,” when the House considers bills passed by the Senate and vice versa. A finance subcommittee in the Republican-majority House voted 4-3 on Feb. 25 to lay the bill on the table, which will essentially hold it indefinitely.

The vote split along party lines. Dels. Kathy Byron, Bobby Orrock, Nick Frietas and Chris Runion — all Republicans — voted in favor of tabling the bill. The three dissenting votes came from Dels. Kathleen Murphy, Sally Hudson and Don Scott — all Democrats.

William McCarty, who represents part of Carrollton on Isle of Wight’s Board of Supervisors, traveled to Richmond the day of the vote to lobby for the sales-tax-by-referendum option.

“For some reason, the governor and the speaker of the House are vehemently against what they perceive as a tax increase,” McCarty told The Smithfield Times on Feb. 28.

According to McCarty, legislators had also characterized the sales tax proposals as “Christmas tree bills,” the term referring to a gift given “at will to whomever asks.”

McCarty, however, called the committee’s vote a “double standard,” given recent actions by Gov. Glenn Youngkin and the legislature to allow parents to have a choice when it comes to masks in schools. He argues parents should have just as much of a choice when it comes to deciding at the ballot box how to fund the construction of new schools.

Virginia’s proposed biennial budget calls for $500 million in one-time grants for school construction, which McCarty called “woefully short” of the estimated $25 billion needed to replace and renovate older schools across the state.

Norment had proposed a nearly identical sales tax bill in 2021 that also passed the Senate but failed to advance in the then-Democratic-controlled House after the House’s finance subcommittee tabled it. That vote was split along party lines, though it had been Democrats — among them Scott — who’d voted in favor of tabling the legislation and Republicans — among them Byron — who’d dissented.

State Sen. Jennifer McClellan, D-Richmond, had proposed her own version of the legislation this year as Senate Bill 472, which would have allowed any Virginia locality the option of raising its sales tax 1% to fund school construction projects, subject to local voters’ approval via a referendum.

McClellan’s bill, which would have effectively ended Virginia’s practice of requiring piecemeal General Assembly approval of localities wishing to exercise the sales tax option, passed the Senate but met the same fate as Norment’s proposal when it reached the House’s finance subcommittee.

The same four Republicans who’d voted to lay Senate Bill 37 on the table voted to do the same to McClellan’s bill, with the same three Democrats dissenting.

Isle of Wight officials had hoped to use the resulting revenue in lieu of raising real estate taxes to fund the replacement of the county’s Hardy and Westside elementary schools – both of which date to the 1960s.

The county had borrowed $34 million in 2020, budgeting $27 million for the Hardy project, but inflation and a pandemic-induced supply chain breakdown drove the cost to $36.8 million last year — resulting in a nearly $10 million gap in available funds. The cost of supplying water to the new school and surrounding area also increased from a 2020 estimate of $2.2 million to roughly $4.8 million as of December.

Isle of Wight’s Board of Supervisors voted to borrow another roughly $19 million in January to cover the Hardy gap and fund other capital needs, in lieu of a larger loan for the replacement of Westside.

The school system hopes to replace Westside, which currently houses grades 4-6, with a new middle school that would house grades 5-7. With Westside’s replacement now estimated to cost $66 million, the move effectively defunds and postpones the project until another source of revenue can be found.