Introduction

Foreward

This is the thirty-eighth edition of the Cooper Center’s annual publication about the tax rates of Virginia’s local governments. In addition to information about tax rates, the publication contains details about tax administration, valuation methods, and due dates. There is also information on water and sewer rates, waste disposal charges and numerous other aspects of local government finance. This comprehensive guide to local taxes is based on information gathered in the spring, summer, and early fall of 2019. The study includes all of Virginia’s 38 independent cities and 95 counties and 118 of the 190 incorporated towns. The included towns account for 92 percent of the Commonwealth’s population in towns.1 The study also contains information from several outside sources, including two Department of Taxation studies, 2019 Legislative Summary and The 2017 Assessment/Sales Ratio Study, as well as Department of Taxation information on the assessed value of real estate by type of property. We also used the Auditor of Public Accounts’ Comparative Report of Local Government Revenues and Expenditures, Year Ended June 30, 2018, the Commission on Local Governments’ Report on Proffered Cash Payments and Expenditures by Virginia’s Counties, Cities and Towns, 2017-2018, and the Department of Housing and Community Development’s Virginia Enterprise Zone Program 2018 Grant Year Annual Report.

Organization of the Book

The study is divided into 26 sections. Section 1 is a reprint of the “Local Tax Legislation” section of the Department of Taxation’s 2019 Legislative Summary. The original Department of Taxation report is available at its website. Sections 2 through 26 cover specific taxes, fees, service charges, cash proffers, enterprise zones, and financial documents on the web. Most of the data came from a detailed web-based questionnaire sent to all cities, counties, and incorporated towns (see Appendix A for a printed version). Appendix B provides a listing of names, phone numbers, and email addresses, when available, of respondents and non-respondents to the questionnaire. Appendix C shows the percentage share of total local taxes represented by each specific tax for each locality based on data from the Auditor of Public Accounts for fiscal year 2018. Information is provided for each city and county and for 38 populous incorporated towns. Finally, Appendix D contains 2018 population estimates for cities, counties and towns from the Cooper Center’s Demographics Research Group. The population information is provided to give readers some perspective on the relative size of localities.

Please note that the web addresses provided in this publication were good at the time this text was printed. However, some links are unstable and may not work with certain browsers or they may be modified or withdrawn subsequent to publication.

About the Survey

In 2019, localities could choose between online or printed versions of the questionnaire. The Cooper Center has made its best efforts to accurately reflect in this report the responses of localities based on the survey or follow-up queries.

In the tables three dots (…) are used to show there was no response and “N/A” is used to indicate “not applicable.” Readers may use the telephone/email list in Appendix B to contact local officials in order to obtain clarification and additional detail.

Some Components of Local Taxes

This book deals mainly with local sources of revenue for local governments. Though localities might also receive federal and state resources, an important part of local funding comes from local sources. The Auditor of Public Accounts, Comparative Report of Local Government Revenues and Expenditures provides data on these local sources. The following analysis uses the data from their report for the year ended June 30, 2018.

A common misperception is that nearly all local tax revenue comes from the real property tax. True, the real property tax is the dominant source, accounting for 61.9 percent of city-county tax revenue in FY 2018, the latest year available (see text table below). But three other taxes—–the personal property tax, the local option sales and use tax, and the business license tax—–together accounted for 24.5 percent of total tax revenue. The remaining 14.6 percent of tax revenue came from more than a dozen other taxes.

Table 0.1: Sources of Virginia Local Government Tax Revenue, FY 2018
Tax Amount ($) % of Total
Total taxes $17,967,385,766 100.00
Real property $10,946,877,675 60.93
Personal property $2,370,758,768 13.19
Local option sales and use $1,239,855,163 6.90
Business license $771,958,263 4.30
Restaurant meals $612,940,580 3.41
Public service corporation property $412,121,081 2.29
Consumer utility $327,627,947 1.82
Hotel and motel room $244,412,964 1.36
Machinery and tools $233,076,157 1.30
Motor vehicle license $197,705,384 1.10
Recordation and will $126,458,487 0.70
Bank stock $117,199,137 0.65
Other local taxes $92,124,397 0.51
Tobacco $65,150,996 0.36
Coal, oil, and gas $28,510,002 0.16
Admission $21,815,169 0.12
Franchise license $16,362,103 0.09
Merchants’ Capital $14,301,188 0.08
Penalties and interest $128,130,305 0.71

There are six localities where the real property tax is not dominant. Bath and Surry counties have large power plants that pay public service corporation property taxes that overwhelm other sources. Buchanan County has rich mineral deposits subject to local severance taxes that exceed the real property tax. Covington City and Alleghany County receive large shares of revenue from machinery and tools taxes on MeadWestvaco’s large paperboard manufacturing facility. Finally, the small city of Norton, the least populous independent city in Virginia (3,908 in 2018) received almost as much money from the local option sales and use tax as from the real property tax. In the remaining 127 cities and counties where the real property tax is dominant, its relative importance varies from 30.3 percent of total tax revenue in Galax City to 78.8 percent in Lancaster County (see Appendix C).

Thirty-six cities (two cities–Hopewell and Petersburg–did not provide information for the 2018 Comparative Report) and 95 counties imposed four of the taxes shown in the previous table—the real property tax, the personal property tax, the local option sales and use tax, and the public service corporation property tax. Most, but not all, localities imposed recordation and will taxes, consumer utility taxes, motor vehicle license taxes, and taxes on manufacturers’ machinery and tools. Nonetheless, as shown in the next table, there are a number of taxes, a few of them significant sources of revenue, which are not levied by all localities. Also, some of the taxes are used so sparingly that their revenue yield is very low.

Table 0.2: Number of Virginia Localities Imposing Taxes by Type, FY 2018
Tax Cities Counties Total
Real property 36 95 131
Personal property 36 95 131
Local option sales and use 36 95 131
Public service corporation property 36 95 131
Consumer utility 36 92 128
Recordation and wills 32 93 125
Motor vehicle license 32 86 118
Machinery and tools property 31 85 116
Bank stock 36 64 100
Hotel and motel room 32 67 99
Business license 36 52 88
Restaurant meals 36 49 85
Franchise license 11 37 48
Merchants’ capital 1 43 44
Tobacco 29 2 31
Admission 18 3 21
Coal, oil, and gas 1 6 7
Other local taxes 23 49 72

There are three major reasons why local governments do not to impose some taxes: (1) The locality lacks a tax base for a particular tax (e.g., a locality must have a bank in order to apply a bank stock tax and a locality must have taxable mineral deposits to impose coal, oil, and gas taxes). (2) The locality is faced with state restrictions (e.g., county excise taxes on hotel and motel room rental have tax rate restrictions imposed by the state; county restaurant meals taxes must be approved in a voter referendum; tobacco taxes are permitted in only two counties; and county admissions taxes are subject to many restrictions). In regard to the busi-ness, professional, and occupational license tax (BPOL tax), counties must choose either the BPOL tax or the merchants’ capital tax. Counties are not permitted to impose a business license tax within the boundaries of an incorporated town situated within the county without permission of the town. This means that counties with large shares of business activity within towns are motivated to impose a merchants’ capital tax that can be applied countywide. (3) The locality chooses not to impose a permitted tax (e.g., Richmond City, a community with a large cigarette manufacturing plant, has not adopted a consumer tobacco tax even though all cities are granted the authority to levy such a tax).

Partnership with LexisNexis

The Weldon Cooper Center for Public Service is partnering with the publisher LexisNexis to produce the annual Tax Rates books. The Cooper Center still prepares and distributes the survey and writes up the results. LexisNexis publishes the book and fulfills orders from interested parties. This arrangement allows us to concentrate on providing the most accurate and up-to-date information about Virginia tax rates and leverages LexisNexis’ considerable expertise in production and distribution of the annual volume. We hope the arrangement will lead to continued improvements in our Virginia Local Tax Rates series.

Study Personnel

Stephen C. Kulp, Research Specialist at the Center for Economic and Policy Studies, was responsible for work on the project. He refined the new database, administered the survey, translated the results into tables, checked relevant code sections, assisted with the development of the web-based questionnaire, and made appropriate changes in the text. Jennifer Nelson, of the Cooper Center’s Publications Section, designed the cover. Cooper Center employee Albert W. Spengler, who authored this study for a number of years prior to 1991, laid the foundation for the study when it was his responsibility.

The strong support for this publication by the Virginia Association of Counties and the Virginia Municipal League helps ensure our continued efforts to provide this resource as a basic reference on Virginia local taxes.

About the Online Edition

This online edition of the Virginia Local Tax Rates survey report was developed by Arthur Small, Principal Scientist in the Weldon Cooper Center, with capable assistance from intern Anne Bader of Grinnell College.

Final Comments

The Cooper Center is grateful to the many local officials throughout the Commonwealth who supplied the survey information presented in this study. Their willingness to provide information and their patience in answering follow-up questions is what makes this book successful. The high response rates could not have been achieved without their cooperation.

Stephen C. Kulp

Research Specialist

Center for Economic and Policy Studies

Weldon Cooper Center for Public Service

University of Virginia

Charlottesville

February 2020


  1. Locality population figures are based on estimates developed by the Demographics Research Group of the Weldon Cooper Center for Public Service. See Appendix D.↩︎