Editorial: In Search of Diversified Revenue

Editorial: In Search of Diversified Revenue

Fairfax County residents can expect to see meals tax question on November ballots.

Local governments pay for almost all of local services, including schools, by taxing a single industry, property owners.

In Fairfax County, property taxes pay for 65 percent of the budget. In Arlington, which has more revenue options as an urban county, property taxes pay for 57 percent of everything. In the City of Alexandria, property taxes pay for 58 percent.

It costs more every year to provide a consistent level of services, and the sources of revenue available to local governments in Virginia are very limited, forcing an outsized reliance on property taxes. The reason is that localities in Virginia have only the power explicitly given to them by the General Assembly, and the General Assembly allows very few options for localities to collect revenue.

Alexandria and Arlington already have a 4 percent meals tax on top of the 6 percent sales tax, and it’s evident that the robust restaurant scene in both areas has not suffered as a result. Would-be diners do not drive to Fairfax County to avoid the tax. But whether Fairfax County can collect a meals tax will be up to voters in November, pending the Board of Supervisors putting the question on the ballot.

A meals tax is not a silver bullet, but it does add one more source of revenue. A 4-cent meals tax is roughly equivalent to the 4-cent increase in property taxes that Fairfax County residents will face this year. But the property tax is levied on people with no relationship to their ability to pay. The meals tax is related to spending, a more progressive approach, and will also collect taxes from non-residents.

This is one of the wealthiest regions in the country, and the highly educated population has high expectations. Schools, public safety, recreational facilities, transportation, human services and other services and facilities cannot be allowed to atrophy because real estate values are flat. The Fairfax County Board of Supervisors was correct to provide what Chairman Sharon Bulova called a “booster shot,” mostly to schools but also to other needs in the county.

What is needed for the future is access to other, more diversified forms of taxes. While it is a pipe dream given the disposition of the General Assembly, what is really needed is to give localities a portion of the income tax. In the meantime, locals will have to press the state to pay for its fair share locally, and to allow increases in cigarette taxes and other possible sources of revenue.