The Virginia Senate is making another attempt at allowing cities and counties to enact a 1% sales tax surcharge by voter referendum to fund school construction, this time via the state’s proposed 2026-28 biennial budget.

Only nine Virginia localities – Charlotte, Gloucester, Halifax, Henry, Mecklenburg, Northampton, Patrick and Pittsylvania counties and the city of Danville – are afforded the option under current state law. Isle of Wight County has been lobbying for the referendum option for the past four years as a possible means of funding the replacement of the 1960s-era Westside Elementary in the near future.

Last year, a bill that would have expanded the 1% option to all cities and counties passed both General Assembly chambers but was vetoed by Gov. Glenn Youngkin. 

This year’s Senate budget bill, dubbed SB 800, includes language allowing cities and counties to initiate the 1% surcharge process via a local resolution, which like last year’s proposal would need to be affirmed by a majority of voters. The surcharge would expire on the date a city or county makes its final bond or loan payment for a newly constructed school, or a date chosen by the governing body that’s within 20 years of the initiating resolution. SB 800 passed the Senate 38-2 on Feb. 6 with only Sen. Luther Cifers III, R-Amelia, and Glen Sturtevant, R-Midlothian, opposing it. As of Feb. 10 it had been referred to the House of Delegates’ Committee on Appropriations for its first “crossover” vote, when each chamber gets to vote on the legislation passed by the other.

The same verbiage does not appear to have been included in the House of Delegates’ budget bill, dubbed HB 1600, which passed the House 79-18 on Feb. 6 with the support of Dels. Nadarius Clark, D-Suffolk, and Otto Wachsmann, R-Sussex, who represent Isle of Wight, and Del. Kim Taylor, R-Petersburg, who represents Surry. That bill had been referred to the Senate Committee on Finance and Appropriations as of Feb. 7.

A separate Senate bill cosponsored by Sens. Jeremy McPike, D-Woodbridge, and Travis Hackworth, R-Richlands, dubbed SB 1307, also includes the 1% sales tax option. It passed the Senate 27-13 on Jan. 20 with the support of Sen. Emily Jordan, R-Isle of Wight, and Lashrecse Aird, D-Petersburg, whose district includes Surry County. The House Committee on Finance voted 13-7 on Feb. 10 to advance a substitute bill.

“We’re hopeful that it will likewise this year pass both the senate as well as the house … and that perhaps the governor will either have a change of heart or there will be enough legislative support to override the veto,” Robertson said in a recent update to the Board of Supervisors.

One key difference between the most recent revision to SB 1307 and the budget proposal, according to Robertson, is that the former would allow the 1% sales tax revenue to be applied to debt payments for past projects, and not just future ones. 

“Current law does not allow the qualifying localities to use the 1% sales and use tax for past debt service,” Assistant County Administrator Don Robertson said. “That’s why we began this effort prior to construction of Hardy Elementary.”

The county borrowed more than $30 million in 2020 and 2011 to replace the circa-1961 Hardy with a new, larger school that opened in 2023, though its lobbying efforts have been focused on Westside rather than Hardy.

Youngkin’s office said he’d vetoed last year’s sales tax surcharge legislation over concerns that she localities would have a combined 8% local and state sales tax rate, potentially resulting in a “nearly $1.5 billion a year tax increase on Virginians.” Virginia’s statewide rate currently stands at 5.3% though Williamsburg, James City County and York County already pay a combined 7% state and regional rate to promote tourism. The General Assembly, in 2013, authorized an additional 0.7% surcharge on top of the 5.3% statewide rate for Northern Virginia and Hampton Roads to create a 6% rate to fund transportation projects.

Though each of last year’s two identical bills proposing the 1% surcharge had passed with the requisite two-thirds bipartisan majorities that could have override Youngkin’s veto, they failed to garner the same support when each chamber reconvened last April.

Editor’s note: This story was updated at 12:30 p.m. on Feb. 13 to correct that the General Assembly authorized the additional 0.7% surcharge in 2013, not 2012. Further, current state law does not allow the nine localities authorized to collect the 1% sales tax to use it to pay past debt.