Gov. Glenn Youngkin, for the second year in a row, vetoed a bill that would have authorized any Virginia city or county to raise its sales tax by 1% by voter referendum to fund school construction.

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.

The General Assembly made two attempts this year at expanding the 1% sales tax option, including it in the Senate budget bill, dubbed SB 800, and via Senate Bill 1307, which was cosponsored by Sens. Jeremy McPike, D-Prince William, and Travis Hackworth, R-Tazewell. 

The Senate budget bill passed its originating chamber 38-2 in February but stalled that same month in the House of Delegates’ Committee on Appropriations. The House budget bill, dubbed HB 1600, does not include the 1% sales tax option.

Youngkin vetoed SB 1307 ahead of his 11:59 p.m. deadline on March 24 to act on this year’s General Assembly bills, writing in his veto explanation that while “school construction still remains a worthy cause, and Virginia has made significant progress” the bill “could result in a nearly $1.5 billion a year tax increase on Virginians.”

“Some localities would have a combined sales tax rate of 8%, with no additional offsets, such as reduced income tax or property tax,” Youngkin said in his veto statement. 

He’d given the same explanation in 2024 for vetoing nearly identical bills by McPike and Del. Sam Rasoul, D-Roanoke.

Virginia’s statewide sales tax 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. 

Youngkin said in his veto statement that his recommended amendments to the House budget bill include an additional $50 million for school construction grants and loans beyond what’s in the current biennial budget, bringing the total available to $610 million if the General Assembly adopts his budget amendments.

“The Commonwealth should pursue a tax policy that unleashes economic development and prioritizes job and wage growth through innovative reforms,” Youngkin said in his statement. “These reforms must allow hardworking Virginians to keep more of their money, not less; any proposal that increases the cost of living and the cost of business is not a policy we should pursue.”

Isle of Wight Board of Supervisors Chairman Don Rosie called Youngkin’s veto “unfortunate” in that it continues to put the cost of new schools on taxpayers statewide and “biased” since state law already allows a handful of localities – but not Isle of Wight – the 1% sales tax option.

A House substitute for SB 1307 passed that chamber 62-33 and was agreed to by the Senate in a 27-12 vote in February. The House vote exceeds the two-thirds majority that could potentially override Youngkin’s veto, but the Senate vote was just under the required threshold.

Both chambers will reconvene April 2 to vote on Youngkin’s budget amendment and potentially override his vetoes. State Sen. Emily Jordan, R-Isle of Wight, who’d voted in favor of the 1% sales tax bill, said she’d vote in favor of overriding Youngkin’s veto. She also noted that there’s $310 million in additional funding for school infrastructure included in the proposed biennial budget.

It may not go very far toward funding every new school needed statewide. Isle of Wight spent $36 million to build its newest school, Hardy Elementary, in 2023, and has budgeted $50 million to replace the 1960s-era Westside Elementary on West Main Street, though the most recent cost estimate is expected to be higher. Jordan said a “long-term sustainable” solution is needed.

Both of the 2024 bills proposing the 1% sales tax surcharge had passed each legislative chamber with the requisite two-thirds majority but failed to garner the same support after Youngkin’s veto. Dels. Nadarius Clark, D-Suffolk, and Otto Wachsmann, R-Sussex, who each represent a portion of Isle of Wight County, voted in favor of SB 1307 when it crossed over to the House of Delegates in February. They didn’t say how they’d vote come April 2.