An 8 percent sales tax is not a concept that thrills us, and we were caught off-guard when we heard of Board of Education Chairman Tommy Riddle’s idea to use that tax to finance the school system’s serious facility needs.
After all, that additional penny on the sales tax would force us to dig up an extra nickel every time we hit Big Cheese Pizza for one of its $5 takeout specials. In the course of a year, that would be a lot of nickels.
But the more we thought about it, the more we liked the idea.
It seems to beat the two most common means of financing capital improvements: bonds and certificates of participation.
We have nothing against a bond referendum, even though interest rates are starting to creep up. Granville County, for instance, is using bonds to finance its latest wave of new facilities, including a third high school. The problem is that we doubt Vance County voters would approve a bond referendum. Such a rejection not only would prevent us from getting a desperately needed middle school, but would send a terrible message to any businesses considering moving here.
On the other hand, we are adamantly opposed to certificates of participation, which are a sneaky way for local governments to borrow money without voter approval. While we believe in the necessity of the $28.1 million facility-needs plan (or whatever is left of it after the county commissioners chip away year after year through measures such as the Qualified Zone Academy Bonds, a form of no-interest federal lending for school repairs), we don’t believe the county should take on that much debt without a referendum.
What makes Riddle’s idea truly different and so appealing is that unlike bonds, certificates of participation and any other financing proposal we can think of, property owners wouldn’t have to carry the burden alone.
After all, that’s the scariest thing about a $28.1 million school bond — the potential 15- or 16-cent increase in the property tax rate to pay the money back. A penny increase in the sales tax avoids such a depressing, industry-repelling rise in the property tax rate.
We suspect that retail sales would dip a bit for the first month after such a local sales tax increase, but then things would return to normal. People aren’t going to drive to Granville or Warren to save 1 cent per dollar spent. And Virginians who shop in Vance already accept a sales tax that’s 2.5 cents higher on this side of the border; we see no reason why they would turn around to avoid one more penny.
For all the rhetoric about our education dollars crossing the border to buy lottery tickets in Virginia, we like the symmetry of letting Virginians help pay for our education facilities.
Still, the decision in Vance County about whether to seek special state legislation allowing this local-option sales tax will come down to how people perceive fairness in taxes.
Homeowners generally see property taxes as grossly unfair, particularly in an area where renters make up a solid majority of residents. Why should most of the people in Vance County escape responsibility for building the schools in which all families have an interest?
But advocates for the poor come at the question from a different perspective. Yes, the sales tax spreads the burden beyond property owners, but it takes a disproportionate toll on those with the least money. Why should people who can’t afford their own homes pay more in taxes to make life easier for those who do have property?
It’s not a simple situation, which is one of the reasons we prefer no tax increases of any kind. But unless the state steps in to cover school construction costs, Vance must find revenue somewhere. Because it would allow those who eat, shop and work here but don’t live here to contribute to the costs, and because we don’t think our economic development efforts can survive higher property taxes, we support an education-earmarked sales tax increase.