Study: Local governments may face
By Bob Brickhouse
severe financial crisis means that local governments as well as
the state face tough times ahead. But while state coffers overflowed
during the boom of the 1990s, now it is the localities that are
in better shape than state government, according to a new study
by the University of Virginias Weldon
Cooper Center for Public Service.
far, local governments have weathered the current recession better
than in the previous recession, when a poor housing market diminished
real-property tax collections, said economist John L. Knapp.
However, in the near future, Virginias local governments
will face difficult times, as the state reduces aid and as local
tax revenues reflect the slow growth of the economy.
also warned that if the so-called housing bubble were to
burst, this would cause a sharp drop in real-property tax revenue
for local governments and add to their problems.
270-page study, Tax Rates 2002, contains detailed
information on tax rates levied in all of Virginias 95 counties
and 39 cities and in most of the incorporated towns. The study
is based on a comprehensive annual survey conducted by the Cooper
the state has cut local aid, city and county officials have protested
that the unpopular job of raising taxes to maintain services may
fall unfairly on them alone, with their main option being the
real estate tax.
law providing car tax rebates makes it politically difficult for
local governments to increase tax rates on cars, Knapp said. The
state reimburses car owners on the basis of 1997 local rates and
no large jurisdictions have increased their rates since then,
he noted. In contrast, 19 counties, most of them rural, have increased
about ordering the Cooper Centers Tax Rates