The Buck Starts Here: Loudoun and Virginia’s Tax Imbalance

Northern Virginia is often called the economic engine of Virginia, but that also means that counties like Loudoun buoy the budget for the entire state—and much of the money Loudouners send to Richmond never comes back.

According to the Virginia Department of Taxation’s annual report, in Fiscal Year 2018, which ended June 30, 2019, Loudouners sent the state about $956.5 million—close to a billion dollars—in taxes just from the state income tax and the state’s share of the sales tax.

Drawing a direct comparison of the money Loudouners send to the state against what they get back is difficult. In direct distributions to the local government, Loudoun County got $370 million in Fiscal Year 2019. The state’s services—such as the Department for Aging and Rehabilitative Services, Agricultural and Consumer Services, the Virginia Housing Development Authority, or even the State Police—can be spread around and aren’t all tracked by the county. But where they are apparent, the differences are stark, and the weight the local budget is carrying for the state is significant.

One example: roads, which are by state law a state responsibility. But the previous Board of Supervisors, seeing that the state was years behind on road construction, began pouring local money into transportation projects to break up Loudoun commuters’ gridlock.

Retiring Board of Supervisors Vice Chairman Ralph M. Buona (R-Ashburn), who had just been elected to the board at that time, said it was a matter of practical and political necessity. He and his Republican colleagues had run a joint campaign around a few issues, among them traffic.

“Honestly, as Republicans, it kind of fundamentally goes against al lot of our principals, because we’re sending all these tax dollars to Richmond, and it’s a greatly lopsided relationship,” Buona said. But while the Loudoun was seeing money sent to Richmond and none come back, there was no more time to wait on the state.

“The problem became, if we just stood on that principal, then the problem was going to get worse and worse, and traffic was getting so bad that next election, they’d throw all nine of us out,” Buona said. “…It became one of those things where we have to bite the bullet and we have to get this done.”

That work was buoyed by Loudoun’s economic development efforts, which shifted some of the tax burden off the local homeowner and onto Loudoun’s booming businesses. The region also got a significant boon with the General Assembly authorized the Northern Virginia Transportation Authority, which now funds hundreds of millions of dollars in transportation projects through taxes on the region.

Transportation projects now make up more than half of Loudoun’s capital budget.

Over the next six years, the state has plans for $577.1 million in Virginia Department of Transportation projects in Loudoun, according to its latest six-year plan. Loudoun, meanwhile, will put almost as much—$529 million—local money into transportation projects, all money it is spending on a state responsibility. Another $337 million in projects are also funded by local money through the Northern Virginia Transportation Authority, through a regional sales tax.

But more money for transportation from the state has historically been hard to come by. When state lawmakers went looking for money to fund Virginia’s obligation to Metrorail, they ended up raiding the Northern Virginia Transportation Authority’s locally produced funds, taking yet more money from the effort to fix the region’s roads. Other proposals for new taxes to pay that cost have fallen flat.

Even many legislators who have billed themselves as transportation advocates have been loath to raise more money for roads.

In 2017, frustrations boiled over on the county Board of Supervisors when Del. Dave A. LaRock (R-33) and retiring Sen. Richard H. Black (R-13) pushed supervisors to get NVTA money for Rt. 15. Supervisors from both parties pointed out that Black had and voted against the state legislation that created the NVTA and the regional taxes that fund it, while LaRock successfully campaigned against it with his famous giant “Tax Pig” and unseated one of its architects in a Republican primary.

According to the group Americans for Tax Reform, LaRock, Supervisor Geary M. Higgins (R-Catoctin) who sought unsuccessfully to replace Black, former delegate J. Randall Minchew, who this year unsuccessfully sought another term in his old seat, and incumbent state Sen. Jill Holtzman Vogel (R-27) have all signed a “Taxpayer Protection Pledge” created by activist Grover Norquist, promising to “oppose and vote against any and all efforts to increase taxes.”

There are other places where the county uses local dollars to make up for skimpy state funding, such as in the District Court. In the past two budgets, the county has given that court’s employees, who are paid by the state, a 10 percent salary supplement to counter staff turnover and the high cost of living in the area.

“We need some political will in Richmond,” Buona said. “But that said, it’s not so much a partisan issue in Richmond. It’s an issue of, ‘those rich people in Northern Virginia versus the rest of the commonwealth.’ We’re just flat out-voted, and not along party lines.”

He said the rest of state sees the region as the golden goose—and Northern Virginia doesn’t have enough votes in Richmond to change that.

But wealthy counties in Virginia will likely always have to carry some of the weight for other counties. On the opposite end of the income scale, Buchanan County is Virginia’s poorest county by median household income, with a U.S. Census Bureau-estimated median income of $30,828 and a population of just over 24,000. The county government had a Fiscal Year 2018 budget of $42.8 million—meaning Loudoun’s parks department alone had nearly double that county’s budget.

Buchanan County produced just over $13 million in tax revenues for the state according to the Virginia Department of Taxation’s 2018 Annual Report. Building the Grassy Creek bridge on Rt. 460 in Buchanan County alone, which, because of the mountainous local geography is the tallest bridge in the state, cost the state $120 million. VDOT projects listed in the agency’s six-year plan in Buchanan County over the next six years are estimated at almost $80 million. On a per capita basis, that level of transportation funding is about double of that scheduled to be provided to Loudoun County over the same period.

3 thoughts on “The Buck Starts Here: Loudoun and Virginia’s Tax Imbalance

  • 2019-11-07 at 2:55 pm

    Loudoun should sue the state for all the monies that it is putting into roads. The only way to recoup the losses is a court-ordered mandate based on the obvious deriliction of duty by Richmond.

  • 2019-11-07 at 4:42 pm

    Just like the relationship of Blue States to Red ones — we pay more than we get, and it is used to support policies that are against our better judgement.

    I guess it’s part of a democracy, I just wish they’d listen to us a little more.

  • 2019-11-11 at 9:10 pm

    So sad and so lame! “stand on principle doesn’t work” REALLY! Buchanan county only charges its property owners 39 cents per hundred. They take our funds and don’t even tax themselves the state average of 79 cents. The reason we (the Supervisors) can’t fix this is because the only point of leverage is to threaten to stop high density residential growth which drives the income tax growth for the state and chokes Loudoun with traffic. I wrote about this for many months but with 70% of the county not even bothering to vote I guess the majority of Loudoun is OK with getting ripped off by the state. Somebody said it a long time ago – theres a sucker born every day and maybe its’ Loudoun. Too bad because we could use the funds to catch up on backlogged school construction, fixing roads that hydroplane every time it rains and update lights like the one at Rasberry Falls which wastes time out of driver lives every day and more on Fridays. Maybe the next BOS will actually do something instead of making up stupid excuses for inaction as they protected their developer campaign investors.

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