Waynesboro: City Council to consider sales tax referendum, with money to go to schools

Waynesboro City Council will debate at its July 13 meeting on a proposal to give city voters the chance to vote in a November referendum on a proposed 1 percent sales tax increase that would go toward funding public school building improvements.

The 2026-2028 state budget enacted last week gives localities in Virginia the ability to set sales tax referendums, inspired by the success of a 2021 state law that allowed nine localities to ask their voters to approve increases in their sales tax rates to boost their efforts to address aging school infrastructure.

Reporting from Virginia Mercury tells us that one of the localities that decided to move forward with the sales tax increase, Danville, has collected $30 million from its 1 percent sales tax increase, after voters there approved a local tax increase in a 2021 referendum.

A staff report prepared for Waynesboro City Council members in advance of the July 13 meeting notes that it is not known right now exactly how much the city could expect to generate from a 1 percent sales tax increase here, if the voters were to approve an increase in a November referendum.

Per the staff report, the city collects $7 million per year from its share of the 5.3 percent sales tax – which includes a state base rate of 3.3 percent, 1 percent that goes to the state for K-12 education, and 1 percent that goes directly to the locality.

The 1 percent that goes to the city includes taxes on food purchased for human consumption and essential personal hygiene products; “the new levy would not include such items,” according to the staff report.

Based on legal and legislative guidance, the staff believes the money generated from an additional 1 percent local sales tax “could be used to cover debt service on the ongoing High School renovation, provided the associated debt is issued after the tax is formally adopted.”

“This tax could potentially take pressure off other local taxes, such as Real Estate and Meals Taxes, which is how the City currently plans to fund the debt payment for said project,” per the staff report.