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Report details COVID-19′s impact on central Virginia tax revenue

Coronavirus caused what the Free Enterprise Forum describes as a “precipitous drop” in tax...
Coronavirus caused what the Free Enterprise Forum describes as a “precipitous drop” in tax revenue – especially for businesses in and around Charlottesville.(WVIR)
Updated: Apr. 16, 2021 at 4:25 PM EDT
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CHARLOTTESVILLE, Va. (WVIR) - A new report is showing just how much the coronavirus pandemic impacted tax revenue in central Virginia. While Charlottesville still leads the way in terms of money coming from businesses, COVID-19 led to big gains for the outlying counties.

Coronavirus caused what the Free Enterprise Forum describes as a “precipitous drop” in tax revenue, especially for businesses in and around Charlottesville. Working from home and a recent U.S. Supreme Court decision provided a key boost outside of the urban areas.

The city and Albemarle County’s urban ring were particularly hard hit.

“It is clear the revenue shifted,” Free Enterprise Forum Founder Neil Williamson said. “They have more of a hospitality bent, and more hotel rooms exists in Albemarle County and Charlottesville then do in all the other outlying counties combined.”

Still, based on a strong first three quarters of the year in fiscal year 2020, Charlottesville leads the way with 35.7% of its revenue coming from business-related taxes. Meanwhile, Albemarle Co. comes in at 27%. The forum warns losses in the hospitality industry could have long-lasting effects.

“The Convention and Visitor’s Bureau is funded based upon transient occupancy taxes,” Williamson said. “If the transient occupancy taxes are down as they were an FY20 by 30 or 40% their funding is down by 30 or 40% in the subsequent year.”

The outlying counties were also affected by the pandemic, but they had a surprise helping hand: The Wayfair decision.

“It was a Supreme Court decision that allowed all localities to collect sales tax from internet sales that are delivered to the locality,” Williamson explained.

More people working from home meant more people shopping online, and shopping closer to home. For some localities, like Fluvanna County, the forum suggests zoning decisions have affected the possibility for growth.

“.75% of their landmass is zoned appropriately to allow industrial and commercial uses,” Williamson said.

Business taxes made up just 7.3% of Fluvanna County’s revenue.

This year’s report only details the beginnings of the pandemics impact. The full scope won’t be clear for months, or even years.

“FY21 is going to be a fascinating year that will compare with FY22 And FY20,” Williamson said. “I think that you’re going to see a hybrid going forward of telework, as we’ve seen kind of happening now.”

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