When less is more: VAR fights (and wins) for a smaller grantors tax increase
26 Mar 2013
Posted by Andrew Kantor 
Some last-minute work by VAR has paid off: In his proposed amendments to Virginia’s transportation bill, Governor Bob McDonnell has asked that the proposed grantor’s tax increase in Northern Virginia be reduced from 25 cents per $100 to only 15 cents.
The bill passed by the General Assembly included a regional package for Planning District Commission 8, which includes a large portion of Northern Virginia. To help raise approximately $30 million for congestion relief, the bill (HB 2313) raised the grantor’s tax in the region by 25 cents per $100.
But when we looked at how the General Assembly arrived at that figure, we noticed something immediately: Its calculations were based on the average grantor taxes collected from 2007-2011 – years that include the worst part of the housing crash.
So we hired Dr. Chris Chmura, a well-known Virginia-based economist, to estimate sales data for the Northern Virginia area. Then, using those figures (ones that are more reflective of the current market), we saw that a 25-cent increase wasn’t necessary.
Working hand-in-hand with local associations whose members would be affected by the increase, we met with the governor’s office repeatedly over several weeks. We showed how the region could raise that $30 million with only a 15 cent per $100 increase in the grantors tax.
Governor McDonnell agreed, and worked our suggested change into his amended bill, which the legislature will consider.
We will now be reaching out to members of the General Assembly to make sure they understand our intentions, most notably, not to do the bill harm.
We think we’ve found a win-win scenario – one that lowers the amount of the grantor tax increase without lowering the amount of money that will flow into PDC 8 for transportation.