"Promoting housing affordability by combating exclusionary housing policies"

  

Housing Virginia finds that new residents do not drain local finances

 
 The 2011 Housing Virginia study notes that existing residents in communities, as well as their elected officials, “often fear that new housing will drive up their taxes to pay for the costs of educating the children of new residents.” Housing Virginia, The Effects of Housing on the Local Economy, p. 5 (Dec. 2011), posted at http://www.housingvirginia.org. The study explains why those perceptions are unjustified. As to sources of revenue:  

 

Residents not only pay local real estate taxes, but also contribute to a wide array of local taxes and fees. Typically, a household will pay personal taxes on two or more cars that they own. About one in every seven households owns a boat generating additional personal property taxes. Often, residents operate home-based businesses that generate license taxes and fees. Families go out to eat and spend their income in local shops and stores, generating sales and meals taxes. These household expenditures in the local economy help local businessmen and women who then pay additional taxes to the local government.

 

Id. School costs represent the largest single category of local government expenditures. Housing Virginia found large variations in the costs of educating students, students per household, local tax rates, and home values needed to cover local education costs in the five regions studied, during the study period (fiscal year (FY) 2010). (Those regions are the Charlottesville MSA, George Washington Regional Commission (Fredericksburg), Lynchburg MSA, Middle Peninsula and Roanoke MSA’s.) However:

 

the 2010 median home sales prices exceeded the home values needed to cover the local cost of education in all localities within the five regions with only a few exceptions. Contrary to common belief, the conclusion is clear that homes generate sufficient local tax revenue to cover the local cost of educating the children that will reside in these homes.

 

Id. at 6. In fact:

 

In the majority of localities, homes generate sufficient local tax revenue to cover the total cost of local government. The 2010 median home sales prices exceeded the home values needed to cover the cost of local government in 16 of the 26 localities within the five regions studied. In 2007, the median sales price exceeded the home value needed to cover the total cost of local government.

 

Id. at 6-7. The study concluded overall that: “Contrary to the common misperception, housing is not a drag on the local tax base but a contributor to the local tax coffers.” Id. at 7.