Virginia collective bargaining bill would trigger nearly $4B in state and local tax hikes

Property taxes may need to go up by 18% to pay for one proposal making its way through the state legislature.

Imagine the Virginia House of Delegates voted to raise taxes by nearly $4 billion a year.

Imagine no longer. That’s exactly what lawmakers are setting into motion by pushing an extreme proposal that reduces taxpayers’ power at the bargaining table.

The Virginia House of Delegates passed House Bill 582 on Feb. 6, and it is now awaiting action in the Senate. HB 582 would insert highly political government worker labor unions into contract negotiations between public employees and local governments – a practice known as collective bargaining – meaning taxpayers would be on the hook for higher costs.

The costs will be higher. The only question is how much. The City of Roanoke, for example, estimated the city’s costs would increase by at least $28.3 million if the proposal becomes law.

According to a World Bank study, collective bargaining increases employment costs by 15% in the U.S.

An increase of that magnitude would cost the state an additional $1.46 billion a year, according to the Virginia Department of Planning and Budget. Meanwhile, local governments’ overall costs would increase by $2.5 billion, with a handful of local government employees excluded from the proposal’s scope. Together, that comes to nearly $4 billion in higher government employment costs every year.

Property taxes are the primary source of tax revenue in Virginia, and the easiest to scale up. If Virginia’s local governments had to cover an additional $2.5 billion a year with higher property tax collections, Virginians’ property tax bills would need to go up by 18%.

Covering the state’s share would require increasing the state income tax’s top rate, which applies to all income above $17,000, from 5.75% to 6.0%, or adding a percentage point onto the sales tax.

If a Virginia lawmaker proposed 15% higher costs for state and local government employees, at a cost of nearly $4 billion, the proposal would never get a hearing. That sort of money simply isn’t in the budget, and Virginia voters would never stand for a $4 billion tax increase.

But that’s exactly what they’d be getting if HB 582 becomes law – only without the scrutiny, and with the higher costs only showing up after the law is in place.