HAMPTON, Va. — Ross Mugler, Hampton's commissioner of revenue, expects changes will come to Virginia's state grocery tax.
“I think this train has really left the station," said Mugler. "I think we'll probably see the elimination of the grocery tax."
Mugler, who also chairs the Virginia Commissioner of Revenue Legislative Committee, said the grocery tax brings a lot of money to the City of Hampton.
“So we would lose a little over $4 million annually if you did away with the grocery tax," said Mugler, who also said revenue from the tax has increased since the pandemic began.
Currently, the 2.5% tax goes to local governments and to the state, which then redistributes money to school divisions.
Republican Gov. Glenn Youngkin has said he wants to eliminate the grocery tax and other taxes to relieve the burden on people.
13News Now political analyst Quinton Kidd believes the governor has a good chance to get this done.
"It may not be an opportunity for the whole grocery tax to be repealed but it may be an opportunity for part of it to be repealed," said Kidd.
However, Kidd believes serious negotiations will need to take place between the governor’s team and Democrats in the Senate to work out a deal.
“In order to get anything passed, it has to be able to pass the State Senate," said Kidd.
He points out we have already seen high-profile negotiating. The optional mask mandate for schools was passed with bipartisan support in the Senate.
“Local governments are a little leery of the General Assembly and the governor saying, 'Let’s get rid of a local tax and then not making it up,'" said Kidd.
“We’ve seen that in the past through different taxes. The state will say they’ll eliminate and then we’ll replace them and unless it’s legislated there’s no guarantee," Mugler said.
That’s why Mugler would like to see some kind of financial commitment to local governments written into any type of deal.
"I think the governor and the House will have to compromise on [is] to make sure localities have that guarantee that this would be mandated in the code of Virginia that this revenue is replaced," said Mugler, who predicts a deal will be ironed out in Budget Conference.
When asked the Governor has said he believes the Commonwealth can afford to cut taxes and provide services, especially given the state's historic $2.6 billion surplus in Fiscal Year 2021.
“It’s a surplus that’s going to be spent over the next couple of budget years and then what?" said Kidd. "That’s what I think would concern local government officials.”
Kidd predicts the governor and the General Assembly will either, figure out ways to cut the entire grocery tax and make up for the lost revenue, or eliminate the state's portion of the tax and keep what goes to local governments.