The Top Grant -- Take Charge

Community Indicators for the Take Charge Virginia program

Indicators can play an important role in decision-making by measuring progress toward established goals. Indicators are data that can be used to analyze trends over time. Indicators can be used to interpret the past, explain the present, and help plan for the future. Community members and officials can use them to assess the health of the city or county in a way that is simple, understandable, and relevant.

“Traditional” indicators, such as the unemployment rate and crime rates, are important for analyzing trends in communities. While these indicators are useful, they measure only one aspect of the community. For example, the unemployment rate measures the economic health of a community by looking at the number of people without jobs. However, this data fails to measure whether the economy is sustainable for that community (for example, are natural resources being used too past or are the jobs available dangerous or low paying?) Therefore, it is important to consider interrelationships in different aspects of the community and examine how information from the past can affect long-term goals. A better understanding of the employment picture would come from measuring the number of jobs and the adequacy of pay for the area. Therefore, using a mix of traditional and sustainable indicators will help a community make decisions based on a more comprehensive view.

A community is comprised of its environment (land, ecosystems, and natural resources), its society (people, values, laws, and information services), and its economy (jobs, goods, and services). A sustainable approach to community development recognizes that each of these three sectors affects, and is affected by, the others. By focusing on these three dimensions, the indicators will help stakeholders measure the capacity to support people, businesses, and services in a sustainable manner.

Demographics

Demographic Data can reveal trends in the number of people utilizing services, paying taxes, or seeking employment. This information can assist local government officials in developing accurate portraits of the resident population. Extreme changes in population, either growth or decline, can have profound impacts upon the level of services provided. Such changes can severely impact a locality's infrastructure needs, revenue-generating ability, and the quality and quantity of service. Accurate knowledge of a locality's population serves as the foundation for a more detailed analysis of the locality.

Demographic information includes population, age distribution, median age, and educational attainment. The population indicates the total number of people in the locality and changes in the population demonstrate trends over time in the total number of people living in the locality. Age distribution, median age, and end of year membership in school show changes in the age of the population. The age distribution shows how the size of different age-based segments of the population has changed over time. The median age shows whether the population has gotten older or younger over the past several decades. Educational Attainment shows how much formal education the residents of the locality have obtained. It can be used as a proxy variable to determine many things from the possible skills of the work force to literacy rate in the locality.

Virginia demographic information (you must have Microsoft Excel to view these files):

Data Sources:

U.S. Bureau of the Census.
Age Distribution by Race - http://www.factfinder.census.gov
Poverty Estimates From http://www.cache.census.gov/
Health Statistics
Resident live births… from http://www.vdh.state.va.us/stats/

Labor Force and Employment:

Labor Force and Employment indicators provide a good measurement of the size and utilization of a locality's employable population. Changes in these measures point to shifts in the types of job opportunities available in the locality. Civilian labor force counts are estimates of a locality's total employment base. Average annual employment and unemployment figures are estimates of the total number of individuals employed and unemployed, respectively. Average annual unemployment rates are estimates of the monthly rates on an annualized basis.

Job Market information includes place of work and SIC employment data. Place of work shows whether or not individuals must travel out of the locality or even out of the state to find employment. Employment by sector, wages by sector, payroll by sector, and establishments by sector are based on SIC classifications which divide places of employment into ten standard industrial categories. Changes in these indicators point to shifts in local economic conditions.

Virginia labor force & employment information (you must have Microsoft Excel to view these files):

Data Sources: Virginia Employment Commission. Annual Report of Labor Force and Employment, 1981-2000; Covered Employment and Wages in Virginia by 2-digit SIC. Quarterly.

Economic Conditions

Economic Indicators can provide the local decision-maker with valuable information concerning the economic climate of a locality. Such information can be used in assessing a locality's overall economic health and taxing capacity. Each of the economic indicators addressed in this profile represents a major component of a locality's tax base and/or fiscal structure. Fluctuations in the assessed valuation of taxable properties or in other economic indicators can have major consequences for a locality's taxing policy, revenue generating capacity, and the overall quality of life enjoyed by its citizens.

Adjusted Gross Income represents the total income of a locality's residents before any exemptions and/or deductions. As an indicator, it is probably the best measurement of general income level in a locality. It is also a good indicator of the buying power and wealth of a community. The per capita measure might, however, mask inequities in the distribution of wealth.

Fair Market Values of Real Estate and Total Personal Property Values are the two major revenue generating sources available to local jurisdictions. In general, these two indicators provide a good indication of a locality's overall economic climate and the relative wealth of its citizens. Time series analysis of these indicators provides a good method of understanding changes in the growth or decline of a local economy. Such information has important ramifications for long-term strategic planning.

Taxable Retail Sales is a good indicator of the relative health of the local retail trade industry. It portrays the sheer size and volume of the retail trade industry and demonstrates how much revenue is being redistributed into the local economy via the 1% local option sales tax. Taxable retail sales reflect the total taxable value of retail goods exchanged within a locality. This amount is a fairly accurate estimate of the figure the state uses to calculate its sales tax receipts. The number of registered dealers and sales for each business classification code provide information for the eleven classification groups reported by the Department of Taxation. The number of registered dealers for each business classification code accounts for multiple locality dealers. This figure is determined by counting each separate place of business. However, where there are less than four dealers in a business classification, the taxable sales data are reported in the Other-Miscellaneous-and-unidentifiable category.

Public Service Corporation Values are another source of revenue for localities. Local tax rates are applied to the assessed value of such public corporations as utilities, rail roads, etc., that provide service across the boundaries of several localities or states. The assessed values are established and distributed through the State Corporation Commission and the State Department of Taxation. Local levies applied to these values can yield significant tax revenues in localities such as Bath, Louisa, and Surry counties. It is important to monitor the fluctuations in values carefully if substantial revenues are derived from this source

Tax Rates are often viewed by local boards and councils as an indicator of effort or stress. The Virginia Department of Taxation collects and publishes nominal (actual) tax rates for real estate. The nominal rates are compared to another rate called the Average Effective True Tax Rate. The Average Effective True Tax Rate is calculated by using statistical procedures to compare assessed values of property to the selling prices for property in a given locality. The relationship between nominal and average effective true tax rates can vary widely. These variations can be linked to discrepancies between assessed values and changing market values of real estate in a locality. These discrepancies can be even greater if the locality's reassessment schedule spans several years.

Beginning in 1977, localities in Virginia were required to assess real estate at 100% fair market value effective on January 1, 1977 or effective by July 1, 1981.

Nominal tax rates often are volatile political issues for many boards and councils, causing rates to remain lower than the fiscal capacity and the needs of the locality.

Differences in taxes among Virginia's localities cannot be measured by comparing the nominal tax rates alone because of the varying assessment procedures employed by the localities. To adjust for fractional assessments the nominal tax rate is multiplied by the median assessment/sales ratio to yield the average effective true tax rate per $100 of true value. The average effective true tax rate allows an accurate comparison of real estate taxes on similar properties in different taxing jurisdictions.
One of the most revealing ways for a locality to gauge its taxing capacity is to look at the difference between the nominal and average effective true tax rates. If assessments are performed on a consistent and equitable basis, there should be little difference between the figures. In actuality, great differences are often manifested when comparing these two figures.

Virginia economic conditions (you must have Microsoft Excel to view these files):

Data Sources:

Virginia Department of Taxation.
Virginia Department of Taxation Annual Report.
Taxable Sales in Virginia Counties and Cities.

Agricultural Statistics

From Census of Agriculture http://www.usda.gov/nass

Governmental Operations

Sources of Local Revenue

Local Revenues provide insight into a combination of local capacity and local effort. The twelve local revenue categories identify the sources from which the majority of local revenues are derived.

Property Taxes
Taxes on classes of property are the most important sources of local revenue in both counties and municipalities. Real property tax accounts for 41 percent of all dollars raised by Virginia cities and counties. When all four categories of local property tax (real, personal, machinery and tools, and public service corporations) are combined, the total accounts for over six of every ten revenue dollars (Comparative Report of Local Government Revenues and Expenditures for FY 2000; VA Auditor of Public Accounts). Clearly, the property tax is the single largest source of locally generated local government revenue.

Real Property. Tangible real property is composed of land and buildings or other permanent fixtures and improvements. Virginia law requires that localities assess the value of real property at least every five years. Local governments have the authority to change the rate applied to real property. Use-value assessment of agricultural, horticultural, forestal, and open space lands apply to counties and municipalities that have enacted appropriate local ordinances. Use-value assessment also applies to land in agricultural and forestal districts.

Personal Property. Tangible personal property consists of assets not attached to real estate. This tax is applied to a broad range of items such as motor vehicles, mobile homes, business furniture, boats, recreational vehicles, computer equipment, aircraft, farm machinery, and farm livestock. Local governments are allowed to set their own rates for the tax. As might be expected, assessment ratios and valuation methods vary significantly across the state.

Machinery and Tools. The machinery and tools tax is a form of personal property tax. All machinery and tools used in manufacturing, mining, processing, radio and television broadcasting, dairy operations, laundry and dry cleaning must be valued by depreciated cost or a percentage of original total capitalized cost excluding capitalized interest. The tax rate may not exceed the rate imposed on general personal property, but some localities use lower rates as part of an economic development strategy.

Public Service Corporations. The value of the property of public service corporations, including electric, telephone, water, heating, and pipeline distribution companies is assessed annually by the State Corporation Commission. Localities are authorized to impose a tax rate on the assessed value of the corporation’s real property (original cost less depreciation) and a similar tax on the corporation’s tangible personal property.

Local Sales and Use Tax
In Virginia, the point-of-sale sales tax collection is administered by the state. Merchants collect 4.5% of gross sales, send it to the state where 1% is earmarked and distributed back to the “point of sale” locality for operation and maintenance of the educational system. Another 1% is earmarked for operation and maintenance of local school systems, but it is re-allocated to localities based upon their school aged population. The remaining 2.5% is used to cover the costs of providing state government services and state aid to localities, in combination with other sources of state revenue.

2 percent is deposited in the state general fund and used for general governmental programs.
1 percent is distributed to cities, counties, and towns that operate a school division for the operation of public schools.
0.5 percent is deposited in the Transportation Trust Fund to help pay for highway construction and maintenance, ports, airports, and mass transit.

Business, Professional, and Occupational Licenses (BPOL)

Each local government may levy a local license tax on business, trades, occupations, and professions, although some types of businesses are exempt from the tax. There are four different BPOL classifications—contractor, retail, business services, and professional services—and each classification has a maximum tax rate that has been set by state law. Localities that do not impose a BPOL tax may levy a merchant’s capital tax. Generally, cities and towns rely on the BPOL tax, while about half the counties impose the merchant’s capital tax.

Utility License Tax
Each local government is authorized to impose a license tax on public service corporations, including telephone, telegraph companies, water, heat, light, and power companies. The tax is capped at a rate not to exceed one-half of 1 percent of the gross receipts resulting from sales to consumers in the respective locality. This tax is imposed on public service corporations in lieu of the BPOL tax.

Licenses and Fees
Virginia’s local governments may levy certain license taxes on a variety of taxable subjects. Chief among the items and activities being taxed are motor vehicles, trailers, semi-trailers, food and beverage, E-911, wireless E-911, bank stock, cigarettes, video programming, and alcoholic beverages. However, selected licenses and fees are not available to all counties or all towns. In some cases, local voters must approve the license or fee before the locality can use the revenue source.

Service Charges/User Fees

Revenue secured through the use of service fees has gained in popularity over the past two decades. Their popularity, in part, is attributable to the payment being linked to a particular service with an identifiable end user.

Inter-Governmental Revenue

Revenue from the Commonwealth. State aid is an important source of revenue for local governments. The state provides three major types of aid to localities. The first is financial assistance for discrete governmental functions such as education, social services, health, libraries, and jails. The second category involves cost-sharing the salaries and expenses of constitutional officers. The third type is taxes and fees local governments receive according to a General Assembly established distribution formula, which can change annually. The motor vehicle sales tax and Alcoholic Beverage Control (ABC) profits are examples.

Revenue from the Federal Government. Federal categorical grants for water and sewer projects, economic development, and mass transit are an important source of revenue for many local governments in Virginia. Much of the revenue that arrives from the federal partner is in the form of block grants.

Maintenance and Operation Expenditures

Expenditure data provide detailed information on expenditure levels for maintenance and operation programs, capital outlays, gross debt, and enterprise funds. The level of expenditures associated with each of these program and project accounts represents how local governments are spending their funds. The funding level associated with each of these categories is indicative of the relative value placed upon each of these governmental functions.

Maintenance and Operation Expenditures are allocated to nine categories. Among the nine reported categories, expenditures for education in the state of Virginia are the greatest. The education expenditures are distributed into six functional activities. The elements (departments) included in each of the activities are detailed in the Uniform Financial Reporting Manual for Virginia Counties and Municipalities.

The Auditor of Public Accounts uses the following categories to identify expenditures for the taxes that are collected. These categories represent the goods and services purchased with tax dollars collected. With fewer tax dollars available, these goods and services are often reduced or turned over to the private sector that charges individuals for the services.

Community Development includes the operation and maintenance expenses for planning and community development, environmental management, and local expenditures for Cooperative Extension.

Education includes operation and maintenance expenses for school instruction, school administration, pupil attendance and health, pupil transportation services, school food services and other non-instructional operations, as well as contributions to community colleges.

General Government Administration includes the operation and maintenance expenses for legislative functions like the Commissioner of Revenue’s office, the Treasurer’s office, data processing, automotive motor pool, central purchasing and central stores, print shop, and risk management/self insurance.

Health and Welfare includes operation and maintenance expenses for health, mental health and mental retardation, welfare, and social services.

Judicial Administration includes the operation and maintenance of courts and legal services.

Parks, Recreation, and Cultural includes operation and maintenance expenses for parks and recreation, public libraries, and cultural enrichment activities.

Public Safety includes the operation and maintenance of law enforcement and traffic control, fire and rescue services, correction and detention, inspections, and other protection services.

Public Works includes the operation and maintenance of highways, streets, bridges and sidewalks, sanitation and waste removal, and general buildings and grounds maintenance.

Total Gross Debt provides an indication of the total debt incumbered by a locality.

Total Capital Applications provides an indication of a locality's total capital investment for a given year. These applications include those for specific capital projects, transfers to other funds, and payments to other governments.

Virginia governmental operations information (you must have Microsoft Excel to view these files):

Revenue & expenditure data for governmental operations

Data Source: Auditor of Public Accounts. Comparative Report of Local Government Revenues and Expenditures. Richmond VA.

Education

Educational data can provide insight into one of the most expensive functions undertaken by local governments in Virginia. The educational variables identified in this profile address some of the most important issues facing local school systems. Membership, graduation information, and dropout rates can reveal current trends in school age population. This information allows school administrators to ascertain current and future demands on staff, programs, and facilities.

There are four sources of funding for educational operations expenditures -- local, state, state retail sales and use tax, and federal. These data represent the total funding available for educational operational expenditures. When these data are divided by Average Daily Membership figures, per pupil expenditure information is generated for each source of funding. Per pupil expenditure data provides basic information concerning how much a local school system spends on a per pupil basis to educate all its students. Such data provides an excellent basis for comparing how much local governments are spending on education and their relative reliance on a single source of funding. Examination of this information reveals a locality's general capacity to fund its educational system and programs.

Virginia education information (you must have Microsoft Excel to view these files):

Data Sources: Virginia Department of Education, Superintendent’s Annual Report. http://www.pen.k12.va.us/VDOE/Publications/