This report is a staff study for the Revenue Resources and Economic Study. Commission. The staff was composed of members of the Research Section, Division of State Planning and Community Affairs. The report was prepared by John L. Knapp, Chief of the Research Section, in association with economists Stephen M. Gross and Barry E. Lipman. Dianne B. Chesson, Edward T. Hurley, Mary G. Scully, and Paula K. Wright, served as technical assistants. The opinions and conclusions are those of the authors and do not necessarily represent the views of the Division of State Planning and Community Affairs or other offices of the State Government.

Many persons gave generous assistance in the preparation of the report and no attempt will be made to mention each name. However, particular recognition is due Dr. Thomas C. Atkeson, Chancellor Professor of Taxation, College of William and Mary, and Dr. Lorin A. Thompson, Chancellor, George Mason College, for their advice and encouragement. Without the assistance of Tax Commissioner C. H. Morrissett, Assistant Commissioner W. H. White, and L. L. Jones and J. M. Carpenter of the Department of Taxation's Division of Data Processing, we would have not secured several special tabulations which were vital to the analysis. W. B. Harvie, Jr., Director of the Department of Taxation's Division of Research and Statistics, and H. R. Fields, Director of Accounts, Department of Accounts, were patient suppliers of historical data. Any errors which remain in the report are the sole responsibility of the authors and should not be attributed to any of the above-mentioned persons.

The mandate of the Commission as elaborated in Senate Joint Resolution 15 is quite broad, and this report does not cover all of the topics elaborated in the resolution. An important omission is consideration of the present system of assessment of public service corporation property; this is a major topic and, given our other responsibilities, there was not adequate time for studying it. The topic of expenditure projections is covered only briefly in the report since such figures were felt to be the province of the Division of the Budget and the Division of Engineering and Buildings.

In the four public hearings much of the testimony was about local government revenue requirements and proposals for change. Such change would be accomplished by new taxes (e.g., local income or payroll taxes), higher existing taxes, or the alternative of additional State aid either by cash transfer or assumption of administrative and financial responsibility for certain functions. This report contributes to the debate by offering alternative changes in the State Government's revenue structure. Increases in State revenues would allow the State to give the local governments more assistance. Except for a general discussion in Chapter IV, the report does not examine taxation problems confronting local governments. This is another and very important problem which deserves separate study.

This report does not contain final recommendations. Such a task is left with the members of the Commission. The purpose of the report is to help the Commission make decisions by investigating alternatives and evaluating their merits.