In this study we develop a framework of analysis to assist the Revenue Resources and Economic Study Commission in making decisions. We do this by making projections, investigating alternatives, and evaluating the results. Final recommendations are not provided, since they are the prerogative of the members of the commission.

The authors are members of the Finance Section in the Division of State Planning and Community Affairs and the Research Division of the Department of Taxation who have been on loan to the commission. They have been given a free hand in preparing the study; therefore, the opinions and conclusions are their own and do not necessarily represent the views of the Division of State Planning and Community Affairs, the Department of Taxation, or any other offices of state government.

Throughout the study the projection period extends to 1979-80, a seven-year period from the current fiscal year or three bienniums ahead if measured from the present biennium. At various points in the study, data are presented for individual localities. Because of time and space limitations, we could not provide figures for each of the 134 cities and counties. Instead, we use a representative sample of seventeen cities and counties shown in Chart 1.1. The selection of sample areas was based on a desire to show effects due to size, geographic location, city or county status, and degree of urbanization.

This summary chapter is followed by five major chapters and a statistical appendix. Chapter II provides background on state and local finances. It contains information on population, income, measures of fiscal effort and capacity, and major features of governmental finances in Virginia. Chapters III and IV furnish revenue and expenditure projections for the state's general fund and explore ways of increasing revenues. The next chapter provides the revenue and expenditure projections for local governments. In addition, Chapter V supplies some fiscal measurements for central cities and an analysis of local revenue systems with particular emphasis on the real property tax. Chapter VI is devoted to ways in which the state might give additional fiscal assistance to local governments.

The remainder of this chapter is devoted to a summary of the study's highlights. To insure brevity and readability, several of the technical discussions are omitted, and some of the topics are discussed out of the sequence in which they are treated in later chapters.