The Revenue Resources and Economic Commission was first created in 1968 to ''study and evaluate the Commonwealth's tax structure with emphasis on the equities of that structure as it affects the taxpayers. It shall also evaluate the sources of revenue of the local governments, the problems facing cities and urban areas relative to finance, the proper division of sources of revenue between state and  local governments and the proper division of responsibility of services. It shall study the overall tax structure of the Commonwealth in relation to the magnitude and distribution of the wealth of its people and their need for public services and the ways and means best designed to adjust state and local taxation to facilitate a more adequate and equitable financing of local public services and to encourage and achieve desired land-use goals and shall appraise the current status of the real property tax in the state." In 1974, the Commission was made permanent (§ 9-146, Code of Virginia).

During 1977, the Commission elected to devote a large portion of its energies to analyzing local fiscal problems, while, at the same time, maintaining its interest in overall tax revenues and tax equity. The  Commission's staff prepared and published a report, Local Fiscal Issues, A Staff Report to the Revenue Resources and Economic Commission, which examines the following areas:

1. Local Revenue Considerations

a. Existing Revenue Sources and Distribution Between the State and Local Governments
b. Local Revenue Trends
c. Alternatives for Distribution of Revenues

2. Examination of Certain Local Taxes

a. Analysis of Value Added, Business Income, and Business License Taxes
b. Restructuring the .Local Business, Professional, Occupational License Tax

3. Analysis of the State Budgeting Process

4. Local Fiscal Reporting

Readers are encouraged to refer to the staff report for additional information and supportive data.

This document contains the Commission's recommendations. The recommendations reported below relate to  three areas: 1) local business, professional, occupational license tax, 2) personal property tax, and 3) local fiscal reporting. A statement by the Chairman of the Commission on the establishment of a local  Government Fund is also included.

Local Business, Professional, Occupational License Tax

The Commission would prefer to recommend an elimination of the local business, professional, occupational license (BPOL) tax as a local tax source with replacement revenues or another tax source provided to local governments. It is not felt, however, that money is available without a general tax increase to eliminate the BPOL tax at this time. Thus, the following proposal on the BPOL tax is offered. While this proposal would not cause an actual loss of dollars for any locality, the Commission recognizes that it does curtail revenue growth in this tax source for those localities above the suggested ceiling rates. Therefore, the Commission recommends the following proposal with the proviso that the state offer greater assistance to the local governments in the cost of services local governments  provide and/or provide local governments with an additional source of revenue. With this provision, the proposal is unanimously supported by the Commission.