RICHMOND — Lt. Gov. Winsome Earle-Sears is trying to ride a familiar Republican campaign slogan to victory in the governor’s race: no car tax.
Nearly 30 years after former Attorney General Jim Gilmore, a Republican, used the slogan to reach the Executive Mansion, Earle-Sears resurrected it in a brief speech to cheering volunteers before a campaign training session in Fairfax County on Tuesday.
“We’re going to get rid of the daggone car tax!” she proclaimed before adding a promise to also end the state tax on income earned from tips or other gratuities.
Both tax proposals were part of Gov. Glenn Youngkin’s proposed budget this year, but the Democratic-controlled General Assembly dismissed both efforts. It chose instead to use $1 billion in excess state revenue to provide one-time income tax rebates to a broader swath of taxpayers in October, weeks before the election between Earle-Sears and former Rep. Abigail Spanberger, D-7th. The winner will be the first woman to serve as governor of Virginia.
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Spanberger, who stepped down from Congress after three terms to run for governor, said through a campaign spokesman on Thursday that she, too, would like to get rid of the car tax by finding a bipartisan way to get it done.
“Virginians have heard from politicians year after year who vow to eliminate the most hated tax in Virginia — the car tax — only to see empty promises and gimmicks,” Connor Joseph said in a statement. “As governor, Abigail will work with both Democrats and Republicans to put Virginia on a real path towards eliminating the car tax once and for all.”
“And as the next governor of Virginia, Abigail is committed to working with the General Assembly to deliver meaningful tax relief for tipped workers and other workers alike as part of her agenda to lower costs,” Joseph said. “Abigail will focus on delivering for Virginia workers and every Virginia family — and that’s why she has already been rolling out her plan to lower costs across the board, including health care costs and housing costs.”
Local levies
The “car tax” is the personal property tax that localities assess on vehicles, based on their assessed value. In Richmond the rate is $3.70 per $100 of assessed value. The rate is $3.35 per $100 in Chesterfield County and Henrico County and $3.57 in Hanover County. Car tax payments were due Thursday in Richmond and Chesterfield, as well as the first of two installments in Henrico. Hanover’s car taxes are due in February.
Like Gilmore in 1997, Earle-Sears is trying to capitalize on public hostility to the local tax, but neither she nor Spanberger has said how she would eliminate it without crippling local governments’ ability to provide essential services — such as public education, law enforcement and emergency response — or saddling the state budget with an enormous financial obligation in an increasingly uncertain economy under President Donald Trump.
“It’s a tough nut to crack because there’s no way to offset those local revenues one-to-one without the state revenues,” said Jim Regimbal, a veteran fiscal analyst who advises the Virginia Association of Counties and the Virginia Municipal League, representing hundreds of cities, counties and towns across the state.
Youngkin first floated car tax repeal at the end of 2023, a month after Democrats secured control of both chambers of the General Assembly, crippling the Republican governor’s political agenda as he entered the final two years of his single term in office. He urged lawmakers to work with him to eliminate the tax, but he did not propose a way to do it.
$2.5 billion
Freshman Del. Chad Green, R-York, was the only legislator to take up Youngkin’s challenge to end the tax last year, but he was not surprised when a House subcommittee killed his bill after he acknowledged that it would cost the state general fund budget $2.5 billion to $3 billion a year.
“The localities would be compensated, but it would be a heavy lift,” he told the House Finance subcommittee. “I’m not going to sugarcoat it.”
Virginia’s budget already provides $950 million a year to reimburse localities for partial repeal of the car tax. In 2002, in a souring economy, the General Assembly, then controlled by Republicans, capped the reimbursement at 70% of a vehicle’s assessed value.
“How much will it cost to replace the money is what I’m concerned about,” said Dean Lynch, executive director of the Virginia Association of Counties. “No one has reached out to us to do any kind of work to talk about replacement.”
“We would love to engage in a conversation so we can make everyone aware of what the dollars are being used for and the problems that doing away with it would have on services at the local level without having a whole lot of state dollars going to communities,” Lynch said.
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Joe Flores, director of fiscal policy at the municipal league, said, “Replacing those lost revenues if the car tax is repealed will require a major investment from the commonwealth — roughly 10% of the state’s annual operating budget — at a time when general fund revenues are likely to be in short supply.”
“To be clear, VML staff have not spoken to the campaign about this proposal, but we’re happy to do so, to better understand the specifics of the initiative and the commitments being made,” said Flores, a former secretary of finance under then-Gov. Ralph Northam.
Youngkin’s effort
Youngkin tried again this year with a budget proposal to use $1 billion in surplus revenues to create a fund for providing income tax credits to some, but not all, Virginians who pay the local tax over a three-year period.
The proposal would not have spared anyone from paying the full tax levied in their locality. It would have provided $150 in income tax rebates to individual tax filers who earn $50,000 or less a year and $300 to couples filing jointly if they earned $100,000 a year or less. Taxpayers would have been eligible only if they lived in localities that had not raised the tax rate by more than the rate of inflation.
The proposal went nowhere with legislators on the assembly’s budget committees, who said it left out too many people for tax relief, including those who don’t own a vehicle. They chose instead to provide one-time income tax rebates of $200 for individuals and $400 for couples filing jointly.
“I want to do what is going to be the greatest amount of good for the greatest number of people,” Senate Finance Chair Louise Lucas, D-Portsmouth, said the same day that Youngkin pitched his proposal in December.
‘We have the money’
Earle-Spears, speaking to campaign volunteers Tuesday, insisted, “We have the money.”
But she will have to overcome public uneasiness with the state of the economy, expressed both by plummeting consumer expectations and the first signs of a pullback in consumer spending that drives 70% of economic output.
“I think it’s a very good chance that whoever is elected is going to face a very different economy than what we’ve had the last four years,” said Bob Holsworth, a Richmond political analyst who has followed Virginia politics closely for more than 30 years.
Spanberger and Democrats are focusing on the threats to Virginia’s economy — and household incomes — from Trump’s aggressive and erratic tariff policies, and cuts to federal employment and spending, especially in Northern Virginia and Hampton Roads, which depend on both for fiscal stability.
Youngkin has acknowledged a potential threat to the state revenue forecast for the next fiscal year because of Trump’s policies on tariffs and federal spending. The governor cut $900 million in approved spending from the revised budget, most of it for capital projects at public universities and services under Medicaid, “as a cushion … against any risk to the forecast.”
Youngkin and Earle-Sears kept their distance from Trump and his Make America Great Again movement for a time.
Earle-Sears once worked to boost Black voters’ support for Trump as national chairwoman of Black Americans to Re-elect the President PAC. But in November 2022 she broke with the former president days after Republicans failed to make sweeping gains in the midterm congressional elections. She told Fox Business that it was time for the GOP to move on.
But Youngkin and Earle-Sears have embraced Trump since he took firm control of the national party on his way to regaining the White House last year.
“She and Youngkin have defended everything that Trump has done,” Holsworth said.
Still, calling again for repeal of the car tax makes sense politically, he said. “I think the car tax remains problematic for a lot of people.”
Holsworth noted that car tax rates have risen in many localities since the assembly capped the state reimbursement more than 20 years ago. He said he sold a car last year for almost half of the value that the city of Richmond had assessed it for the tax.
“It’s certainly an understandable political move to try to counter what is obviously a very bad environment for Republicans in Virginia right now,” he said.