School board renews push to direct meals-tax revenue to school capital fund

At the March 18 joint work session, Warren County school leaders renewed efforts to route the county meals-tax revenue into the school division’s capital improvements fund, saying the 2003 referendum authorizing the tax intended funds to support school facilities.

Board members reported an ambiguous current practice: the county’s general fund has been used to pay debt and other items and towns now collect some local meals taxes, and a 2018 settlement was described as providing the town an "equivalent" of 30% of the meals-tax revenue. Speakers said that implementation over recent years appears to have diverted money away from the schools and that staff could not readily produce a clear, up-to-date list of the businesses and localities remitting the meals tax countywide.

Participants recommended staff pursue two lines of inquiry: a clear accounting for which entities remit the meals tax (noting legal limits on disclosing payment amounts, which staff said appear in Virginia Code) and a clean restatement of how the 2018 joint settlement has been applied — whether the town received a 30% cut directly from the school allocation or whether an offset equivalent was paid from county general-fund revenues. Speakers suggested asking the treasurer, commissioner of revenue or health department for ledger or license cross-checks to identify restaurants paying the tax outside the corridor.

School leaders said re-establishing a transparent, accountable mechanism to ensure that meals-tax receipts intended for school capital improvements actually reach a separate CIP account is a precondition for considering any future local referenda. They urged specific edits to the draft MOU to (1) use the referendum’s original language that revenues be used “solely for public school capital improvement projects,” (2) remove clauses allowing the county to retain revenues, and (3) make the agreement binding rather than non-binding.