Memo for fiscal year 2022, updated 2021-03-05

[Archived] Question # 28: Can you provide a revenue estimate for the proposed 5 cent tax on disposable plastic bags ordinance to be effective on October 1, 2021?


Section 58.1-1745 of the Code of Virginia allows the City to enact an ordinance imposing a 5-cent tax on each disposable plastic bag to finance pollution-reduction efforts. Can you please provide the revenue estimates for FY 2022 assuming that the City Council enacts the ordinance to be effective October 1, 2021. Additionally, can you please include a proposed expenditure plan for these new revenues assuming that a quarter of revenue will fund the provision of reusable bags for SNAP/WIC beneficiaries and the remaining revenue will finance street trash cans and recycling cans (inclusive of any incremental collection costs).  (Mayor Wilson)


This is in response to Virginia SB11, which authorizes any county or city to impose a tax of five cents per bag on disposable plastic bags provided to consumers by certain retailers beginning no earlier than January 1, 2021. The plastic bag tax aligns with the City’s goals in the WasteSmart Strategic Plan and the Environmental Action Plan. The bill was also a City Council Legislative Package priority, for which the City’s Legislative Director worked closely with the General Assembly to get the bill passed.

SB11 only applies to grocery stores, convenience stores and drug stores, of which there are approximately 100 in the City. It excludes food establishments and restaurants and does not apply to paper bags. It also limits the City’s share to three of the five cents until January 1, 2023 and four cents in each subsequent year and allows the Commonwealth to deduct administrative costs for collection, enforcement and dispersal. 

Revenues collected from the Plastic Bag Ordinance may be only used for the purposes of environmental cleanup, providing education programs designed to reduce environmental waste, mitigating pollution and litter, or providing reusable bags to recipients of Supplemental Nutrition Assistance Program (SNAP) or Women, Infants, and Children Program (WIC) benefits. 

Staff estimates that the implementation of this new tax would generate approximately $50,000 over a 12-month period. It is unknown at this time how much the State will deduct. Staff have therefore budgeted $30,000 in the FY 2022 budget for the Plastic Bag Ordinance with the priority expenses identified for hosting reusable bag distribution events to SNAP/WIC beneficiaries and outreach to the regulated community.

This expenditure plan includes $10,000 allocated for printing & postage (developing graphics, printing mailers, window cling stickers, notification letters for stakeholders); $5,000 to purchase reusable bags for low-income households and SNAP/WIC beneficiaries, $10,000 in temporary staffing hours (hours for reusable bag distribution events, conducting street outreach to regulated businesses, and liaising with State on enforcement and violations); finally $5,000 allocated for advertisements (social media, local newspapers, and/or bus shelters). The expenditure plan for future year plastic bag revenue will vary depending on the needs of the City’s waste and pollution-reduction efforts.

SB11 states that “The Tax Commissioner shall develop and make publicly available guidelines implementing the provisions of this article.” SB11 also states that the "Tax Commissioner shall collect, administer, and enforce this tax in the same manner that he collects, administers, and enforces the retail sales and use tax under Chapter 6." At this present time, the State Tax Commissioner has yet to start to draft or publish implementation guidelines but has recently stated that this will begin after higher priority income tax issue work is completed. If the City brings a proposed ordinance to Council prior to the issuance of state guidelines, an ordinance amendment may need to follow if state guidelines conflict the City's language. SB11 also requires that a certified copy of the City's plastic bag ordinance is submitted to the Tax Commissioner at least three months prior to the tax effective date.

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