The fiscal stress index illustrates a locality’s ability to generate additional local revenues from its current tax base relative to the rest of the commonwealth. The three components are:
- Revenue capacity per capita (the theoretical ability of a locality to raise revenue)
- Revenue effort (the amount of the theoretical revenue capacity that the locality actually collects through taxes and fees)
- Median household income
Primary users of this index are local governments in Virginia and various state agencies, who use the index to assist in the allocation of state aid.