Council hears home rule proposals

PARKERSBURG- A 1 percent sales tax could raise more than four times the amount lost through accompanying business and occupation tax cuts, according to rough estimates provided to City Council’s Finance Committee Wednesday.

During the meeting in the small conference room on the second floor of the Municipal Building, Mayor Bob Newell, Finance Director Ashley Flowers and Development Director Rickie Yeager outlined the city’s planned application for West Virginia’s home rule program.

It would, among other things, allow the city to implement the sales tax while cutting B&O rates. The proposal would eliminate the 20-cents-per-$100 B&O rate on manufacturing, reduce the rate on retail and restaurants from 40 cents to 32 cents per $100 and cut the $2.80 amount on electric, light and power by half.

Based on average B&O revenue, Flowers estimated that would represent a loss of about $1.1 million a year. Her rough estimate for annual sales tax revenue was more than $4.7 million.

The state Tax Department was unable to assist the city in projecting sales tax revenue. Newell said he’s wary of making reductions that are too large until the actual revenue is known.

“When we do this, we are making conservative cuts into the B&O,” Newell said.

The mayor pointed to Wheeling, which implemented a half-percent sales tax accompanied by B&O reductions only to delay those cuts when the sales tax revenue came in lower than projected.

“They’re in a situation where they can keep both,” he said.

But the law has changed since Wheeling was accepted into the program.

“Once we get into this, we can never raise B&O,” Newell said.

However, the city can make further cuts to the tax.

The mayor and others consider B&O a negative tax on businesses since it is charged whether they turn a profit or not. The belief is that reducing it will make the city more business-friendly and the sales tax will draw revenue from a wider base, including visitors to the city.

Newell said he hopes the city can eventually make additional B&O cuts, especially to the electric, light and power rate, which utilities pass that along to consumers on their bills.

“If we’re not taxing them, then they certainly can’t charge it,” Newell said. “Everybody will get that cut on their utility bills.”

The flexibility provided by home rule could eventually allow the city to reconsider other fees, including police, fire and even the user fee, Newell said.

In addition to offsetting B&O reductions, the city would use some of the additional revenue to address fire and police pension funding requirements, which will cost the city nearly $4.5 million combined in 2020. Newell said the city should not wait to address the rising costs.

“I think we need to stop it, and the state’s given us an opportunity to stop it,” he said.

Another change in the application is aimed at allowing the city to recoup more money from demolished properties.

Since 1986, the city has spent $964,955 on demolition and collected just $84,156 through liens, since the liens go unpaid if the owner doesn’t redeem the property within a certain period.

Under the proposal, the city would have the first option to purchase the tax lien on a property for which it had a demolition lien for the amount of the taxes owed.

According to a memo given to council members, that would allow the city’s Urban Renewal Authority to later use the land for neighborhood revitalization or sell it. It also limits how much the city would have to pay for the land.

“You’re bidding against somebody else, and the price can go up,” City Attorney Joe Santer said.

The third proposal would combine the 15-member Municipal Planning Commission with the five-member Board of Zoning Appeals. Yeager said this would streamline the development review process by allowing property owners to deal with a single entity.

If a person wants a zoning variance for a sign and permission to close an alley, “right now they’re required to go to two different organizations and get two different appraisals,” he said.

The administration had considered allowing property owners to appeal decisions by the new committee to City Council but decided against it.

“First of all, I don’t think City Council wants to deal with fences,” Newell said.

Zoning appeals could still go to Wood County Circuit Court, as they do now, although Newell said that option is exercised infrequently.

Finance Committee Chairman Jim Reed asked whether the city was obligated to do everything in the application if it is approved. Santer said the state’s home rule board only gives permission to enact the changes; they are not required.

The city’s application is due by June 1 and must still receive final approval from council. Comments on the proposal can be submitted to the city clerk’s office prior to that, and a public hearing will be held during a May City Council meeting.