June 8, 2010
Council Finance Committee Moves Huntington Sales Tax to June 14 Council Agenda
By Tony Rutherford
Huntingtonnews.net Reporter
Huntington, WV (HNN) – Facing a constituency opposed to an occupation tax on their incomes, council member Nate Randolph stepped to the plate in proposing acceptance of a one percent city sales tax. “Constituents have approached me saying that it’s more palatable than other alternatives,” Randolph said during the Monday evening City Council Finance Committee meeting. “People are scared of the occupation tax.”
The city must replace revenue reduced due to the recession which has cut business and occupation and user (service) fee collections. Otherwise, the city faces temporary layoffs (except police and fire personnel and positions not paid through the general fund), furloughs, and other cuts.
Due to the complexity of collection, the sales tax, even if passed in the next month, would likely not see its first dollars sent from the state tax department until the fourth quarter of fiscal 2010-2011.
Finance Director Deron Runyon estimated that the tax would generate about $3.7 million dollars during a year. The estimate accounts for 5% going uncollected. The tax can only be imposed on items that mirror the West Virginia sales tax, which would roughly be retail sales, amusements, and certain services.
“Some of it is easy stuff, but some items come from people who sell into the city,” Runyon explained, referring to merchandise shipped into the city.
Under the Home Rule project, the city can implement such a tax, but, a quandary exists as to whether the business and occupation tax must be removed or reduced.
However, the legislature also has provision for implementation of a one percent sales tax dedicated to supporting city pension funds. Since the home rule provisions are both novel and sunset (in 2013) Insco proposed that the tax be added to the June 14 council agenda dedicated to pension funding.
For the upcoming fiscal year, about $900,000 would be projected in revenue. This would remove the furloughs ($425,000) and allow a net gain of $500,000. While the sale tax money would go to the pension funds, the money from the general fund supporting the pensions would be scaled back accordingly.
Randolph again spoke in favor of the tax, agreeing with Insco’s avoidance of the untested Home Rule provision that may or may not contain additional stipulations on tax changes.
“You pay only if you make a purchase,” Randolph said, adding that most in city purchases are for “convenience” and people likely would not run outside the city limits to escape the one percent. (Lawrence County , Ohio, has a similar one percent county tax, meaning, purchases across the Ohio have a 7% sales tax.)
The new revenue would allow the city in the future to designate funds for infrastructure repairs and other unfunded liabilities.
Simultaneously, the occupation tax will still be studied by a task force consisting of Insco, Williams and Runyon, meaning it may be brought back as part of a comprehensive tax reform package.
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Council Finance Committee Moves Huntington Sales Tax to June 14 Council Agenda
By Tony Rutherford
Huntingtonnews.net Reporter
Huntington, WV (HNN) – Facing a constituency opposed to an occupation tax on their incomes, council member Nate Randolph stepped to the plate in proposing acceptance of a one percent city sales tax. “Constituents have approached me saying that it’s more palatable than other alternatives,” Randolph said during the Monday evening City Council Finance Committee meeting. “People are scared of the occupation tax.”
The city must replace revenue reduced due to the recession which has cut business and occupation and user (service) fee collections. Otherwise, the city faces temporary layoffs (except police and fire personnel and positions not paid through the general fund), furloughs, and other cuts.
Due to the complexity of collection, the sales tax, even if passed in the next month, would likely not see its first dollars sent from the state tax department until the fourth quarter of fiscal 2010-2011.
Finance Director Deron Runyon estimated that the tax would generate about $3.7 million dollars during a year. The estimate accounts for 5% going uncollected. The tax can only be imposed on items that mirror the West Virginia sales tax, which would roughly be retail sales, amusements, and certain services.
“Some of it is easy stuff, but some items come from people who sell into the city,” Runyon explained, referring to merchandise shipped into the city.
Under the Home Rule project, the city can implement such a tax, but, a quandary exists as to whether the business and occupation tax must be removed or reduced.
However, the legislature also has provision for implementation of a one percent sales tax dedicated to supporting city pension funds. Since the home rule provisions are both novel and sunset (in 2013) Insco proposed that the tax be added to the June 14 council agenda dedicated to pension funding.
For the upcoming fiscal year, about $900,000 would be projected in revenue. This would remove the furloughs ($425,000) and allow a net gain of $500,000. While the sale tax money would go to the pension funds, the money from the general fund supporting the pensions would be scaled back accordingly.
Randolph again spoke in favor of the tax, agreeing with Insco’s avoidance of the untested Home Rule provision that may or may not contain additional stipulations on tax changes.
“You pay only if you make a purchase,” Randolph said, adding that most in city purchases are for “convenience” and people likely would not run outside the city limits to escape the one percent. (Lawrence County , Ohio, has a similar one percent county tax, meaning, purchases across the Ohio have a 7% sales tax.)
The new revenue would allow the city in the future to designate funds for infrastructure repairs and other unfunded liabilities.
Simultaneously, the occupation tax will still be studied by a task force consisting of Insco, Williams and Runyon, meaning it may be brought back as part of a comprehensive tax reform package.
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