Proposed 1 percent sales tax will be considered by City Council
ELKINS — Tempers flared Thursday evening as Elkins City Council members engaged in a spirited debate about a proposed 1 percent sales tax for city businesses.
The heated conversation took place during a City Council Revenue Committee meeting. In the end, the Committee voted Thursday to send the proposed new tax to the full City Council for consideration.
Elkins officials are looking at creating a 1 percent sales tax on businesses, which is possible now that the state has approved the city’s application to amend the original Home Rule plan for Elkins.
Annexation of Beverly Pike Five-lane businesses had been suggested as an alternative to creating a new sales tax, which is opposed by some downtown business owners. At the Aug. 17 committee meeting, Committee Chairman Charles Friddle and Mayor Van Broughton agreed to meet with Wal-Mart corporate officials about possible annexation and report back.
On Thursday, Friddle said the manager of the Elkins Wal-Mart had not called him back. Friddle said Councilwoman Linda Vest gave him the Wal-Mart district manager’s name, and he had attempted to make contact but had not received a call back yet.
“We’re doing our due diligence to determine our next steps,” Friddle said.
“I think we need to do some more asking, since we’ve not heard anything back from Wal-Mart yet,” Vest said. “I think there are other businesses up there we can talk to.”
“You have to think,” Mayor Van Broughton said. “We have between, they say, 20,000 to 24,000 people use our city infrastructure… and the 7,200 citizens of Elkins are paying the full price for this.”
Several officials at the meeting began talking about the proposed sales tax being a necessity for the growth of Elkins.
City Treasurer Tracy Judy said, “I still think if the city is going to grow any further than we are, because we just kind of flatlined, our revenue stream over the last few years, I think it’s one thing that we truly need to look at.”
“Based on the formula that most cities in the state have used, and with the adjustments that we would have to make, we could potentially get an additional $700,000 to $800,000,” Judy said.
“We’re looking for new sources of revenue,” Friddle said.
Judy also noted health insurance costs for the city “will increase by a minimum of 10 percent on the average the next three or four years.”
Friddle then asked for a motion to send the proposed new tax to the full City Council for consideration.
“This has been on our agenda for six or eight months,” Friddle said. “Since we have beat this horse for eight months or 10 months or whatever it’s been, I would like to ask for a motion to move this sales tax issue to the full Council. Get it off of our plate and give the full Council the opportunity to discuss this issue and make a decision regarding what they would like to do.”
In order to implement a new sales tax, Elkins must give the state six months’ lead time, he said. The proposed sales tax would have to be voted on three times by City Council to become law.
“Which means we must have three meetings, so we have to have that done by Dec. 31,” Friddle said. “If we can move it out of this committee and get it to full Council and use Council time to do their due diligence and still get it implemented by this coming July 1, if we want to. If we don’t have it done by then, we have to wait a whole other year.”
Councilman Robert Chenoweth said he was concerned about a sales tax hurting downtown businesses, which could possibly lose customers to stores on the Beverly Pike Five-lane that are not within city limits. He again brought up the issue of annexing Five-Lane businesses into the city.
“I think these are two separate issues that we can try at the same time,” Friddle said.
“OK, we’ve had it on the agenda all this time,” Vest said. “And you still didn’t get a call back and you never tried to call them again. I had to do the calling and get the number and you still didn’t get in touch with him. Do I have to call him and talk to him?”
“No, ma’am,” Friddle said. “But that’s not the issue we’re talking about. Annexation is not the issue.”
The discussion continued for several moments, and then Councilman Dave Parker said he didn’t think a new 1 percent sales tax would hurt downtown businesses.
“We’re talking about a penny on the dollar, and it doesn’t come from the merchant… The business owners do not bear the cost of this,” Parker said. “And I can’t imagine that there are going to be more than half a dozen people in the city who are going to say that, for the cost of a penny, ‘I’m going to go drive five miles away.’ … I’m not sure who thinks there’s going to be an exodus for a penny.”
If the new sales tax is created, Elkins city officials plan to eliminate the B&O manufacturing tax. Friddle said that several months ago City Council restructured the B&O taxes, including decreasing retail B&O retail taxes by one-half percent.
Chenoweth said he’d like to focus on annexation before passing a new sales tax, however.
“How many people already go to Wal-Mart… as opposed to shopping downtown?” Chenoweth said, later adding, “I think it just adds to that burden” for downtown businesses.
“The annexation is going to go on for not less than three years,” Parker said. “Not less than three years. We’re going to have flatline revenues for three years. Our costs are not going to go down over three years.”
“I don’t think enough has been down with annexation,” Chenoweth said.
The intensity of the discussion increased when Council members began talking about how the proposed sales tax revenues might be used.
“I mean, what would the money go for, insurance?” Vest asked.
“That’s up to Council, it’s not up to me,” Judy said, later adding, “That’s part of the budgeting process.”
Vest said she wasn’t sure she was part of the discussions earlier this year.
“Yes you were,” Parker said, raising his voice. “I am tired of that line. I am so dog tired of that. We are an open process and everyone was welcome to that. It was informative, questions were answered, the committee meetings were wide open. That’s not even a part of this conversation.”
“Do you think we should lay out how we’re going to spend any increase in revenue ahead of time, and then suddenly if an emergency situation comes up we shouldn’t adjust the budget?” Friddle asked Vest.
“Well, I think if an emergency comes up we should have a look at it,” Vest said, then moments later added, “I make a motion to send it on to Council, since he doesn’t want to talk about it anymore, OK? He’s already told me that, he’s going to turn it over to Finance (Committee) …”
Friddle seconded the motion to vote on sending the proposed new sales tax to Council. Chenoweth voted against the motion, which passed, and Friddle adjourned the meeting.
Friddle and Vest continued to speak about the issue for several minutes after the meeting. Vest did not attend Thursday’s City Council meeting, which took place about an hour after the Revenue Committee meeting ended.