Buckhannon City Council discuss the 2019-2020 fiscal year budget Monday, Feb. 18. This year's budget has been built without factoring in revenue the city would realize from a 1 percent municipal sales tax.

Bill that would allow city to collect 1 percent sales tax sooner being considered in Senate

BUCKHANNON – A proposed law that could have a big impact on how many bucks are in the City of Buckhannon’s 2019-2020 budget has cleared the state Senate Finance Committee.

On Friday, city attorney Tom O’Neill said Friday Senate Bill 535, which would allow Buckhannon to begin collecting 1 percent municipal sales tax six months sooner – on July 19, 2019 – rather than later – on Jan. 1, 2020 – is now on the floor in the Senate.

As of now, the ordinance that permits the sales tax to be levied lists a Jan. 1, 2020 effective date.

According to the W.Va. Legislature’s bill tracking website, the bill is on second reading in the Senate, and O’Neill said he was “guardedly optimistic” it would pass the Senate as a whole.

Sen. Bill Hamilton, R-Upshur, is working with city officials as the legislation’s primary sponsor.

At its Feb. 7 meeting, council unanimously approved Ordinance No. 433, which established a 1 percent sales, service and use tax to be applied to all items sold within city bounds that are subject to state tax.

The ordinance also, in accordance with state code, lowered the business and occupancy tax and established a special revenue fund into which the sales tax will be funneled.

City officials have stated they believe the 1 percent sales tax will yield about $1 million every year in additional revenue.

In fact, they initially thought they’d be able to begin collecting the tax-generated revenue July 1, 2019 because they had assumed the state’s Home Rule Board would meet in October 2018.

That matters because before a city governmental body can consider a law implementing a sales tax, the West Virginia Municipal Home Rule Board must approve the city’s proposed amendment to their home rule plan – in this case, the imposition of a 1 percent municipal sales tax.

However, because the home rule board didn’t convene in October, their consideration and ultimately approval of Buckhannon’s proposal to amend its home rule plan was delayed until Jan. 16, 2019.

The delay had implications for Buckhannon’s fiscal year 2019-2020 budget. That’s because state law requires 180 days to pass between the time the W.Va. State Tax Commissioner receives a city’s approved sales tax ordinance and the date it can be implemented.

Additionally, there are only two possible dates sales tax ordinances may go into effect: July 1 or Jan. 1, and the 180-day time period won’t be over prior to July 1, 2019.

In order to circumvent that obstacle, at the request of mayor David McCauley and other city officials, Hamilton sponsored Senate Bill 535. If passed, the legislation would allow the sales tax ordinance to go into effect July 1, 2019.

Although O’Neill said he was somewhat optimistic about the bill passing the Senate, he’s unsure of its fate in the House of Delegates, which will likely consider it Monday or Tuesday.

“There are a lot of moving parts to this,” the city attorney said. “There are a lot of things that have to happen, so I’d say we are one-third of the way there.”

One issue is that West Virginia State Tax Commissioner Dale Steager has expressed his opposition to SB 535, sending a Feb. 8 letter outlining the reasons he’s against it to Sen. Craig Blair, chairman of the Senate Finance Committee.

O’Neill said the city is working to address those concerns, the primary being that Steager believes the Legislature’s passage of the bill would set an unfavorable precedent, and other cities would follow suit.

“His objection is that it would set a bad precedent, and the tax commissioner’s office would be flooded with cities asking for treatment outside the rule,” O’Neill said. “We think we’re a unique case because there was no October meeting (of the Municipal Home Rule Board), which delayed us considering the ordinance. We think that merits a special bill, a local bill.”

“This is by no means unprecedented. Local bills are constitutional,” O’Neill added.

In an effort to spur local representatives to support the legislation, the mayor has written letters to Del. Patrick Martin, R-46, and Del. Carl “Robbie” Martin, R-45, requesting their support of the bill.

The letter says the $1 million in new revenue generated would fund a host of projects, including the construction of a new multi-use gymnasium/auditorium for the Stockert Youth & Community Center; additional paving and sidewalk construction/repair; playground equipment and security cameras for a number of the city’s parks; much-needed storm sewer infrastructure projects; more funding for Buckhannon’s police and fire departments; and completion of the restoration of the Colonial Theatre as a multi-medium arts venue, among other endeavors.

“The sooner we can realize this much-needed funding, the better it will be for all our constituents,” McCauley wrote in the letter to the Martins. “Passage of Senate Bill 535 is tantamount to a half million-dollar grant from the State of West Virginia.”

Not being able to impose the tax until Jan. 1, 2020 means the city would miss out on the $500,000 that could have been collected in the six months prior to the start of 2020.

At Thursday’s council meeting, finance and administrative director Amberle Jenkins said she erred on the conservative side by not factoring any sales tax revenue into the 2019-2010 budget, now an estimated $4.4 million.

“It does not have any sales tax involved in it,” Jenkins said. “We’re still waiting on some legislation about our sales tax ordinance and when that might be implemented, so we’re building this budget without any sales tax at this time. That’ll come later.”

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