City council approves 1 percent municipal sales tax

Also: City officials work with Hamilton to begin tax collections in July 2019 instead of January 2020

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At Thursday's council meeting city attorney Tom O'Neill told council he's been working with Sen. Bill Hamilton, R-Upshur, on a bill that would allow the city to begin collecting municipal sales tax in July.

BUCKHANNON – One might say it’s been a long and taxing process, but the City of Buckhannon took the final step to approve a 1 percent municipal sales tax Thursday evening.

Ordinance 433, which imposes the tax, passed unanimously on second and final reading following a public hearing.

That much is settled; however, the question of when the city will begin collecting the municipal sales, service and use tax has yet to be resolved. As the ordinance stands currently, the city isn’t permitted to begin collecting the tax – which is applicable to any item or service that’s taxable by the state of West Virginia – until Jan. 1, 2020.

However, city officials have solicited the help of state Senator Bill Hamilton, R-Upshur, in their bid to begin collecting the tax July 1, 2019.

City attorney Tom O’Neill told council Thursday that Hamilton had introduced a bill to the state Legislature that would enable the city to begin collecting the tax this year.

Hamilton is the sole sponsor of Senate Bill 535 – “Allowing City of Buckhannon to begin collecting municipal sales and service and use tax on July 1, 2019.” Records show it was introduced to the Senate Finance Committee Wednesday, Feb. 6.

At Thursday’s meeting, O’Neill said he had “guarded optimism” that the bill would pass the Senate and advance into the House of Delegates for consideration.

“I certainly do not want to get in the business of making predictions,” O’Neill told council, “but I will say that I do feel good about our prospects in the state Senate.”

“If we are successful with our efforts, we will come back with another ordinance amending this ordinance’s collection date,” he added.

Ordinance 433 – the municipal sales tax law – passed unanimously on second and final reading Thursday night, with no one showing up to comment on the ordinance during the public hearing, which took place at 7 p.m. just before the meeting got underway.

Prior to reading the ordinance, O’Neill explained the law implements a 1 percent municipal sales tax for all retail purchases within city bounds: essentially, the new 1 percent sales tax would apply to any item or service to which state sales tax applies. As is required by state code, the law also reduces business and occupation tax by 5 cents per $100 of retail items above and beyond the $1 million exemption, which will stay intact.

(The City of Buckhannon is relatively rare in that the first $1 million of a business’ gross income is exempted from being taxed.)

Some everyday items – including groceries, gasoline and prescriptions – will be exempt from the sales tax.

Ordinance 433 also calls for the creation of a special revenue fund within the city’s general fund budget that the tax will be funneled into on a quarterly basis. In addition, the ordinance also notes the state tax commissioner may keep 2 percent of the amount collected as a service fee and says the money in the above-mentioned revenue fund may be used to finance large infrastructure projects.

Mayor David McCauley said council members have been mulling over the ordinance for months.

“This puts us in a position where we can do a lot of good things,” he said.

Councilman David Thomas made a motion to approve the ordinance, which was seconded by councilman Robbie Skinner prior to passing unanimously.

City officials began the push for a sales tax in August 2018, saying they needed close to $1 million in new revenue to keep up with current infrastructure needs and continue to enhance the quality of life in Buckhannon.

At the time, finance and administrative director Amberle Jenkins highlighted the following revenue needs: $100,000 more to maintain parks, parking lots and cemeteries; $300,000 more for sidewalk and street upkeep; $200,000 more to complete street projects; $100,000 to put into a fund for fire department equipment; and over $70,000 to meet the expanding needs of the Stockert Youth and Community Center.

Arguably the most notable need, McCauley said following the meeting’s adjournment, is money the city’s general fund has pledged to give the sewer department for storm sewer projects and storm water operations upkeep. When the sanitary department took over storm water management, city officials said the general fund would allocate a certain amount to the department for that express purpose.

The city’s general fund is separate from three other enterprise funds – the Sanitary/Sewer Board, the Water Board and the Waste Board – all of which have their own separate budgets.

“I think that the things that jump out the quickest would be the $150,000 to $200,000 per year that we’ve pledged to Sanitary (Sewer) Board to do storm sewer projects,” McCauley said. “We gave them $50,000 last year … so we’re already basically $350,000 behind. It’s not like we owe them money because they didn’t do the work [yet], but we have to make advances with that part of our infrastructure plan.

“Another thing is, we will be able to contract out sidewalk and/or street paving. We do all of that in-house now, but this will allow us to contract projects out, which will be overseen by our excellent staff. This will allow us to do three times the amount of sidewalk and street paving.”

McCauley said the city street department has paved more streets and built more sidewalks in the past three years than it had in the 15 years prior.

“We’ve paved more streets and we’ve built more sidewalks in the last three years than we’ve done in the last 15 years already, so we’re proud of that,” he said, “but we also recognize that people who need their sidewalks repaired or who don’t have them at all, that when they see a neighbor or somebody else in town getting a new sidewalk, they’re like, ‘How’s come I can’t get mine?’ So, we get it. We hear you.”