B&O in force, 3-2
WEIRTON – Council voted 3 to 2, with one abstention, to approve an ordinance to amend the business and occupation tax in accordance with a budget scenario proposed by Ward 6 Councilman David Dalrymple at a special meeting Friday evening.
This vote came after nearly six months of budget workshops and committee meetings aimed at resolving a projected $1.6 million shortfall in the 2015-2016 fiscal year using a variety of combinations of the B&O, the cable franchise fee, a potential sales tax and adjustments to the municipal service fee and police and fire service fees. The 2014-2015 fiscal year begins July 1.
Citizens were allowed to comment before the vote took place, and J.J. Bernabei, owner of Tri-State Medical Group, voiced his concerns first.
“We employ at any time about 25 to 30 employees out of Weirton. I’d like to speak against this B and O tax for the simple reason that if we were to pay that tax, it would end up being about 25 percent of our net profit,” he said during Friday’s meeting. “The B and O tax for decades has been a tax on gross receipts. The retail business model has changed because of the accessibility of goods being so easy. The only way you can be successful in any retail market is if you have tremendous volume and work on a low margin. As every decade passes, as every year passes, the B and O tax becomes even more regressive than before.”
Bernabei said that the municipal service fee is a better option, because it taxes people who work in Weirton but do not reside within city limits.
“We have the police and fire services fee that we could increase by 50 percent. I want to make everyone aware that businesses don’t mind paying that. Even though businesses are paying 70 percent of that number, they don’t mind paying that. We don’t mind paying our fair share,” he added Friday.
Bernabei also mentioned that the vote was not fair without representation for Ward 1.
Ronnie Jones, First District representative in the House of Delegates, officially resigned from his post as Ward 1 Councilman at the June 9 regular council meeting. That left Ward 1 without representation in City Council’s vote at Friday’s meeting.
“No matter whether you’re for taxes or against taxes or fees, it doesn’t matter – every ward should be represented. We have one ward here that’s not represented and therefore can’t weigh in on the largest tax proposal in the city’s history. At least work through those issues so that everybody has a voice,” Bernabei said during an interview Tuesday afternoon.
According to the city charter, council members have six weeks after Jones’ official resignation (June 10) to appoint a resident of Ward 1 to the position. If they do not fill the position in that time, a special election will take place.
The Weirton Area Chamber of of Commerce, which has expressed its opposition to the tax, has scheduled a open membership meeting for noon Thursday at the Holiday Inn on Three Springs Drive to allow members to discuss the issue, A press conference will follow the meeting at 1 p.m.
Nick Latousakis, member of the board of directors of the Weirton Area Chamber of Commerce and president of Wine and Beverage Merchants on Three Springs Drive, agreed that Ward 1 should have been represented in the decision.
“I don’t understand why such a life-changing event for the city in its first reading would be convened with one ward having its business section and constituents totally disregarded. They need to have representation here. It’s only fair to them,” he said Friday.
Latousakis, who also serves as chairman of the Weirton Christian Center, questioned how the B and O would be enforced for businesses that make transactions in the city but are not physically located there.
“If this B and O tax is implemented, then I will have five competitors coming into Weirton to compete against me. How will they be policed? How will that B and O tax be effective to them? How will you know that they are in town doing business? Will there be penalties?” he asked. “I had two businesses call me today and tell me that if this B&O tax is implemented, they will leave the city the minute that their leases are up.”
Latousakis stated he supports a sales tax above the other options.
Vince Azzarello, former city manager, also spoke on behalf of the board of directors of the Weirton Chamber of Commerce.
“My days at the city go back to the mid-1980s, and all through that time I remember going to municipal league meetings and government finance officer meetings, and we always heard about B and O tax back then. It was an issue back then for cities that had it. They all hated the B and O tax, but they all had no other option. We talked for 30 years about lobbying for home rule. We’ve finally reached a point where, after all those years, Home Rule has become an option for cities in West Virginia. It’s likely to be a very viable option for Weirton, and it adds the sales tax option,” he said. “With the opportunity to an alternative being so close … we’re so close to the finish line. We’re right there. And now you’re going to consider passing the B and O tax. I just don’t think that makes any sense given the history and historical perspective. Please don’t let a decision that affects the next 25 years of the city be based on the transitional period to a sales tax over the next three to nine to 12 months.”
Jody Trupiano, a city resident, pointed to Follansbee as an example of how a B and O tax could benefit the city.
“Somebody brought up the fact that Follansbee has a B and O tax, and its Main Street seems to be doing just fine. They have every building in Follansbee filled with a business, and their streets are remarkably immaculate. Their sidewalks and building fronts are something to think about,” she commented. “Whatever you do, it should be fair for everyone. No one group should have the brunt of the deficit that we didn’t create.”
Walter Angelini, a local attorney, said he would not object to the B and O.
“I just wanted to mention from my perspective that the needs of the many certainly outweigh the needs of the few. I’m not saying that I am for a B and O tax, but I would not object to it if your collective deliberations say that at this time, under these circumstances, we need to have that. I know it’s difficult and regressive, but when you look at the benefits that can be derived for all of our citizens versus having to shoulder, as business people, a portion of the weight of it to help the city overall, I think it’s time and it’s possible to do that,” Angelini said. “I’ve been on the board of the Weirton Transit Corp. for over 25 years, and we’ve had difficulties that we have had to work through. There are a lot of sacrifices that our particular employees make. Just to reiterate, I would not object to the B and O tax if it’s deemed necessary.”
After citizen comments were concluded, Dalrymple, Ward 2 Councilman Chuck Wright and Ward 4 Councilman George Ash Sr. voted “yes,” while Ward 3 Councilman Fred Marsh and Ward 7 Councilman Terry Weigel voted “no.” Ward 5 Councilman George Gaughenbaugh abstained.
When asked why he abstained after the meeting, Gaughenbaugh was only willing to say that there was a “conflict of interest.” He would not elaborate.
The ordinance will require a second reading to pass, and agenda items related to the other steps within Dalrymple’s plan are expected to see first readings at the next regular City Council meeting.
Dalrymple’s scenario proposes to enact the B and O tax with most categories set to 25 percent of their maximum allowable rate. Current B and O categories would remain the same, with production and utility categories set to 100 percent of the maximum allowable rate. The retail category would be set to 75 percent of the maximum allowable rate, which is 0.375 percent, with a $500,000 annual exemption ($125,000 per quarter). Service category would be set to 65 percent of the maximum allowable rate, which is 0.65 percent, with a $100,000 annual exemption ($25,000 per quarter). The contractor category would be set to 100 percent of the maximum allowable rate, which is 2 percent, with a $100,000 per project exemption. These were the changes encompassed by the ordinance voted on by council during the special meeting.
The proposed scenario would also reduce the police and fire service fee by approximately 20 percent. Residential fees would decrease from $50 to $40. Commercial fees would decrease from 15 cents per square foot to 12 cents per square foot, and churches and schools would decrease from 8 cents per square foot to 6 cents per square foot.
The plan includes a stipulation that any excess funds superseding the projected $1.6 million budget gap “shall be targeted toward security.”
Dalrymple’s proposal would generate an estimated $1.7 million in additional revenue.
As of Tuesday evening, City Manager Valerie Means had not returned calls seeking comment on her stance regarding the proposed scenario or the special City Council meeting Friday.
In an interview Tuesday, City Attorney Vincent Gurrera said business owners may have the option to challenge the B and O down the road, if it is passed.
“The same with any new law, it’s always able to be challenged in court. That relates to the substance of the law as well as the actions taken in the process of passing it,” he said. “We will handle that as it comes along.”
(Dalrymple can be contacted at email@example.com)