MORGANTOWN — The budget currently under consideration by Morgantown City Council includes revenue that will be generated by the city’s 1% sales tax, which goes into effect July 1.
City Manager Paul Brake explained that the city won’t receive its first remittance from the state until October and conservatively estimates it will get a total of $3.75 million in the 2021 fiscal year.
That money will be split between BOPARC, a city retirement fund, the capital escrow account and the city’s general fund — with each getting $827,063.
The general fund will receive an additional $441,750 to offset slight reductions in the city’s retail and service B&O tax rates. Reductions in B&O rates are mandated through Home Rule in order to implement a sales tax.
Brake explained that sales tax revenue will also likely be necessary to get the runway extension project off the ground while the city works on creating an airport TIF district.
“It may be necessary until the TIF generates income that we may need to look at the sales tax to shore up the early years of funding,” Brake said.
Best case scenario, the city, state or some combination of the two will have to come up with $5 million as a local match for $45 million in federal funding for the runway project.
As the city will only receive three of the four quarterly payments in this first year of collections, the numbers will climb in 2022. Original state estimates put the annual haul at $5 million.
As of right now, however, those are just estimates. When the first check comes in October, the city will have a much clearer picture of just how much the tax will generate.
“It’s hard to project. Unlike property tax where you know what the valuation is … The sales tax is projected on comparables. We looked at other similar sized communities,” Brake said. “It’s an educated estimate that we’ve made and it’s on the conservative side.”
While Morgantown was granted the authority to implement such a tax as part of its original Home Rule application, approved in 2014, city council only passed it into law this past May.
The delay came after a previous council opted to go with the $3 weekly user fee instead, which came into effect in January 2016.
The sales tax will allow the city to address issues like pensions and building maintenance that have been put off for too long according to Councilor Jenny Selin.
“Buildings, employee benefits, retirement benefits, employee pensions, those types of expenditures are important and we have not had the funds available to cover some of those,” she said. “So I’m appreciative of that.”
The city’s $39.3 spending plan also anticipates:
- $16.6 million in B&O taxes, $2.7 million of which will be tied to construction
- $4.8 million in property tax revenues
- $4.6 million in weekly user fees
- $3.6 million in fire fees, which includes a 10% increase
- A 2.5% cost of living raise for city employees, totaling $353,000
- A new full-time housing tech for the city’s code enforcement office, and moving a part time urban landscape position full time.
- The elimination by attrition of 12 grant-funded firefighter positions.
- The switch to a four-day work week for office personnel and other non-emergency response employees.
Council passed a first reading of the budget on March 3. It will hold a budget workshop at 7 p.m. on Tuesday in council chambers.
