When business and occupation taxes were eliminated on new car sales beginning in July 2023, Granville took as big a hit as anyone.
The town of less than 2,000 residents has five car dealerships.
Vehicle sales in the town are currently projected at $127.7 million annually.
Granville Mayor Patty Lewis said town leadership considered that a shot across the bow, particularly as the move came amidst a larger conversation about eliminating B&O taxes altogether.
“That was an eye-opener, and we knew there were other organizations and companies knocking at the door wanting that same advantage for their businesses. … I know many of the legislators think the B&O tax is antiquated. They say it’s an antiquated system, but they haven’t been able to come up with a way for the cities then to fund themselves,” she said. “We talked about it a couple years and decided we would be proactive in the event that future legislation would eliminate more B&O taxes, because we’re under an obligation to provide services to our citizens and our businesses.”
On Nov. 12, Granville Town Council will conduct a first reading of an ordinance authorizing application to West Virginia’s Home Rule Municipal Board.
As part of that application, the town is proposing the implementation of a 1% municipal sales tax.
Home Rule began as a four-city pilot program in 2007 with the goal of giving the state’s municipalities freedom within the law to tackle unique challenges.
In October 2014, the pilot cities of Bridgeport, Charleston, Huntington and Wheeling were joined by 16 additional municipalities, including Morgantown, as part of the expanded pilot program.
As of January 2019, Home Rule is permanent. Westover became the state’s 60th Home Rule city last fall.
Both Morgantown and Westover have implemented municipal sales taxes via Home Rule. Morgantown’s tax took effect in July 2020 and is expected to generate about $9.6 million this year. Westover’s tax went into effect this past July and is expected to bring in about $3.3 million.
According to Granville’s application, the town anticipates its sales tax will initially generate just over $4.4 million.
As a requirement of establishing the tax, the town must reduce its business and occupation privilege taxes — meaning non-construction B&O taxes. Those taxes fall into a number of categories, including amusement, banking, contracting, manufacturing, public service utility, rental, retail, service and wholesale.
Granville is proposing a rate reduction on retailers from .0050 to .0040, which, based on fiscal year 2023 numbers, would represent about $593,420 on just under $591.2 million in retail sales. The elimination of B&O taxes on amusements ($7,076.08) and a rate reduction on financial institutions from .01 to .0050 ($34,840.37) bring the total estimated B&O cuts to $635,336.59 and the net gain of implementing the sales tax to $3,765,250.97.
“My recommendation to council initially will be to put that money in a fund for larger capital projects that we’ll have coming up in the near future, such as repaving a portion of University Town Centre and our side streets which we try to pave on a rotating basis,” Lewis said. “The idea would be to not really incorporate or depend on that extra income initially, but in case B&O goes away, then we’ll have a source of income to continue to provide services.”
Granville’s current budget is roughly $9.5 million.
“We’re trying to be proactive,” Lewis continued. “I just don’t want residents or anybody who shops at the [University] Town Centre thinking we’re doing that just to boost our budget and be wasteful. We’re doing it as a precaution. So we know that we’ll have the funds to provide the services we’re obligated to provide.”
While the sales tax is undoubtedly the headliner, the town’s Home Rule application includes five additional initiatives, including:
- Disposition of property and equipment without public auction — This would allow the town to directly dispose of real estate and personal property without auction in appropriate circumstances and to consider the value of public services to the provided or economic development expected when determining a fair value for the lease or sale of property.
- On-the-spot citations — This would allow the town to issue citations on the spot for life safety code, health and sanitation, and public nuisance violations.
- Liens for dilapidated and nuisance properties — This would allow the town to file liens against properties for which it has incurred expenses in abating issues caused by disrepair or nuisance issues.
- Collection of liens for demolition and remediation — This would allow the town to more easily collect funds due under liens for demolition by making payment of such a requirement of purchase at tax sales.
- Liens for solid waste fees — This would allow the town to place liens without instituting a civil action to collect unpaid fees for solid waste collection.
Assuming the matter passes first reading on Nov. 12, Granville Town Council will hold a public hearing and second reading on Nov. 26.
The town is aiming to have its application before the West Virginia Home Rule Board during its January meeting.
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