Parkersburg City Council greenlights B&O tax break
Budget revisions for virus losses approved
PARKERSBURG — Businesses would receive a break on their city B&O taxes as they try to recover from the disruption of the COVID-19 pandemic under an ordinance approved on first reading this week by Parkersburg City Council.
Along with about $2 million in budget revisions proposed in anticipation of revenue lost during the shutdown and slowdown of business as West Virginia tried to contain the virus, the measure passed Tuesday during a council meeting conducted online using the Microsoft Teams app. The session didn’t last 15 minutes, but both measures were discussed at length in a remote Finance Committee meeting earlier that evening.
“As we prepared this revision, make no mistake, we are looking at what we consider a worst-case scenario,” Parkersburg Mayor Tom Joyce said during the Finance meeting. “We are going to be facing some significant budget shortfalls.”
With business and occupation and municipal sales taxes collected quarterly, it’s not clear how much revenue the city will lose from people staying home and business reducing operations or closing down.
The B&O tax is assessed on businesses’ gross receipts and revenue. Finance Director Eric Jiles predicts a decrease of 15 percent, for businesses like banks and contractors, to 50 percent for restaurant and retail. That translates to nearly $850,000 in decreased revenue.
To lighten the burden on some businesses, the administration proposed exempting from the tax the first $500 they would owe for the fourth quarter of the current fiscal year. That translates to no B&O tax on the first $178,571 earned by restaurants and retail during the period, the first $62,500 for those renting or leasing real property and the first $55,556 for service businesses.
According to figures provided by Jiles, an estimated 1,496 small businesses would have no tax liability for the fourth quarter.
The Finance Committee voted 4-0 to refer the ordinance to council, which approved it by an 8-0 margin later that evening.
In both cases, Councilman J.R. Carpenter recused himself, saying he did not feel it was appropriate for him to vote since his restaurant, the Crystal Cafe, would benefit. City Attorney Joe Santer said Carpenter did not have to do so, since the measure did not affect him specifically.
“Thank you. I still will recuse myself,” Carpenter said during the Finance meeting. “I think it’s (the exemption) a fantastic idea.”
If approved on final reading at council’s June 2 meeting — a week earlier than usual because of the rescheduled primary election — the exemption would reduce projected revenue by another $193,056.
The $1,042,010 B&O cut makes up the bulk of the general fund reduction, which climbs above $1.8 million when potential losses on sales tax, the user fee, property tax and more are taken into account.
Jiles projected a 28 percent drop in sales tax revenue, noting that unlike B&O it does capture online sales. A 40 percent drop in the user fee is predicted, in part because two of the city’s largest employers – the Bureau of the Fiscal Service and Highmark West Virginia – are expected to have people working from home into the summer.
Council voted 9-0 to approve the budget revisions proposed by the administration, including moving $1,065,389 from the stabilization fund into the general fund. The fund had a balance of $3,600,000, most of which was transferred in for the 2018-19 fiscal year after a change in government accounting practices freed millions of dollars previously set aside to cover accrued liabilities for retiree health benefits.
“I just want to say kudos to the administration and council for setting this money aside for this rainy day that we’re all going through so that we can try and overcome the situation that we’re in,” Finance Chairman Zach Stanley said.
Spending reductions were examined before the amount to pull from stabilization was determined, Jiles said.
“In nearly every single division within the city, you’re going to see decreases,” he said. “All told, expenses were reduced $747,952.”
Among the largest decreases were $250,000 for demolitions, some of which will be offset by Community Development Block Grant funding council approved for that purpose earlier this month, and $264,417 for a planned underground stormwater retention system in City Park.
The revisions also included standard end-of-year adjustments to reflect actual expenditures. Some departments saw increases, including engineering, with $33,000 used for emergency demolitions of fire-damaged houses, and the Fire Department, boosted by a $7,061 insurance reimbursement to replace turnout gear.
Despite nearly $5,000 in reductions, the Police Department budget saw an increase thanks to an $86,796 U.S. Department of Justice COVID-19 assistance grant. That money will be used to purchase personal protective equipment and virus test kits, as well as fund a contract to clean, disinfect and sanitize first-responder vehicles. Council approved acceptance of the grant in a 9-0 vote.
There was no in-person public forum, following a 7-1 vote by council during a special meeting on Friday. According to that resolution, as long as West Virginia Gov. Jim Justice’s state of emergency remains in effect, members of the public can email or call City Clerk Connie Shaffer to have their comments included in the meetings’ records.
Shaffer said no one called or emailed comments for Tuesday’s meeting.
Evan Bevins can be reached at firstname.lastname@example.org.