Bluefield Daily Telegraph, Bluefield, WV

Local News

March 24, 2013

Bill: Meals tax fate with voters

PRINCETON — Leaders on the county and municipal levels have ideas about what they could do with new revenue if Mercer County’s residents voted to create a small tax on prepared meals served by restaurants.

Delegate John Shott, R-Mercer, has submitted legislation that would allow the county’s citizens to vote about whether the county and municipalities could have a prepared meals tax similar. Shott said the legislation would not create a food tax.

The bill has been entered and it is with the Committee on Political Subdivisions, he said. The committee meets once a week on Wednesday. If the bill passes through that committee, it will go to the Judiciary Committee and then the House.

If approved by the county’s voters, revenue generated by the prepared meals tax would be divided among the Mercer County Commission, the Development Authority of Mercer County, and municipalities if restaurants were located within their boundaries, Shott said. Passage would require at least a 60 percent approval level by the voters. The county would be allowed to levy a tax of no more than 3 percent on prepared meals served in restaurants.

All of these entities would meet and decide how to split the revenue before the proposal could be put before the public for a vote. Cities would not have the option of levying a prepared meals tax unless the county does it. The municipalities and the development authority could receive no less than 25 percent apiece of the new revenue, but they could receive more if all the participants agree on larger shares.

In one example, there is a restaurant outside Princeton’s city limits. The county would receive 75 percent of the revenue, and the development authority would receive 25 percent. If the restaurant were located within Princeton’s city limits, the revenue would be divided three ways, Shott said previously. The city would receive no less than 25 percent, the development authority would get no less than 25 percent, and the county would receive the rest.

 Previous studies show that a prepared meals tax could generate considerable money, said Janet Bailey, executive director of the Development Authority of Mercer County. In 2011, the annual restaurant sales in Mercer County were an estimated $53.7 million. When the last study was made in 2011, a prepared meals tax between 2 to 5 percent was considered. If a tax was 5 percent, it would generate $2,685,000, Bailey said.

In Bluefield, Va., the town has a prepared meals tax, said Town Manager Mike Watson.

“We charge a 5 percent tax that goes directly to the locality, and we use it to keep our personal property and real estate taxes down,” Watson said. “It raises a bit over $1 million a year for the town.”

A 10-cent tax is paid on every prepared meal served in Bluefield, Va.; the town receives 5 cents, and the state receives the other 5 cents, he said.

The town’s tax has been in place for more than 10 years; during that time, the town has not had to raise its real estate or personal property taxes, Watson said. The revenue also allows Bluefield, Va., to fund activities such as movies and music in the downtown, the annual Autumn Jamboree, and operate the town’s parks.

Local leaders have ideas for the new revenue if they received the voters’ approval to generate it. County Commissioner Gene Buckner said the Mercer County Commission would use most of the money to pay the county’s ongoing bills to the state regional jail authority. He estimated that the county is billed between $125,000 to $140,000 every month to house inmates at the Southern Regional Jail in Beaver.

Buckner pointed out that visitors, not county residents, would generate most of the new revenue.

“If this gets passed, the voters need to know that 80 percent of the taxes in that bill would be paid by travelers from out of state,” Buckner said. “It’s on prepared food, not food bought from a grocery store.”

In the city of Princeton, new revenue could help fund the move into a new municipal building, said Vice Mayor Marshall Lytton. The city has acquired the former First Community Bank building on Mercer Street, and plans are underway to turn it into a new city hall.

“Of course, we would need to put it (money) in our general fund, “Lytton said. “We’re going to move into the new city hall, so we’re definitely going to need as much money as we can because that’s going to be expensive. It’s going to be quite expensive because we’ve never done it in the past.”

State and federal entities are reducing their spending; grants are being cut back or eliminated, so the city will receive less funding from those sources, Lytton said. The new revenue could help make up this shortfall.

Bluefield Mayor Linda Whalen said the Bluefield City Board had not discussed the possibilities for new revenue recently, but the money could be spent on economic development.

“Right now, our team Blue Momentum, that’s working on economic development, needs money to do necessary research,” Whalen said. “Blue Momentum needs to be able to research what companies might be fit for the plans they have, and to do that type of research takes money to hire a company that has that expertise.”

What the city could do with new revenue depends on how much money became available, she said.  If the funding was sufficient, the city could offer small business loans. Bluefield could also use a technique employed in other cities: buy property at tax sales and offer it for economic development.

“Now people just buy property online and don’t even have a plan for it. Huntington has used this tool to buy several blocks of property, and then clear it and use it for economic development,” Whalen said.

Marc Meachum, president of the Greater Bluefield Chamber of Commerce, said prepared meals tax revenue would increase funding for the county’s economic development authority. The amount of money available for economic development had decreased during the last few years, putting the county at a competitive disadvantage when marketing itself.

“The legislation simply asks for county voters to have an opportunity to vote about whether they want to do this or not,” Meachum said. “This is not a statewide initiative.”

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