PARKERSBURG, W.Va. — After five months of collections, municipal sales tax revenue has eclipsed the amount lost to required business and occupation tax cuts in Parkersburg and is on the cusp of doing so in Vienna.
The cities were recently notified of the amount they’ll be receiving from the state for September, October and November. The state collects city sales tax revenue with its own, then disburses the payments to the cities on a quarterly basis.
After deducting the state’s 5 percent administrative fee, Parkersburg took in about $1.45 million for the three-month period. Coupled with the $831,000 for July and August, the tax has generated more than $2,281,000.
That’s more than three-quarters of the way through the initial $3 million projected when the city implemented the sales tax at the end of 2014 and on pace to exceed the revised $4.5 million projection from Finance Director Eric Jiles, who was appointed in August.
“It’s really difficult to budget for something when you have no history,” he said.
The amount of revenue received already exceeds the $2.1 million the city expects to lose from making accompanying business and occupation tax cuts, required under the law authorizing West Virginia’s expanded home rule program, into which the city was accepted in 2014. The city eliminated the B&O on manufacturing and electric and natural gas utilities and reduced the rate for retail and restaurants by 30 percent.
“With our first two sales tax payments, we’re at nearly $2.3 million, so we’ve gained that back,” Jiles said.
Vienna is in the same boat. Mayor Randy Rapp said the elimination of B&O taxes on manufacturing and a 20 percent reduction on retail and restaurants was expected to decrease revenue by $1.2 million to $1.4 million. With more than $773,268.24 in sales tax revenue for September through November and about $448,000 for July and August, the city has taken in more than $1.2 million in five months.
“It’s way more than we projected,” Rapp said.
But he, and Parkersburg Mayor Jimmy Colombo, are reluctant to make too many plans for the additional revenue at this point.
“We’re still going to be cautious about this,” Rapp said, noting he doesn’t know what the next two quarters’ receipts will be.
Jiles said that although the revenue coming in is expected to exceed the B&O reductions, there are still other expenses the city must tackle. They include a $770,000 deficit in the projected carryover from the last fiscal year to the current one, $455,000 in Other Post-Employment Benefits obligations and at least $100,000 to pay back a portion of a West Virginia Housing Development Fund loan to raze dilapidated houses.
Some members of Parkersburg City Council have called for reductions in police, fire and floodwall fees, as well as the $2.50-a-week user fee assessed on everyone who works in the city.
But Colombo said he does not want to prematurely make cuts. While knowing the amounts of the first two checks is helpful, he estimates they will need half a dozen before being able to reliably predict the income.
Colombo noted that $1.2 million of the B&O cuts will go back into residents’ pockets since utility companies passed that charge along to customers but can no longer collect it.
In addition, Colombo said the additional sales tax revenue provides an opportunity to plan and make improvements. The city could significantly address ongoing needs for the city, including street repairs and stormwater and drainage issues, instead of doing just enough to get by each year.