Weirton Chamber: Pass sales tax, not B&O

WEIRTON – Some businesses in Weirton said they will have no choice but to leave town if City Council enacts a business and occupation tax to close a projected $1.6 million budget shortfall by next year.

Weirton Area Chamber of Commerce members gathered Thursday at the Holiday Inn in Weirton to urge council members to consider other options – such as enacting a municipal sales tax, which it could do if accepted into the state Home Rule Pilot Program – before enacting a B&O tax. Council passed first reading of an ordinance enacting the tax during a special meeting June 13.

“It’s a bad tax, in our opinion,” chamber President Brenda Mull said of the B&O tax. “It closes businesses, it kills jobs and it prevents new businesses from coming in.”

The B&O tax, when coupled with a proposed 20-percent reduction in the city’s police and fire service fee, would bring in an additional $1.7 million in revenue, city officials have said – more than enough to fill the anticipated budget shortfall for the 2015-16 fiscal year.

City leaders have said they are reluctant to rely on a possible future sales tax to close the projected budget gap. Weirton is a few months away from learning whether it will even be accepted into the home rule program, and officials have said it’s too early to tell how much revenue such a tax might bring in.

But chamber members pointed out that Weirton’s budget for the fiscal year set to begin July 1 is fully funded, and a decision doesn’t need to be made immediately. A sales tax of 0.5-1 percent would be sufficient, they believe, and would spread the burden of making up the shortfall among a greater number of people, including out-of-town shoppers.

“Why act in haste?” said Nick Latousakis, chairman of the chamber board. “They have submitted a balanced budget (for 2014-15), and that budget does not have any cuts in services in it.”

Another chamber board member, former Weirton City Manager Vince Azzarello, said Weirton for decades has been an example of a city that made things work without a B&O tax. With the expansion of home rule, he said, it makes no sense for Weirton to enact such a tax now.

“Other cities are running away from it as fast as they can,” Azzarello said.

Ocean-Air International owner Richard Starck said the B&O tax is particularly burdensome for businesses like his, which employs 26 people in Weirton and provides international moving services, particularly to the military. The firm operates with both high costs and high revenue, adding up to a low overall profit margin. However, he said the B&O tax doesn’t take profits into account, only gross receipts.

If the tax passes, “our only option is to consider where we move next,” Starck said. “I don’t want to see that happen. I want to stay here.”

John Howard, owner of StarTrans International, a similar business that employs 21 people, also said he will relocate if the B&O tax passes.

Barb Owens, general manager of the Fairfield Inn and Suites in Weirton, said she won’t be able to hire additional employees or give existing workers raises if the B&O tax takes effect. She added hotels in Weirton would be at a disadvantage if they have to raise rates, as customers could simply choose to stay across the river in Steubenville.

The proposed tax would be 0.375 percent for retail on gross receipts above $500,000 annually; 0.65 percent for services on receipts above $100,000 annually; and 2 percent on contractors, with a $100,000 per-project exemption.

The June 13 vote in favor of the B&O was 3-2, with Councilman George Gaughenbaugh abstaining, citing an unnamed conflict of interest. Councilmen George Ash, David Dalrymple and Chuck Wright voted in favor of the tax, with councilmen Fred Marsh and Terry Weigel opposed.

The recent resignation of Councilman Ronnie Jones, who is moving out of his ward, appears to have paved the way for passage of the tax. A similar proposal was voted down in May, with Jones joining Marsh and Wright in voting no. With Gaughenbaugh abstaining from that vote, too, Mayor George Kondik voted no to break a 3-3 tie.

Another special council meeting is set for 6:30 p.m. July 1. Council’s next regular meeting is scheduled at 5 p.m. July 7.