Initial City Sales Tax Take Falls Short
WHEELING – Through its first three months, Wheeling’s 0.5 percent municipal sales tax has generated only about half the revenue officials had hoped to receive.
City Manager Robert Herron said Wheeling’s first quarterly revenue check from the West Virginia Tax Department was about $278,000. The state withheld a 1-percent fee for administering the tax, which went into effect Oct. 1.
Wheeling’s budget anticipates receiving $1.1 million from the tax by fiscal year’s end for the first six months of collections, or through the end of March. Collections for the April-June quarter won’t be received until after the start of the 2014-15 fiscal year.
Though the initial figures aren’t encouraging, Herron is not yet ready to hit the panic button.
State code didn’t require catalog vendors – essentially those who ship their products to residents – to begin charging the tax until Jan. 1. And Herron said he’s learned that some contractors who do business in Wheeling still are charging 6 percent on the services they provide, although the only items exempt from the new tax are groceries, fuel and vehicles.
“There’s still not an awareness out there that everybody who works in the city has to pay 6.5 percent,” he said.
For now, the new sales tax revenue is icing on the cake, so to speak, because corresponding reductions in the city’s business and occupation tax rate have yet to take effect.
But continued sluggish sales tax collections could pose a challenge in the months ahead, as the B&O reductions council enacted at the same time as the new sales tax are set to go into effect April 1.
Officials project the B&O reduction will decrease revenue by $1 million. At its current pace, sales tax collections would total about $1.2 million for a full year – leaving a net gain of only about $200,000 for the infrastructure projects and upgrades to WesBanco Arena the tax code changes were implemented to address.
The West Virginia Municipal Home Rule Board had to grant approval before Wheeling could enact its sales tax. The B&O reduction was not part of Wheeling’s proposal to the board, so the city could repeal it if it chose to do so – but Herron said it’s too early to speculate on the likelihood that would happen.
“It would be up to City Council whether we revisit that,” Herron said.
Initially, city officials projected annual revenue of $2.4 million from the sales tax, though they cautioned that figure was merely a best guess. That, they said, would leave $1.4 million that could be divided equally between infrastructure upgrades and improvements to WesBanco Arena, even after the B&O reduction.
Though officials’ wish list for the arena is much more extensive, priorities for improvements to the 36-year-old arena include new seats, shoring up the leaky lobby area and upgrades to the scoreboard, restrooms and concession stands. Infrastructure upgrades could include new sidewalks, bridges and other items in need of replacement.