B&O Tax Relief Delay Debated

WHEELING – Some members of Wheeling City Council are concerned that a proposed delay of tax relief for retail businesses set to take effect April 1 may make some business owners feel like they’ve been misled.

The issue came up during a budget work session Tuesday, with City Council expected to vote on the 2014-15 budget March 18. It’s expected to be a tight budget year, with gambling revenue down and health care and pension costs up – and City Manager Robert Herron isn’t sure Wheeling can afford to lose an estimated $650,000 by reducing the retail business and occupation tax.

When council passed the B&O reduction last year, they expected revenue from a new municipal sales tax would more than offset the impact of those tax breaks. Even though sales tax collections have lagged behind initial projections, some council members said they’re reluctant to go back on that plan.

“The public perception is just going to kill us. … I hate to make a promise and take it away,” said Councilman Don Atkinson.

Herron, stressing the proposed elimination of B&O tax on manufacturing would remain in place, said he suggested delaying the retail B&O reduction based on the fact many of the city’s highest-volume retailers, such as grocery stores, pharmacies and car dealers, aren’t subject to the city sales tax. Unless sales tax collections trend upward, he said, going ahead with the B&O relief as scheduled would mean the city’s street paving budget would be slashed by half, and other projects such as fixing slips and repairs at Garden Park’s pool may not happen at all.

“The impact is going to be in the community. … The citizens would see a reduction in infrastructure improvements immediately,” Herron said.

Atkinson suggested a compromise, reducing B&O only on retailers subject to sales tax. But according to Herron, state code doesn’t allow cities to subdivide categories of B&O taxpayers. The city could try to do so through home rule, but that process likely would take several months, he said.

After speaking with several business owners in his ward, Councilman David Miller said if council is going to delay the B&O cut, they owe it to those affected to take an in-depth look at the tax code and make sure all are being treated fairly – by July, if possible.

“That’s another employee. That’s another piece of equipment,” Miller said in reference to the possible impact of the tax relief. “Those people deserve an answer as soon as possible.”

Vice Mayor Eugene Fahey said the city must be careful it doesn’t reduce revenue to a point where it no longer can provide for basic needs.

“I go back to, fundamentally, what is our purpose? It’s to provide services to residents. … We can’t lose track of that,” Fahey said.