Tax Break For City Businesses Is Delayed

WHEELING – City officials’ plan to delay about $1.1 million in planned tax relief for businesses is generating mixed reaction – with some taking the course change in stride but others viewing it as a broken promise.

Last June, City Council voted to reduce its retail business and occupation tax rate by 26 percent and eliminate its manufacturing B and O tax entirely at the same time it imposed a 0.5-percent municipal sales tax. But with sales tax revenue behind projections, and the April 1 tax cut date looming, city leaders now want to take a step back.

Mayor Andy McKenzie said last week the city is not going back on its promise to ease the burden on businesses, and will develop a new strategy in the coming months to reduce the B and O rate – even if that means shrinking the size of government to cut expenses.

The delay has Jeff Nau, third-generation owner of Lou W. Nau Inc., feeling like he’s getting squeezed on two fronts.

After adding a retail hardware showroom to the plumbing and renovation contracting business on National Road early last year, he still pays the same rate of B and O tax.

“I expanded my business, and they raised the (sales) tax within six months. … Obviously, I think they need to honor their word and reduce the B and O tax like they said they were. Not later, but April 1, like they said,” Nau said.

Nau is not convinced by city officials’ assurances the delay in B and O relief is only temporary.

“They don’t have a good track record. I’ll believe it when I see it,” he said.

Others, meanwhile, are wondering what all the fuss is about.

“Sounds like they’re making a prudent financial decision for the city,” said Ye Olde Alpha owner Charles Schlegel. “That’s OK. I support it 100 percent.”

According to Schlegel, compared to other costs such as insurance and utilities, the B and O tax impact on the popular Carmel Road restaurant and watering hole’s bottom line is minimal. Unlike Nau, he doesn’t believe city officials would renege on their word.

“They’re doing a really good job. If we didn’t think they were making good decisions with our money, maybe I’d feel differently,” he said.

Schlegel’s business partner at the Alpha, Mark Thomas, doesn’t so much have a problem with the city delaying B and O relief as he does with the existence of the tax itself. He’s owned businesses in Ohio, which has no B and O tax – a particular concern for Wheeling, which is so close to the border.

“It doesn’t create a level playing field with businesses across the river,” Thomas said. “Do I wish for a reduction in the B and O tax? Yes. Absolutely, especially when you’re enacting an increased sales tax now, but something’s got to give.”

But Thomas, a Belmont County commissioner, understands the pressure governments face in balancing budgets. He’s not entirely against delaying the B and O reduction – provided city officials follow through with their pledge to figure out where to cut costs and propose more comprehensive tax relief.

“It truly is not going to affect us in any great fashion. … If there’s a need and council sets out a well thought-out plan then I might have a change of opinion,” he said.

The Wheeling Area Chamber of Commerce – which supported the city’s original plan last year to raise the sales tax in conjunction with B and O relief – hasn’t heard anything from its membership on the issue, according to chamber President Terry Sterling.

“We haven’t addressed it. We have not been contacted, so we’ll wait and see what happens at the city level,” he said.

City Council will vote on its 2014-15 budget during a meeting at 5:30 p.m. Tuesday, which will open with a public hearing on the proposed delay in retail B and O reductions.

Due to a timing issue, council will need to hold a special meeting – and public hearing – to pass a separate measure delaying elimination of B and O on manufacturing. That is set to take place at noon March 25.