WHEELING - City Manager Robert Herron believes Wheeling should delay tax relief approved for some businesses last year as the city has "virtually no margin for error" in what he expects to be a very tight 2014-15 budget year.
The $31.49 million budget plan Herron unveiled to City Council during a special finance committee meeting Tuesday represents a $100,000 increase over the current year's budget - but it includes a full year of revenue from the city's new 0.5-percent sales tax, compared to just six months' worth in the current budget. And it doesn't take into account Gov. Earl Ray Tomblin's proposal to cut cities' share of gambling revenue, the fate of which remains in the Legislature's hands.
In the face of that uncertainty, coupled with the rising cost of health care and pension plans, Herron believes the city needs to delay a planned Business and Occupation Tax reduction on retail businesses set to take effect April 1 - while keeping in place the elimination of such tax on manufacturing. He also wants to raise ambulance fees and increase employee health insurance deductibles to prevent a major increase in premiums.
Photo by Ian Hicks
City Manager Robert Herron predicts Wheeling
will have a very tight budget year, so promised business & occupation tax relief should be delayed.
"We don't have a lot of sources of growing revenue," Herron said. "Retail B&O is one of them."
Herron said the idea behind scaling back the B&O tax was to shift some of the burden from businesses to consumers. But Herron pointed out most of the city's largest retail B&O taxpayers aren't subject to sales tax, and he is not yet confident enough in sales tax collections to be comfortable taking such a large chunk - about $650,000 - out of the city's annual B&O revenue.
If the B&O reduction goes into effect as scheduled, Herron projects about $550,000 would be available to split evenly between improvements to WesBanco Arena and capital projects such as street paving, slip repair, guardrails and park improvements. By leaving the rate the same on retail businesses, that amount would more than double, to almost $1.2 million.
Anticipated employee health insurance costs of $3.4 million and contributions to police and fire pension funds of $3.8 million collectively make up more than 20 percent of the city's proposed budget.
The city will continue to pay 80 percent of employee health insurance premiums, but employee deductibles will increase from $100 for single plans and $200 for family plans to $500 and $1,000, respectively. Herron said a continuation of current benefits would have meant a 17.5 percent increase to premiums, while the higher deductible plan will only result in a 1.8-percent over the $3.35 million being paid for the current year.
"This is still a very good plan," Herron said, noting an employee's monthly premium for a family policy would increase by about $4.
Meanwhile, Wheeling's ambulance fees are among the lowest in the area, Herron said. By raising the current rates from $350 for basic life support, $450 for advanced life support and $7 per mile to $400, $550 and $10 per mile, respectively, the city would generate an additional $272,000 to cover the increased cost of providing ambulance service.
A budget work session is set for March 4, and council is set to adopt the budget at its meeting March 18. Council members said they will consider Herron's recommendation to delay the B&O reduction, but it's too early to endorse it.
"We have a fiscal responsibility to the city, so we have to look at every avenue," said Vice Mayor Eugene Fahey, who also serves as chairman of council's Finance Committee. "It's very difficult to give something to (businesses) and then take it away, but it really hasn't taken effect yet.
Mayor Andy McKenzie stressed Herron's suggestion is just that - a suggestion.
"The biggest thing we need is more information," McKenzie said. "I'm very confident that we can continue to reduce the B&O, but we have to be careful not to create a hole in the budget."