Town of Bath weighing new sales regulations

February 15, 2005|by TRISH RUDDER

BERKELEY SPRINGS, W.Va. - A West Virginia law that gives towns the option to charge an additional 1 percent sales tax will go into effect on July 1 and Town of Bath officials are weighing whether to impose the tax or continue with its current tax system.

Last March, the West Virginia Legislature gave municipalities the option of imposing a 1 percent sales tax with the money going back to the municipality. According to the new law, towns can apply the 1 percent sales tax or a Business and Occupation tax (B&O), but cannot apply both at the same time. The Town of Bath currently applies a B&O tax to Allegheny Power, which nets them $23,000 a year.

David Crosby, chairman of the town's finance committee, said banks will not have to pay the sales tax if the town opts to apply the 1 percent tax. Town Clerk Margie McCumbee said other businesses such as contractors and lawyers also would be exempt.


Mayor Susan Webster said any business that does not charge a state sales tax will not collect the additional 1 percent for the town.

Webster said the council needs to make a decision on the sales tax. The town does not want to lose the $23,000 from Allegheny, she said.

Before a decision is made, officials are waiting for information from the state that will tell them the potential numbers from the sales tax.

Crosby said the estimate from WVU's financial planner, Michael Dougherty, was that the town could receive about $75,000 per year based on one-half of 1 percent of the sales tax. To help the town with its financial problems, Citizens National Bank hired Dougherty last year to help the town develop alternatives to the B&O tax on banks.

Dougherty said he used the 1997 economic census and three types of businesses for his estimate. Since the figures were for all of Morgan County, he said he estimated that the town produced one-half of the retail trade sales, two-thirds of the accommodation and food services and two-third of other businesses, that might have included contractors and lawyers.

In 1997, Dougherty said, $59.7 million was made in retail trade sales, $11.8 million from accommodation and food services, and $2.1 million from the "other" category. Dougherty said the $75,000, based on one-half of 1 percent, "is the best to my knowledge." He said the new economic census will be available later this year.

Dougherty said he thought the sales tax option is better than a B&O tax for the town. His final report to the town will be finished in a few weeks.

In the past, the town has considered imposing a 1 percent B&O tax on town businesses, but business owners successfully discouraged the council from imposing the tax. Business owners considered the B&O tax unfair because it is based on a business' gross income.

The town faced a $30,000 budget shortfall at the beginning of the fiscal year on July 1, 2004.

Last June, the mayor broke a 3-3 tie to kill the proposed B&O tax ordinance on the town's three banks. Town business owners attended that council meeting to voice their concerns about the tax and to offer suggestions on how town revenues could be raised instead of imposing the B&O tax.

Since then, the town has made changes to increase revenue, such as increasing garbage pickup rates on town businesses and residents, and increasing fines and court costs for municipal traffic violations. Some Greenway Cemetery expenses also have been increased, Crosby said.

At the Feb. 7 Town Council meeting, Webster asked Councilwoman Nancy Harvey to find a sample ordinance of the tax. Harvey chairs the Ordinance committee.

Harvey also reported at the Feb. 7 meeting that she is working on local government certification for the town. Being certified will help the town to get grants, Harvey said. She asked the Morgan County Commission to "join us in this endeavor."

The Town of Bath is the local government inside Berkeley Springs.

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