CHARLESTON, W.Va. -- Although a plan to roll back Charleston's B&O tax on retail was hamstrung by state legislation, the gray cloud may actually have a silver lining, one city leader believes.
The state Legislature passed a bill extending the state's home rule program by another five years during the last session.
Home rule gives cities more autonomy when passing ordinances dealing with issues like taxation. Charleston leaders are working to pass a half-cent city sales tax under the state's current home rule program, which sunsets June 30.
The sales tax will generate funds to help pay off debt incurred from renovating the city's aging Civic Center.
The new home rule bill allows participating cities to enact a municipal sales tax up to 1 percent if that municipality reduces or eliminates business and occupation taxes.
Mayor Danny Jones is proposing an elimination of the city's B&O tax on manufacturing and a reduction of the retail B&O.
However, the new legislation expanding the home rule program would prohibit the city from raising the B&O taxes once they were lowered without first dropping the municipal sales tax, Jones said.
This is a provision that Jones is unwilling to accept.
He has therefore scrapped his proposal to reduce the B&O on retail, which was estimated to cost the city about $2.25 million annually.
However, Jones still plans to eliminate the B&O on manufacturing, he said.
Councilman Edward Talkington, a West Side Democrat, was opposed to the reduction of the B&O from the onset.
And although he is not pleased with the Legislature's attempts to reduce home rule powers given to the cities, he is pleased that the rollback plan has been dropped.
"I believe we can find better uses for that money," Talkington said.
He hopes the city can use the funds to help pay down millions of dollars in unfunded liabilities in firefighter and police pension plans.
The city has about $259 million in those pension plans, Talkington said. And although the city has already set up a method for paying that unfunded liability down, Talkington believes the funds generated by the B&O on retail can be used to cover that debt much quicker.
"And it that plan isn't the will of the majority of council, I'm sure we can find some other worthwhile projects in Charleston," Talkington said.
The city sales tax is expected to gross about $6 million. However, $2.25 million of the sales tax would be used to make up that money as well as the revenue lost by eliminating the B&O on manufacturing.
City leaders estimated that Charleston would lose about $350,000 annually by eliminating the B&O on manufacturing.
However, the city will now have the additional $2.25 million a year if the proposal to roll back the B&O on retail services is dropped.
Jones said he would rather have the city sales tax "sunset" when the bond debt on the $35 million to $60 million in Civic Center renovations is paid for. The B&O on retail could then be increased once again to make up for the lost revenue, he said.
"But the new law keeps us from doing that," Jones said.