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• Gallery: Protesters rally against occupation tax

HUNTINGTON — Workers within the city of Huntington are another step closer to paying a 1 percent occupation tax after Huntington City Council approved a new tax package Monday, following months of consideration and debate on the issue.

The tax package still has a few more steps to go through before it is set in stone — including more public comment, another vote at a work session and a vote by the state’s home rule board — but Monday’s vote was a major hurdle.

Council members heard Monday night from dozens of concerned citizens who either work in city limits or live there. The City Council chambers were packed, spilling into the hallway with a boisterous crowd, the most vocal of whom were in opposition of the tax.

"You're just like a school yard bully. You're big enough to do it, so you're going to," Marshall University professor Maurice Lockridge said before the vote on the occupation tax. "But you know what, every school yard bully gets his day. ... This metro area is much bigger than Huntington. When the state takes away this power two years from now, you know what, we're not coming back."

The three-pronged tax reform proposal includes a 1 percent occupation tax on all those who work within city limits, while repealing the current $3-per-week city service fee, also known as the user fee. That would go into effect Oct. 1, and there would be a cap, so that no one who makes more than $125,000 a year would have to pay more than $1,250 per year.

The current user fee generates $4.5 million for the city, and the occupation tax is expected to generate an estimated $8 million, meaning an additional $3.5 million in revenue for the city, according to estimates from city hall.

The tax package also includes the addition of a 1 percent sales tax on goods purchased in the city. It would apply to the same goods and products as the state sales tax, including food. That tax is expected to raise $3.7 million.

The sales tax would go into effect in April of next year. Also at that time, many businesses would notice a reduction or the elimination of business and occupation (B&O) taxes.

According to City Finance Director Deron Runyon, there are just short of 80 manufacturing companies in Huntington that would see the B&O tax eliminated, while a little more than 1,000 retailers and 1,300 service-related businesses would see the B&O tax cut in half.

This would reduce revenue to the city by $3.7 million, the same amount expected to be generated from the addition of a sales tax.

While many business leaders and workers who live outside the city have voiced opposition to the occupation tax, the city has said it needs the additional funds to offset revenue shortfalls related to the recession and keep the city moving forward. The first $7 million would go into the general fund, much of which would offset the repeal of the user fee.

Anything above $7 million and up to $9 million would be used for capital improvement projects, and anything more than that would be used to further reduce the B&O tax.

The city gained the authority to implement a 1 percent occupation tax when it became part of a five-year home rule pilot program in 2008. Three other West Virginia cities received home rule powers under the program, but Huntington was the only one that proposed changes to its tax structure.

An occupation tax is a tax on earnings (wages, salaries and commissions) related to a job or profession, affecting employers as well as employees.

Some who spoke on Monday said they don’t support an increase in taxes because they haven’t seen any benefits from the user fee.

“All we've seen is that fee go up and no improvements,” said Kellie Dye, a city resident for the past 11 years. “Now you want to take 1 percent of our gross annual income to fix problems that are still there. ...Come up with something better. There has to be a better solution to this.”

A handful of residents at the meeting spoke out in favor of the tax, and some council members pointed out that they’ve heard from many supporters, including business owners who are afraid to voice their support because they fear their businesses will be targeted by opponents.

"I don't need everyone to clap for me," said Jasper Black of Huntington. "I'm for this, if you take the cap off. It's not about me. It's about leaving things better for our children here. ...We have to be an example and make the city of Huntington the type of city that people want to move to and not want to move out."

People are willing to spend a lot of money for cable channels that they don't watch and sneakers that won't actually make their child jump any higher or run any faster, he said.

"Are we not good enough to leave the 1 percent for our city and for our children to make things better here?” he asked.

In response to those who charged that the council members have presented no proof that city services will improve as a result of the tax increase, Councilman Nate Randolph pointed out that the city is on better financial grounding going forward because of recent state legislation that lessens the burden of police and fire pensions that had been sucking funds from the city's budget at a rate that far exceeded inflation — the result of a former state law. Other than that, the city had reined in its budget in recent years, he said. The state finally put that “monster back in the closet,” he said of the pension costs, which frees up the city’s budget to put those funds toward other things.

He also assured those present that as a councilman, he had spent probably hundreds of hours researching the issues, and added that as a business person, he believed that a reduction in B&O taxes would be a tremendous help for Huntington’s small businesses.

In approving the vote on the reduction in B&O taxes, Councilman Steve Williams said he thought it would be the most important vote he had ever cast or was likely to.

“I've never heard anybody say anything about business and economic development without saying, ‘Get rid of the B&O tax,’ ” Williams said. “This is the first opportunity we've had to actually (move toward eliminating) that tax.”

Council members who opposed the occupation tax were Rebecca Thacker, Teresa Loudermilk, Frances Jackson and Scott Caserta. Those in favor were James Ritter, Randolph, Sandra Clements, Mark Bates, Russell Houck, Jim Insco and Williams.

In the vote for the sales tax increase, Thacker voted no. The reduction of B&O taxes got unanimous approval.

The next step in the process is for a copy of the plan to be placed online at www.cityofhuntington.com and at the city clerk’s office for public viewing, followed by a public hearing scheduled for 6:30 p.m. Monday, Sept. 13.

What's next

The Huntington City Council's passage on the third reading of tax reform measures isn't the final step in implementing the changes to the tax structure. The tax package proposal includes a 1 percent occupation tax and 1 percent sales tax, as well as the elimination or reduction of portions of the business and occupation tax. The $3-a-week user fee would also be repealed. The package is estimated to result in up to $3.5 million of additional revenue per year, according to an estimation from the city's finance department.

Here are the next steps in the process, according to Brandi Jacobs-Jones, the city's director of administration and finance:

COPY ON FILE: A copy of the plan will be placed online and at the city clerk's office for public inspection for 30 days beginning Thursday, Aug. 12. The city's website is www.cityofhuntington.com.

PUBLIC COMMENT: A public hearing on the plan is scheduled for 6:30 p.m. Monday, Sept. 13. The City Council would then vote in its regular meeting on the same day on the first reading of the plan with comments.

SECOND READINGS: If the plan is approved, it would move to a second reading during a work session scheduled for Thursday, Sept. 23.

HOME RULE: If the measure passes those steps, then the state home rule board would vote on the proposal. The meeting is expected to be sometime between Sept. 24-29.

 

Sholten Singer/The Herald-Dispatch

Protesters fill the sidewalks in front of City Hall in opposition of the proposed occupation tax on Monday, August 9, 2010, at City Hall in Huntington.