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Martinsville, Virginia 24115
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Council opposes repeal of 2 taxes
Wednesday, September 25, 2013
By MICKEY POWELL - Bulletin Staff Writer
Martinsville City Council on Tuesday went on record as opposing efforts by some state lawmakers to eliminate two business-oriented taxes, despite the fervent opposition of two council members.
A resolution opposing any attempt by the General Assembly or other state officials to repeal the business, professional and occupational license (BPOL) and machinery and tools taxes was adopted by the council in a 3-2 vote.
Some state officials have predicted that repealing the taxes would prompt companies to come to Virginia. Only businesses pay those taxes.
However, Martinsville officials say that if the taxes are eliminated, the city will lose about $1.8 million in revenue annually.
To compensate, the city would have to increase its real estate tax rate — paid by many residents as well as businesses — by 28 cents, eliminate about 35 jobs or impose a combination of both a higher tax rate and job cuts, city officials have said.
Most city businesses pay BPOL tax rates based on a percentage, from .0005 to .0058, of their gross receipts, the city’s website show. The city’s tax rate for machinery and tools is $1.85 per $100 of assessed value.
Martinsville’s real estate tax rate is $1.0621 per $100 of assessed value, which means the owner of house assessed at $100,000 would get a tax bill for $1,062.10.
A 28-cent increase would raise the rate to $1.3421, which would mean the owner of that home would see his bill go up by $280 to $1,342.10.
City Manager Leon Towarnicki said a $1.8 million budget cut would be “very tough to overcome.”
Vice Mayor Gene Teague questioned how Martinsville would survive if such a cut had to be made. At the least, it would put the city “in dire straits,” he said.
Revenue collected from the taxes provides funds for schools, public safety, economic development, capital projects, infrastructure maintenance “and a myriad of other local government responsibilities,” the resolution states.
Ultimately, the community should have a role in deciding whether the taxes are eliminated, said Mayor Kim Adkins.
Council members Sharon Brooks Hodge and Danny Turner voted against the resolution.
Hodge said the taxes are biased against new businesses, which she noted often lose money during their first few years of operation.
Businesses generally favor repealing the taxes, and Martinsville is trying to attract businesses that will create new jobs, according to Hodge.
Turner said he objected to the resolution because “we’re right in the middle of an election season.”
“Elections have consequences,” and people should say how they feel about the taxes based on the gubernatorial and General Assembly candidates they vote for on Nov. 5, Turner said.
Councilman Mark Stroud said the resolution has nothing to do with the election and “I don’t see how it would be detrimental to any candidate.”
Adkins noted that Virginia is a so-called “Dillon Rule” state in that localities have little authority other than what the state specifically gives them.
The resolution, she said, basically opposes “the state telling us what we can and cannot do” in terms of being able to generate revenue.
If the state eliminates the taxes, Adkins said Martinsville would have no advantage over other localities in attracting businesses due to the decision.
Del. Danny Marshall, R-Danville, wrote in an email to the Martinsville Bulletin that the Virginia Small Business Commission, of which he is vice chairman, is studying the issue of eliminating the taxes.
The commission, which is under the state’s Division of Legislative Services, studies and makes recommendations to the state on issues concerning small businesses, according to a state website.
Marshall wrote in the email that he thinks the only way that eliminating the taxes would receive the commission’s support would be if the state can “find a way to fill the (revenue) hole” for localities.
Turner has said he plans to talk with lawmakers to try and persuade them to repeal BPOL and get the state to give localities with high unemployment rates the money they would lose if the tax is eliminated.
Most council members think is unlikely to happen.
Teague asked Turner whether he would favor eliminating BPOL — which has garnered the most attention in Richmond — if the state does not reimburse localities for the money they would lose.
After being pressed by Teague several times to answer the question, and after further elaborating on his viewpoint, Turner said yes.
Speaking during business from the floor, city resident Ural Harris expressed support for eliminating BPOL. He said he thinks the city should make budget cuts to make up for the money it would lose.
Teague made the motion to adopt the resolution. Stroud seconded it.
Also Tuesday, the council appointed Bernadette Moore to the city’s Arts & Cultural Committee. She will represent Piedmont Arts, for which she works as director of marketing and public relations.
Suzanne Bridges-Smith was appointed to the city’s Architectural Review Board.
They were selected for their seats following a closed session to consider potential board and commission appointments.