Granville Home Rule application to include municipal sales tax

When business and professional taxes were abolished on new car sales from July 2023, Granville took as big a hit as anyone.

The town of fewer than 2,000 residents has five car dealerships.

Car sales in the city are currently estimated at $127.7 million per year.

Granville Mayor Patty Lewis said city leaders felt this was a shot across the bow, especially since the move came as part of a broader conversation about eliminating B&O taxes altogether.

“That was an eye-opener and we knew that there were other organizations and companies knocking on our door wanting the same benefit for their business. … I know many lawmakers think the B&O tax is outdated. They say it’s an outdated system, but they haven’t been able to figure out a way for the cities to finance themselves,” she said. “We talked about it for a few years and decided that we would be proactive in the event that future legislation would eliminate more B&O taxes, because we have an obligation to provide services to our citizens and businesses.”

On Nov. 12, the Granville City Council will hold a first reading of an ordinance authorizing the application before the Home Rule Municipal Board of West Virginia.

As part of that application, the city is proposing the introduction of a 1% municipal sales tax.

Home Rule began in 2007 as a four-city pilot program with the goal of giving the state’s municipalities the freedom within the law to address unique challenges.

In October 2014, the pilot cities of Bridgeport, Charleston, Huntington and Wheeling were joined by 16 additional municipalities, including Morgantown, as part of the expanded pilot program.

Since January 2019, Home Rule has been permanent. Westover became the state’s 60th Home Rule city last fall.

Both Morgantown and Westover have implemented municipal sales taxes through Home Rule. Morgantown’s tax went into effect in July 2020 and is expected to raise about $9.6 million this year. Westover’s tax went into effect last July and is expected to raise about $3.3 million.

According to Granville’s filing, the city expects the sales tax to generate just over $4.4 million initially.

As a requirement for instituting the tax, the city must reduce taxes on business and occupational privileges – that is, non-construction B&O taxes. These taxes fall into a number of categories, including entertainment, banking, contracts, manufacturing, utilities, rental, retail, services, and wholesale.

Granville is proposing a rate reduction for retailers from 0.0050 to 0.0040, which, based on fiscal year 2023 figures, would represent about $593,420 on just under $591.2 million in retail sales. The elimination of the B&O taxes on entertainment ($7,076.08) and a rate reduction for financial institutions from .01 to .0050 ($34,840.37) brings the total estimated B&O reductions to $635,336.59 and the net benefit from the implementation of the sales tax at $3,765,250.97.

“My recommendation to council will initially be to put that money into a fund for larger capital projects that we will have in the near future, such as repaving part of the university’s downtown area and our side streets that we are trying to paving. on a rotating basis,” said Lewis. “The idea would be to not really absorb or depend on that additional revenue initially, but if B&O leaves, we have a source of revenue to continue providing services.”

Granville’s current budget is approximately $9.5 million.

“We try to be proactive,” Lewis continued. “I just don’t want residents or anyone who shops in the (University) City Center to think that we are just doing that to boost our budget and cause waste. We do it as a precaution. So we know that we will have the resources to provide the services that we are committed to providing.”

While the sales tax is undoubtedly the main focus, the city’s Home Rule filing includes five additional initiatives, including:

• Sale of property and equipment without public auction – This would allow the city to directly sell real estate and personal property without auction in appropriate circumstances and to consider the value of public services in relation to the economic development provided or expected when determining a fair value for the rental or sale of real estate.
• On-the-spot citations – This would allow the city to issue on-the-spot citations for life safety codes, health and sanitation, and public nuisance violations.
• Liens for Dilapidated and Nuisance Properties – This would allow the city to file liens on properties for which it has incurred costs to alleviate problems caused by disrepair or nuisance.
• Collection of Demolition and Rehabilitation Liens – This would allow the City to more easily collect moneys due under demolition liens through the payment of such a purchase requirement at tax sales.
• Liens for Solid Waste Fees – This would allow the City to place liens without filing a civil suit to collect unpaid solid waste collection fees.

Assuming the matter passes first reading on Nov. 12, the Granville City Council will hold a public hearing and second reading on Nov. 26.

The city aims to present the application to the West Virginia Home Rule Board at its January meeting.

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