Granville Home Rule Request to Include City Sales Tax

When business and occupancy taxes on new car sales were eliminated starting in July 2023, Granville suffered as big a hit as any.

The city of less than 2,000 residents has five car dealerships.

Vehicle sales in the city are currently projected at $127.7 million annually.

Granville Mayor Patty Lewis said city leadership considered this a crossfire, particularly because the move came amid a broader conversation about eliminating B&O taxes altogether.

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 … I know many legislators think the B&O tax is outdated. They say it’s an outdated system, but they haven’t been able to find a way for cities to finance themselves,” he said.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

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

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

Home Rule began as a pilot program in four cities in 2007 with the goal of giving the state’s municipalities 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.

As of January 2019, autonomy is permanent. Westover became the state’s 60th charter 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 generate about $9.6 million this year. Westover’s tax went into effect last July and is expected to generate about $3.3 million.

According to Granville’s application, the city anticipates its sales tax will initially generate just over $4.4 million.

As a requirement to establish the tax, the city must reduce its business and occupancy privilege taxes, that is, non-construction B&O taxes. Those taxes are divided into several categories, including entertainment, banking, contracting, manufacturing, utilities, rental, retail, services and wholesale.

Granville is proposing a fee 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 B&O taxes on amusements ($7,076.08) and a reduction in the rate on financial institutions from 0.01 to 0.0050 ($34,840.37) bring B&O’s total estimated cuts to $635,336.59 and the profit net of implementing sales tax at $3,765,250.97.

“My recommendation to the council initially will be to put that money into a fund for larger capital projects that we will have in the near future, such as repaving a portion of University Town Center and our side streets that we intend to pave. on a rotating basis,” Lewis said. “The idea would be not to incorporate or depend on that additional income initially, but in the event that B&O disappears, then we will have a source of income to continue providing services.”

Granville’s current budget is approximately $9.5 million.

“We’re trying to be proactive,” Lewis continued. “I just don’t want residents or anyone who shops at the (University) Town Center to think we’re doing it just to increase our budget and be a waste. We do it as a precaution. “So we know we will have the funds to provide the services we are required to provide.”

While the sales tax is undoubtedly the main issue, the city’s home rule request includes five additional initiatives, including:

• Disposition of property and equipment without public auction: This would allow the city to directly dispose of real property and personal property without auction in appropriate circumstances and consider the value of public services for economic development provided or provided when determining a reasonable value for the lease or sale of property.
• On-the-spot citations: This would allow the city to issue on-the-spot citations for life safety, health and sanitation code violations, and public nuisances.
• Liens on blighted and nuisance properties: This would allow the city to file liens against properties for which it has incurred expenses to reduce problems caused by disrepair or nuisance.
• Collection of Demolition and Remediation Liens: This would allow the City to more easily collect funds owed under demolition liens by paying for such purchase requirement with sales taxes.
• Solid Waste Fee Liens: This would allow the city to place liens without initiating a civil action to collect unpaid fees for solid waste collection.

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

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

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