Tax Cut Plan Weighed Down by City Politics

What business wouldn’t like to have its business license tax reduced? Businesses, like individuals, would be only too happy to see a reduction in the local tax, a reduction that would put more money in their pockets.

But where would the city cut its budget to pay for the proposed $1 million tax cut? What specific programs or projects would have to be put on hold to accommodate an always politically popular tax cut?

City Councilmen Turner Perrow proposed the tax cut. He got some help from his fellow Republican Scott Garrett, but it was not enough. And for good reason. Neither could identify where the cuts would come from in the city budget. That, in the end, spelled defeat for the proposal.

Commonsense reigned over the council as a majority voted to scuttle the tax cut plan.

The council debated the proposal last week against a backdrop of the House of Delegates race in which Garrett prevailed over incumbent Shannon Valentine, a Democrat. He based his campaign heavily on an anti-tax platform.

But, when challenged about whether his support for the tax cut was a campaign stunt, Garrett said he was not playing politics with it. The council majority of Mayor Joan Foster, Vice Mayor Bert Dodson, Mike Gillette and Ceasor Johnson were not convinced.

Perrow had proposed a special one-time rebate of about 14 percent on business license taxes. Businesses would have saved anywhere from a few dollars to as much as $700 or more depending on the size of the enterprise. The councilman argued that the tax savings would help businesses make it through the slow economy.

Gillette asked for some kind of cost-benefit analysis, which would show the effect of the tax cut on the city. But that proved to be a tough issue resulting in more questions than answers.

Perrow suggested that the $1 million could be pulled from the city’s capital improvement budget. That’s the pot of money the city uses for such one-time projects as road construction, building repairs and downtown revitalization work. He never specified which projects should be deferred.

How would the rebate actually benefit the businesses? The question came up during debate on the proposal, with Dodson asking, “How is this amount of tax relief going to lead to hiring more people?” Garrett had suggested earlier that it would help create new jobs.

Dodson added later that taking money from capital projects amounted to “playing risky business.”

Foster said she didn’t think the city budget could take a $1 million hit and pointed to the capital needs facing the city. Among them, she said, are the planned pedestrian improvements to Wards Road, which would help Liberty University students cross the busy corridor.

“If there’s any money available anywhere in the budget this year, this is where I want it to go,” she said.

The council majority made it clear that any tax cut would have to be accompanied by a similar cut in expenses to keep the budget in balance. In the end, finding cuts in the budget — even the capital improvements budget — proved too daunting at this point in the budget cycle.

The council vote also made it clear that proposing tax cuts in such a politically charged atmosphere is not conducive to sound public policy.