Business tax break proposal debated in city

A proposal to give Lynchburg businesses a one-time tax break in hopes of stimulating the local economy gave rise to a heated debate among City Council members on Tuesday.

Councilman Turner Perrow, who acknowledged the idea was a “little radical,” suggested the city consider taking $1 million from its capital improvements fund to pay for an across-the-board cut in business license taxes.

The capital improvements fund supports certain one-time expenses, such as roadwork, building repairs and downtown revitalization projects. Removing $1 million from it would allow the city to offer a more than 10 percent discount on its business license taxes.

Perrow described his proposal as a “one-time, one-year local stimulus” that will give the business community a boost in these rocky times.

“I think we have to look at this as an investment,” Perrow said. “… We can’t help our businesses increase their sales, but we can help them decrease their expenses.”

Councilman Michael Gillette pressed Perrow for a cost-benefit analysis of such a maneuver, which Perrow acknowledged he didn’t have. Gillette specifically asked whether the city would see a quantifiable return on its investment and which capital improvements would have to be cut from the budget to pay for it.

“You don’t know if it’s going to work and you don’t know what it’s going to cost,” Gillette said. “You’re just taking a shot in the dark.”

Perrow said he brought the idea forward Tuesday to get council’s reaction and was not yet prepared to offer a detailed plan. Both he and Councilman Scott Garrett, who supported the proposal, noted they recently met with a series of business leaders who expressed a need for some relief.

“We have been told repeatedly that they are getting squeezed in this declining economy and profound recession,” Garrett said, adding that “high taxes” were part of the problem.

Garrett, who is currently running for the House of Delegates against incumbent Shannon Valentine, jump-started this issue last month by calling for the creation of new business incentives. The topic was placed on the agenda Tuesday at his request.

The debate that ensued was dominated by Gillette, Perrow and Garrett as the three sparred over the practicality of the plan on the table. Gillette said while he agreed the city should support local business, he thought it was “short-sighted” to cut city services to do it.

He also questioned the effectiveness of stimulus programs in general, saying flatly, “I don’t like bailouts. And I’d like to see a hell of a lot more hardnosed reasoning in these stimulus packages.”

Garrett, who said his primary goal in this endeavor was to create jobs, said the city has to pursue creative ideas to help the community through this recession.

“We’ve got to get people back working,” he said. “If we don’t do that, we’re just going to continue to flounder. We’ve got to affirm we’re open for business and looking for opportunities.”

Perrow said council clearly needed to discuss the issue more. Officials tabled the matter after half an hour of debate.

“I’m looking forward to continuing this discussion,” Perrow said. “Maybe we can get some traction on this and help our local businesses.”