Business tax rebate proposal fails in City Council vote

A proposal to extend a one-time tax rebate to Lynchburg businesses failed Tuesday amid accusations of political showboating.

The often-contentious, hourlong debate carried out by City Council on the tax issue could not escape the pall of politics, specifically City Councilman Scott Garrett’s current campaign for the House of Delegates.

Garrett, who kickstarted this discussion last month by calling for the creation of new business incentives, is running as a Republican in the 23rd District against incumbent Shannon Valentine, a Democrat. Several council members suggested Tuesday that the tax rebate proposal, supported by Garrett, was merely a campaign stunt.

“You should look at the camera when you say that,” Councilman Ceasor Johnson said to Garrett at one point.

“I’m not playing politics,” Garrett replied.

“That’s what you’re doing,” Johnson said.

Garrett is running for higher office on a heavily anti-tax platform. Four of his peers — Johnson, Mayor Joan Foster, Vice Mayor Bert Dodson and Councilman Michael Gillette — are supporting his opponent in that race.

The proposal before council Tuesday, which called for a special one-time rebate on business license taxes, was actually suggested by Councilman Turner Perrow, a member of the local Republican committee and Garrett’s only ally in the tax debate.

Both Perrow and Garrett denied in earlier interviews having any ulterior motives in bringing the rebate idea forward.

“I’m on the side of actually helping business,” Perrow said. “I don’t care about the political side. I think this is the right thing to do.”

Garrett said his interest in supporting business was nothing new. “They can say that all they want, but I’ve been working for a long time with business issues,” he said. “My stance on this has been quite consistent.”

Council wrangled over whether the benefit of any potential rebate — which ranged from a few dollars for individual businesses to as much as $700-plus for certain small companies depending on the format suggested — outweighed the gap such a move would leave in the city budget.

“How is this amount of tax relief going to lead to hiring more people?” asked Vice Mayor Dodson, referencing one of Garrett’s previously stated goals of creating new jobs. “How are you going to hire new people, pay their benefits, etc., with this type of relief?”
Dodson added, “You’re going to be playing risky business if you start taking money from capital projects.”

The original rebate proposal called for taking the money from the capital fund, which finances various one-time projects, including roadwork, building repairs and downtown improvements. Several council members noted Tuesday that spending money on such endeavors also supports the economy by giving work to contractors and suppliers.

“We’re already seizing (that aspect) of it with the added benefit of getting these projects done,” said Councilman Gillette, who had been strongly critical of the proposal from the outset, saying that it lacked details and had no established, quantifiable benefits.

Gillette said in an interview later that he found it “suspect” that Garrett raised his business incentive proposal just a few weeks before Election Day. He denied that politics played a role in the rest of council’s assessment of the proposal.

“I think we demonstrated clearly that we are open to discussion, but there needs to be a real plan,” he said.

In a last-ditch effort to get some measure of relief approved, Perrow suggested a total rebate of around $300,000, drastically reduced from his original suggestion of $1 million. The motion failed on a 5-2 vote with only Perrow and Garrett voting to move ahead with a rebate.

Councilman Jeff Helgeson, a Republican who ran unsuccessfully against Garrett for the party nomination in the House of Delegates race, said he could not support a tax cut that didn’t come with specific recommendations on how to correspondingly reduce spending.

“To just say we’re going to take it out of the air, I can’t support that,” he said.

Mayor Foster echoed many of the concerns of her peers. She said she didn’t feel the budget could afford to take such a hit and made note of the capital needs facing the city, specifically a new plan to make pedestrian improvements to Wards Road, an as-yet-unfunded project aimed primarily at helping Liberty University students cross the corridor.

“I want to make sure these students are safe,” Foster said. “If there’s any money available anywhere in the budget this year, this is where I want it to go.”

Foster did ask that the Economic Development Authority, which operates several business incentive programs for the city, assess whether any changes or improvements could be made to it programs and report back to council.