At an April 24 work session, Warrenton Town Council members wrestled with how to help local businesses weather the economic storm created by the COVID-19 pandemic. Council members unanimously approved an ordinance drafted by town attorney Whit Robinson that will delay payment of meals taxes, transient occupancy taxes and BPOL taxes for 90 days, until Aug. 20. Robinson explained that the ordinance would not waive the payments, but rather, delay them until businesses would perhaps be operating more normally.
Businesses would still have to file the required reports on time, but could postpone payments.
During a discussion, Councilman Alec Burnett (Ward 2) seemed to be most uncomfortable with the plan as it relates to the meals tax, a tax collected from restaurant customers at the time they purchase food. Business owners document what they collect and hold it in trust to pay to the town every month.
Burnett said, “I don’t see how this is helping. We’ve got to get people out. We’ve got to get the community visiting these restaurants.” He said that the plan would amount to allowing business owners to use money that was meant to come to the town to instead pay business expenses. “I’m not seeing the value in their using taxpayer money for something it’s not intended for.”
Town Manager Brandie Schaeffer said that the ordinance was meant to provide relief for businesses who are having a temporary cash flow problem.
She said that the idea is not unprecedented, pointing out that the state has utilized a similar strategy with sales tax. “We are following the lead of the state and other neighboring jurisdictions.” Leesburg and Middleburg have already put a similar plan in place, she said.
The ordinance does not apply to any delinquent taxes or penalties. Robinson said the plan would only apply to taxes owed for May 20 through Aug. 20, not to any delinquent taxes. “Those would continue to accrue penalties and interest for anything past due,” he said.
Councilman Kevin Carter (Ward 5) said, “Many Warrenton businesses are closed. Giving them flexibility in when they would pay taxes, a bit of a grace period, is a good idea. Businesses are being forced into a zero-revenue situation.”
Burnett agreed, “I’ll advocate for keeping the resolution as is, but let’s discuss moving revenue into businesses as well. What other opportunities are there to push value to food and beverage businesses? Businesses cannot save their way to success. They need to drive revenue.”
Mayor Carter Nevill said, “Passing this would not preclude us doing something more. That’s an entirely different discussion. Let’s pass this resolution and discuss other resolutions that are incentives for the economy at a later time.”
In the end, council members voted to approve the ordinance, but agreed to discuss other ways to help businesses – like a reduction in utility bills, for instance -- at a later time.
Nevill admitted, “We are flying blind. We don’t yet know what businesses’ concerns are.” He asked Warrenton business owners who may have been listening to the Zoom call to, “Please let us know. Stimulus checks help with this month, but not the next four. It’s customers we need more than anything. And whatever help we provide, it must be equitable.”
Brett Hamby (Ward 3) added, “We need to be prepared for long haul. We need to give as much relief as we can.”
Carter agreed, “We are going to continue to make new discoveries, to find new solutions for the next 18 months.”
Nevill pointed out that a new town council would be taking over in July. “If we find that the suffering is greater than anticipated, the new council can reassess.”
At least two of the town’s wards will have new councilmen; Jerry Wood (Ward 1) and Robert Kravetz (Ward 4) are retiring. Contested seats in Ward 2 and 5 will be decided in a May 19 election. Hamby is running unopposed.
Councilman Sean Polster (at large) said, “COVID relief needs to be broader than just waiving taxes.” He suggested that the council continue discussions as they consider the FY2021 budget in the weeks ahead.
Schaeffer explained that because the town’s tax structure is dependent on businesses, the town could forfeit up to 40%of revenue in certain categories of taxes that are reliant on a good economy.
Nevill admitted that uncertainty is going to complicate the budget process. “We are going to have to approve a budget with a lot of assumptions. It will be imperfect.”
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