South Charleston has taken the first steps toward imposing a 1 percent city sales tax.
The tax would raise an estimated $4.3 million annually. It would be accompanied by an annual reduction of $366,263 in the city's business and occupation tax for utilities. The city's amusement tax, which currently brings in $3,200 annually, would be eliminated.
Council on Thursday held a public hearing on the proposal. There were only two people in the gallery and neither spoke. Council then unanimously approved an ordinance authorizing submission of the plan to the state's Municipal Home Rule Board.
According to the ordinance, the tax would "create funds assisting to remedy the city's underfunded pensions, improving infrastructure to further economic development, and aiding the city to meet its statutory obligations, including as to pay increases."
The draft plan to be submitted to the Home Rule Board says, "Additional income is greatly needed to improve the city's infrastructure, comply with statutory obligations, and alleviate underfunded pensions."
Mayor Frank Mullens has said the city needs about $1 million a year in additional funds to put the police and fire pension plans on a sound financial basis and about $600,000 year for street paving. He also has said he wants to implement a sidewalk-repair program and the city will eventually need to make major outlays for the South Charleston Community Center.
Additional funds also would be used to continue to provide competitive pay for city employees and to build the city's Rainy Day Fund, Mullens has said.
According to the draft plan, "The proposed restructuring of taxes, including the enactment of a sales and use tax and reduction of municipal B&O tax, would assist the city of South Charleston in resolving existing inequities. It would permit the city to reduce the tax burden on South Charleston residents and to have such burden shared by visitors to the city."
According to the draft plan, "The B&O taxes the city is planning to reduce will directly benefit South Charleston residents, given that such taxes are passed directly on to them by the utility companies." The city estimates the reduction would save residents about $366,000 a year.
City Manager Rick Atkinson has said that "probably 75 percent of the sales tax will be paid by people who are not residents" but who shop at Wal-Mart and other stores in South Charleston. Mullens has said that's fair because the shoppers use the city's infrastructure and services.
A city sales tax is possible because the city was accepted into the state's Municipal Home Rule Pilot Program on Oct. 6, 2014. The program gives cities more control over their own affairs.
The city's current annual budget is $21.7 million. The business and occupation tax is the largest revenue source, raising $10.8 million annually - almost half of the city's revenue.
Atkinson has said the city would like for the sales tax to take effect on July 1, 2016, which is the beginning of the next financial year.
The ordinance approved Thursday must be approved again at a future meeting before the city can submit its plan to the state Municipal Home Rule Board. The board can approve or reject the plan.
In other action Thursday, council:
* Approved a bid by Central Poly-Bag for 2,500 compost bags and 6,000 recycle bags at a total cost of $54,250.
* Gave final approval to financing for the $2.6 million fire station to be built on the Fourth Avenue site of the existing Fire Station No. 1 plus the lot next to it.
During department head reports, Public Works Director Gerald Burgy said the city has 250 tons of road salt on hand and will order 500 tons between now and next month.
Mullens announced there will be a ribbon-cutting at Zippy's Hot Dogs off Corridor G at 11 a.m. today. He said that on Oct. 22 there will be a ribbon-cutting ceremony at Sheetz at 10:30 a.m. and a ribbon-cutting for the remodeling at Lester Raines at 5:30 p.m.
Before the meeting, Burgy noted that the department's canned food drive is underway. Residents may hang bags of canned goods and non-perishable food items on their door or front porches and the department's employees will pick them up each Wednesday or on the residents' regularly scheduled pick-up day through Nov. 13. Residents also may call the department at 304 744-5532 to schedule a pickup.
In addition, collection sites have been set up at the Community Center, the public works office, city hall, all fire department locations, the police department on 4th Avenue and the public library.
The department's goal is to collect 5,000 cans of food for the Heart and Hand community service center.
All council members attended the meeting.
Council's next meeting will be at 7:30 p.m. Nov. 5 on the second floor of City Hall on D Street.