Tag Archives: BPOL

The Banana Boat and Charlottesville’s Proposed BPOL Reform

By. Neil Williamson, President

My first car was a yellow 1976 Ford Pinto Station Wagon 1977_Ford_Pinto_rear photo credit motoburg(fondly referred to as the ‘Banana Boat’).  Over time, I upgraded the stereo and dressed up the interior but it never really changed the fundamental fact that my teenage “ride” was a yellow Pinto Station Wagon.

This car came to mind as I watch Charlottesville consider important and proper changes to their Business Professional Occupancy License (BPOL) tax.

Please let me explain.

On March 6th, Charlottesville City Council will be considering changes to their BPOL Ordinance designed to promote fairness to mid-sized businesses.  Currently, any business operating in Charlottesville is required to pay BPOL based on its gross receipts. In fiscal year 2016, the BPOL tax generated $6.9 Million dollars in revenue for the City, 4.4% of all City revenue.  All 38 cities in Virginia charge BPOL.  The Free Enterprise Forum believes this is an unfair tax as it is based on gross receipts and has called for it repeal.

Staff provided several examples of the challenges under the existing ordinance:

Charlottesville businesses grossing $50,000 or less per year pay a flat fee of $35 and businesses grossing more than $50,000 pay based on a rate (established in State Code and as determined by the particular type of business) multiplied by annual gross receipts.

As an example, a veterinarian grossing $49,000 per year pays $35 for an annual business license. A veterinarian grossing $51,000 per year pays according to the standard rate for veterinarians and other similar professions ($0.58/$100), and would pay a rate-based fee of $295.80.

A graphic designer grossing $49,000 per year pays $35 for an annual business license. A graphic designer grossing $51,000 per year pays according to the standard rate for graphic designers and other similar professions ($0.36/$100), and would pay a rate-based fee of $183.60. The effect is that similar small businesses with very similar gross receipts end up paying very different fee amounts.

Meanwhile in neighboring Albemarle County, businesses earning up to $100,000 pay a flat fee of $50.  Therefore the business starting out (>$50,000 gross revenue) pays less in Charlottesville until they cross the $50K threshold and then they pay much more.

The Commissioner of the Revenue has reported of hearing significant concerns from taxpayers about what can be a dramatic jump in their BPOL costs as they cross the $50K gross annual threshold.  It is important to recognize that $50K in gross revenue is the point where many businesses may be at the tipping point between viability and failure.

As the staff report outlines:

In an effort to attract, retain, and encourage small businesses in the City of Charlottesville, the Commissioner of the Revenue and City Treasurer are proposing a modest change to the fee structure used to assess BPOL:

  • Businesses grossing $50,000 and below continue to pay $35 license fee
  • Businesses grossing $50,001 to $100,000 pay a $50 license fee
  • Businesses grossing over $100,000 pay the license fee based on applicable BPOL rate

This proposed change would benefit small businesses within the City of Charlottesville by reducing the license fee paid by businesses earning between $50,000 and $100,000. Staff estimates that approximately 450 businesses would benefit from this structural change. There would also be a comparable change in the technology business incentive as well. We are recommending that these changes take place for the upcoming assessment year of 2018.

The Commissioner and Treasurer would note that this is a relatively modest proposal that seeks to provide meaningful relief to small businesses in our community within limited statutory, system, and budget constraints.

These changes do not come without cost.  Staff estimates adoption of this proposal would potentially reduce BPOL revenue by $93,000.

While the Free Enterprise Forum has consistently called for the REPEAL of BPOL, we are supportive of the reforms contained in the proposal.  In addition, we commend the Commissioner of the Revenue and the Treasurer for thinking beyond the bean counter box and seeking reform.  When properly implemented, we see these changes as leveling the playing field with adjoining localities, increasing fairness for small to mid sized businesses and promoting economic development.  1979 pinto cruising wagon

We would be remiss if we did not remind the City that regardless of changing the paint job, adding new tires and a kicking new stereo, you are still driving a Pinto Station Wagon.

Yes, repeal would be better but we support these commonsensical BPOL reforms.

Respectfully Submitted,

 

Neil Williamson

Neil Williamson is the President of The Free Enterprise Forum, a privately funded public policy organization covering the City of Charlottesville as well as Albemarle, Greene, Fluvanna, Louisa and  Nelson County.

Photo Credits: Motorbug.com, Autospost.com

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Albemarle New Tax Targets Small Businesses

By. Neil Williamson, President

An open letter to the Albemarle County Board of Supervisors

Dear Supervisors,

Thanks to restrictive land use decisions and other cost factors, many of the small businesses that service Albemarle County are located outside of the county limits. These enterprises are important players in our regional economy and, perhaps unknowingly, via your agenda item #23 you are about to stick it to them by requiring increased accounting and a new local tax all for a gain of just over $10,000 a year in revenue.

Please let me explain.

Currently any business located outside of Albemarle County with Albemarle gross receipts greater than $100,000 has to report that income and pay Business and Professional Occupational License (BPOL) Tax to Albemarle. The proposed ordinance drops the gross receipts threshold to $25,000.

Sec. 8-603 Contractors, developers, electricians, plumbers, steamfitters and speculative builders.

Each person engaged as a contractor, developer, electrician, plumber, steamfitter or speculative builder shall be subject to a license tax, and other provisions, as set forth herein:

A. Each contractor, developer, electrician, plumber, steamfitter or speculative builder contractor speculative builder or developer shall be subject to a license tax of sixteen cents ($0.16) for each one hundred dollars ($100.00) of gross receipts from the business conducted during the preceding fiscal or calendar year.

B. Each person engaged in the business of a contractor shall include in his gross receipts all work done, whether such work is done by contract, subcontract, day labor or time and material.

C. Each contractor who has paid a local license tax to another locality in which his principal office or branch office is located shall be exempt from obtaining a license and from paying a license tax to this county for conducting any such business within this county unless the amount of business done by any such person in this county is equal to or greater than one hundred thousand dollars ($100,000.00) twenty-five thousand dollars ($25,000.00). The amount of business done in the other locality in which the license tax is paid may be deducted by the person from the gross receipts reported to this county.

Nothing being proposed is illegal but just because you can does not mean you should.

Beyond the problematic issue of double taxation (will the entity continue to pay for ALL their gross receipts in their home locality), the Free Enterprise Forum is concerned about fairness to small business.

Consider the small family owned HVAC repair company located in Greene County. They do the majority of their work in Greene but from time to time they do work in Albemarle. Because this ordinance is based on gross receipts all of the pass through costs are included, if HVAC install is between $5,000 and $15,000 this company could only take on less than 5 such jobs a year or it has to file for business taxes in Albemarle.

The choice is for the small business to either not offer service to Albemarle or to increase its accounting costs and tax payment planning. Any increase in pricing will be passed along directly to the end user.

And what is the anticipated benefit to Albemarle?

From Albemarle Finance Director Betty Burrell’s staff report:

•  Sec. 8-603(C) – License Tax — threshold for out-of-County contractors – projected $10,250 revenue gain per year. Staff does not anticipate a significant budgetary impact from the other proposed revisions. [Emphasis added nw]

I understand state law has changed that will allow you to do this.

The Free Enterprise Forum believes this lower threshold will inadvertently increase administrative cost for already financially strapped small contractors and in the end harm Albemarle citizens with increased costs, reduced services or both.

Please retain the $100,000 threshold.  Thank you for your service to the community.

Respectfully Submitted,

Neil Williamson

Neil Williamson December 2 2015 Albemarle BOS meeting Photo Credit Charlottesville TomorrowNeil Williamson is the President of The Free Enterprise Forum, a privately funded public policy organization covering the City of Charlottesville as well as Albemarle, Greene, Fluvanna, Louisa and  Nelson County.

Fluvanna Supervisors Talk New Taxes

By. Bryan Rothamel, Field Officer

After back to back shorter meetings, the Fluvanna Board of Supervisors had a meeting with full of informational presentations.

The Board of Supervisors are starting again to look at adding a business fee or tax. It is a subject that comes up every few years.

Fluvanna currently only taxes personal property and real estate for business, just like it does for county residents. There are three options the county can do to further regulate businesses: business directory, business fee or a business/professional/occupational license (BPOL) tax.

The directory option would require businesses to register with the county. The county would publish the directory for residents to peruse business in the locality.

The business fee would require businesses to pay a nominal fee yearly. The fee would be around $30, officials estimated. With over 600 businesses in the county, the county would only bring in $18,000 to $20,000 a year. It would require additional employee hours, creating a net loss for the county.

“It will be revenue neutral. It would probably cost us money,” said Mel Sheridan, Commissioner of Revenue. His office would be in charge of collecting money.

The BPOL tax would go on gross receipts of businesses. Albemarle and Charlottesville charge a BPOL tax. Supervisor Tony O’Brien (Rivanna District) owns a business in Charlottesville and he estimated he paid several thousand in taxes last year.

Ullenbruch2014Vice chairman Bob Ullenbruch (Palmyra District) said there are businesses in Fluvanna who fly under the radar and they do not pay business personal property tax. He suggested a directory or business fee would help correct some of this.

Sheridan said his office actively looks for businesses and makes sure to keep a list of businesses for business personal property taxes, however there are very few not on his list.

“I don’t think (business directory or business fee) would be a 100 percent cure,” said Sheridan.

Sheridan will give an update or ways forward in the first quarter of 2015.

Fluvanna’s biennial reassessment program, completing its first cycle, will increase property values by approximately 2 percent across the county.

“It might be five or six percent increase in a few years, but it won’t be a big swing,” said Dave Hickey from Blue Ridge Mass Appraisals, the company contracted to perform the reassessment.

Sheridan said, “I again want to compliment you for the decision you made a few years back (of doing the reassessment every two years).”

The previous reassessment was done with an effective date of Jan. 1, 2013. The time before that was the state maximum allowed at six years.

This most recent assessment will go in effect Jan. 1, 2015.Nichols2014

County Administrator Steve Nichols gave updates to the board on various projects. On January 15 VDOT will hold a public open house about the Route 15 and Route 53 roundabout.

Louisa County and Louisa County Water Authority will hold a town hall meeting on Dec. 16 about their pipeline that will run along the eastern portion of the county.

The state has cut localities money based on budget shortfalls. Fluvanna will not receive $59,000 in FY15 that it was expecting. At the first December meeting staff will give recommendations on where to pull money. The school budget may also be affected.

The Pleasant Grove House Museum and Welcome Center is now open. It is open for four hours six days a week and Saturday for six hours.

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bryan-rothamel.jpgThe Free Enterprise Forum’s coverage of Fluvanna County is provided by a grant from the Charlottesville Area Association of REALTORS® and by the support of readers like you.

Bryan Rothamel covers Fluvanna County for the Free Enterprise Forum

Photo Credits: Fluvanna County

Fluvanna To Consider New Fees and Taxes

By. Bryan Rothamel, Field Officer

Fluvanna County’s Board of Supervisors only have two main options when it comes to revenue to fill the budget: personal property or real estate taxes.

Wednesday night (3/7) the Board looked at additional options for revenue.

“We are a two trick county: real estate and personal property [taxes],” said Steve Nichols, county administrator.

Staff recommended the board further research and look to implement business, professional and occupational licenses (BPOL) fee and Emergency Medical Services (EMS) revenue recovery. Further more, staff recommended examining a meals tax.

BPOL fee would be a flat charge yearly to every business in the county. A BPOL tax would be based on a percentage of business revenue but was not thought to be the best to implement for the county.

Ullenbruch - Nov 2012 Web

Fluvanna Supervisor Bob Ullenbruch

“Is [BPOL fee] worth the pain you go through?” said Bob Ullenbruch (Palmyra District).

Ullenbruch said it would cause a lot of uproar with businesses and would only generate minimal amount of revenue.

Nelson County County charges $30 a business per year. It generates $32,610 per year. Some counties chose to implement both a fee and a tax but Fluvanna looks to explore the fee only.

“it is perfectly understandable a business doesn’t want to pay a tax,” said Tony O’Brien (Rivanna District).

The EMS recovery option would potentially generate around $500,000 a year. Louisa, who takes more than twice as many calls as Fluvanna, brings in $966,710 in FY13.

The revenue recovery would bring in more than the county currently pays to operate emergency services. It could help pay for things like equipment or part-time staffing.

The plan would be ‘compassionate billing’ which would institute a way for those who showed an inability to pay, the possibility to have the charge removed.

Of the nine counties in the surrounding area, all have revenue recovery except Cumberland.

Staff also recommended supervisors finalize a proffer guidance document and review why some current fees the county collects are significantly lower than its peers.

One idea with additional revenue is to help supplant the current personal property tax. Fluvanna charges $4.15 per $100 assessed. Louisa charges $1.90.

Every nickel of Fluvanna’s personal property tax is $86,000 of revenue.

Measures like fees could be implemented for FY16. A meals tax would require a referendum and counties have had trouble passing such a measure. Currently Greene, Louisa, Madison, Nelson and Orange have a 4 percent meals tax.

Staff is expected to give more information on the items the board have agreed to further examine later this year.

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bryan-rothamelThe Free Enterprise Forum’s coverage of Fluvanna County is provided by a grant from the Charlottesville Area Association of REALTORS® and by the support of readers like you.

Bryan Rothamel covers Fluvanna County for the Free Enterprise Forum.

Photo Credit: Fluvanna County

Fluvanna Okays Economic Development Director

 

By William J. Des Rochers, Fluvanna Field Representative

With minimum debate on the subject, the Fluvanna County Board of Supervisors on October 19th finally agreed to hire a full-time economic development director. The vote was 4-2 — supervisors Weaver (Cunningham) and Fairchild (Rivanna) dissented.

The issue over hiring a full-time director has lingered for years in the county; previously the county could agree only to hire part time personnel, and those directors did not stay for long. At one point, supervisors voted to fund a full-time position but it never was filled.

Initially, the economic development office will be a small endeavor. The director’s salary will be less than $50,000, and the entire office is budgeted for just $108,000 annually.

The Board spent several minutes wrangling over whether or not it also should hire consultants to analyze the economic prospects for the county and include rates of return for various development proposals. While the supervisors took no action on the matter, they informally agreed to take up the idea sometime in the future.

In other matters, supervisors:

· Agreed to assume its financial share ($460,000) of the Central Virginia Regional Jail expansion;

· Were informed that the county’s CSA (Community Services Act) program finished with a small ($38,000) surplus at the close of its fiscal year, and that the expenditures per child were less than 80 percent of the statewide average.

Three business owners addressed the Board with concerns that the supervisors were considering a 5 percent BPOL tax. Chairman John Gooch (Palmyra) stated that a BPOL tax was not under consideration at the present time. However, several supervisors have, in the past, seemed favorably disposed towards establishing such a tax, with some safeguards for small businesses in the county.

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William Des Rochers serves as Free Enterprise Forum’s Fluvanna County Field Officer.  The Free Enterprise Forum is a privately funded public policy organization covering Albemarle, Greene, Fluvanna, Louisa and Nelson county as well as the City of Charlottesville. 

If you find this update helpful, please consider financially supporting these efforts.

Fluvanna to Look at Business Tax

By William J. Des Rochers, Fluvanna Field Officer

At its September 3rd meeting, Supervisor John Gooch (Palmyra) suggested that the Board of Supervisors look at the possibility of enacting a business tax, or Business, Professional, Occupation License (BPOL).

Supervisors had no immediate comment but County Administrator G. Cabell Lawton IV volunteered to prepare a brief on the subject for the Board’s first meeting in October.  The subject has come up before, although not seriously in recent years.  Vigorous opposition by the business community has stymied previous efforts.

But the county now is facing unprecedented debt levels and likely will look for several ways to increase taxes beyond just the real estate and personal property taxes.

Job Analysis

Supervisors also agreed to a job classification and payroll study for county staff.  The analysis will cost about $12,000, but several supervisors expressed concern that benefits were excluded from the proposed scope of work.  Supervisor Don Weaver (Cunningham) cited county figures which show that benefits can account for as much as much as forty percent of a typical compensation package.

Supervisor Gene Ott (Rivanna) noted that some benefits – such as retirement – come with “a long tail”, lasting many years after the employee has retired, and noted that much of the federal government’s work now is “contracted out”, to avoid the benefit liabilities.

The measure passed 4-2, with Supervisors Charles Allbaugh (Rivanna) and Weaver voting against.  Mr. Allbaugh had argued in a previous meeting that the work should be performed in house.

Other Board Actions

The Board plowed through a number of agenda items.  Among the many, supervisors:

·        Were briefed on a regional housing conference report and adopted a resolution in support of the regional housing agenda (Weaver dissented);

·        Agreed to donate approximately 7.1 acres of county land at Pleasant Grove to the School Board, subject to finalizing the request;

·        Established a Building Committee for Fire Stations at Kent Store and Fork Union.

The Board also held a work session after the meeting to review the status of the goals they established earlier this year.  At the work session, they also were updated on the James River water pipeline – see separate story for a full report on that topic.