2017-12-13 / Featured / Front Page

Supervisors tell legislators: preserve local business tax

During meeting with lawmakers, board presses to keep BPOL

As most of Chesterfield’s legislative delegation gathered under one roof last week, county officials initiated a preemptive effort to preserve a tax one local business leader has called “ridiculous” and “totally anti-business.”

During a rare joint meeting of the Board of Supervisors with the School Board and local General Assembly members, chairwoman Dorothy Jaeckle expressed concern about the elimination of the business, professional and occupational license tax (BPOL) and its potential impact on the county government.

“We go over this every year,” she told the assembled state legislators, including House of Delegates Speaker-elect Kirk Cox, R-Colonial Heights. “BPOL is a very strong revenue source for us. We ask that if you do eliminate it, you replace the money that takes away.”

Virginia is governed by the Dillon Rule, which means localities govern with powers specifically granted to them by the state legislature, including tax collection. That’s significant because business groups have lobbied the General Assembly for many years to either reform the BPOL tax or do away with it altogether.

Since the tax is assessed against a company’s gross revenue rather than its net profits, they argue, it disproportionately impacts industries with the lowest profit margins and acts as a disincentive to small business growth.

“If there’s a tax that makes sense to get rid of, it’s that one,” said Al Meyer, who sits on the board of directors of the Greater Southport Business Association. When he ran successfully for the state Senate in 2015, Glen Sturtevant, R-Richmond, advocated for the elimination of the BPOL tax on the basis that it would spur job creation and economic activity.

During the 2016 General Assembly session, state Sen. Amanda Chase, R-Chesterfield, sponsored a bill that would have repealed BPOL. Chase, a small business owner, said she introduced the measure “to start a dialogue” with local officials about incremental reforms to the tax.

Chesterfield and other Virginia localities lobbied against the bill and defeated it.

“It’s understandable that localities don’t want unfunded mandates from the state,” Chase said.

Steve Elswick, supervisor of the Matoaca District, said last week if Chase’s bill had passed, Chesterfield would have lost $19 million in annual tax revenue.

According to Elswick, neighboring Henrico County would have taken a $31 million hit. That would have all but wiped out additional revenue Henrico voters generated by passing a meals tax in 2013, he said.

“We would have to raise [the real estate tax rate] 6 cents [per $100 of assessed value] just to make up the money we would lose on BPOL taxes,” he added. “Please keep that in mind. If you want to take it away, please give us another way to raise revenue so we don’t have to impact the services we provide for our citizens.”

It’s a balancing act for the Board of Supervisors, which has acknowledged the need to attract more commercial development to create jobs and bring balance to a tax base that is overly reliant on residential property assessments.

County Administrator Joe Casey acknowledged during last week’s meeting that Chesterfield is about 40,000 jobs short of having a 1:1 ratio of jobs to citizens.

“That means we have to grow jobs faster than the labor force,” he said. “Whether it’s one job, 100 jobs or 1,000 jobs or more, any time there’s an opportunity to create jobs and a diverse economy, we’re going to be looking at it and pursuing it.”

Significantly increasing the county’s current property tax rate of 96 cents per $100 of assessed value is a non-starter for a majority of the Republican-controlled board, however, for reasons both political and practical.

The blowback from more conservative citizens would be considerable, and the supervisors would be reluctant to put Chesterfield in a less competitive position as compared to regional neighbors Henrico and Hanover, which charge 87 and 81 cents, respectively.

Instead, the Board of Supervisors has created a program to provide financial incentives for starting and expanding small businesses, while also increasing the revenue threshold at which companies are exempted from paying BPOL taxes.

As recently as 2015, only local businesses with annual gross receipts of $200,000 or less qualified for the exemption. The board bumped it up to $275,000 last year and it currently sits at $300,000. “Chesterfield is doing a pretty good job of making sure the real mom-and-pop businesses don’t have to pay,” Chase said.

Meyer isn’t impressed. He maintains the exemption threshold will have to be much higher to make a difference for anyone other than the county’s smallest businesses. He’d prefer that county leaders “bite the bullet and get rid of this stupid tax.”

“Do you want money or do you want educated people staying here and starting their own ventures?” Meyer said. “They need to have faith that over time, they will get the money back.” ¦

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