IW supervisors debate changes to business license fees
May 22, 2017
Isle of Wight, VA
By Stephen Faleski
Isle of Wight’s Board of Supervisors is considering changing the county’s business license fee structure to require a $5 payment for businesses with gross receipts of less than $4,000 and extending the county’s $50 flat fee to cover the first $50,000 of any business earning over $50,000 annually. The discussion took place during a work session on Thursday evening.
Smithfield District Supervisor Dick Grice was the one who suggested the change. Currently, the county does not require businesses with gross receipts under $4,000 to obtain a business license and specifies a $50 flat fee for businesses earning $4,000 or more, but less than $50,000. Businesses earning over $50,000 currently pay a fee determined by a rate per $100 depending on the type of business.
According to numbers provided by Gerald Gwaltney, the county’s commissioner of revenue, under the proposed change, 801 businesses in the county, or roughly 68 percent of the county’s businesses, would pay the flat rate of $50, while 373 businesses earning $100,000 or more would not be affected by the change. By using a flat $50 fee instead of a rate per $100 for the first $50,000 earned by businesses making between $4,000 and $100,000, Gwaltney predicted the county would lose approximately $87,000 in revenue, but that that revenue would be retained by the affected businesses. County Administrator Randy Keaton added that because business license fees are based on the calendar year rather than the fiscal year, the earliest the new rates could take effect would be Jan. 1, 2018.
Assistant County Administrator Don Robertson said that before debating specific fees and rates, it would help him and county staff to know what the board’s intention is for potentially changing the county’s business license fees.
“If the intent is to help small businesses, we can develop a rate structure that can do that; if your intent is to have accountability of those businesses [earning less than $4,000] then we need to look at whether this is the best mechanism to get them to come through the door and file for a business license,” Robertson said.
Carrsville District Supervisor and Chairman Rex Alphin said he thought lowering the minimum sale amount to $0 would burden neighbors who create and sell $10-items like picture frames as a hobby. However, Grice said he was not asking to tax hobbies or one-time sales.
“But if you are opening up a door and you’re do ing it on a regular basis, for example, if I resell ammunition in my garage and I’m selling it to my neighbors and friends and maybe over the internet, and I’m doing it regularly, does the county want to know that?” Grice asked. “I think it’s important that we know things like that. An Amway distributor, they’re driving all over the county making deliveries, that’s a business and they should have a business license.”
Hardy District Supervisor Rudolph Jefferson said he didn’t think either a $5 fee or a $50 fee was going to break anyone’s plans to grow his or her business but said he felt $5 would be insufficient to cover the administrative costs of imposing the fee and producing the paper business license.
Newport District Supervisor William McCarty felt that the current $4,000 threshold was being exploited as a loophole.
“As it stands right now, I can create 25 businesses, each making $3,500 per year, making a total of $87,000 per year tax free,” he said. “You have the other guy who’s making $50,000 to $75,000 per year and following what he’s supposed to be doing but nothing’s preventing me from creating as many businesses under the threshold and even selling the same product. I can even change my name. Today I’m McCarty Shoes and tomorrow I’m Bill’s Shoes, and I’m pretty confident that that’s going on in the county.”
The board tabled their discussion of business license fees following Robertson’s recommendation that they not incorporate the changes in the proposed fiscal year 2017-2018 budget.
“It’s going to be an implementation nightmare if you try to do this [now],” he said.
Also on the agenda for the evening was a presentation by Doug Fritz, a senior water researcher for GKY Associates and the county’s director of utility services, Don Jennings, on potential new legislation by the General Assembly concerning erosion and sediment control. The way the bill is currently worded, it requires any locality that operates a regulated municipal separate storm sewer system (MS4), which the county no-longer does, or that administers an erosion and sediment control program by July 1, 2017,” which the county currently does have, to possibly need to combine the two.
“It kind of links you in the back door to being required to continue to operate the program,” Fritz said. “The DEQ (Virginia Department of Environmental Quality) said that the reason that caveat is there is to keep people from opting out of the [MS4] program once they have it.”
“We are being asked to agree to a regulation that has not been promulgated yet,” Jennings said regarding the bill’s confusing and incomplete wording. “We’re not even being asked to pass something that we haven’t read; we’re being asked to pass something that hasn’t even been written yet.”
One possible option Fritz suggested, which would prevent the county from being required to once again implement capital projects mandated by an MS4 permit, is for the county to cede control of its erosion and sediment control program to the state. The disadvantage of that option is the county would relinquish local control of its stormwater systems and the resulting revenue from the collection of stormwater fees.