B&O revenues reveal no-growth economy in WV - WOWK 13 Charleston, Huntington WV News, Weather, Sports

B&O revenues reveal no-growth economy in WV

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Source: West Virginia State Auditor’s Office Source: West Virginia State Auditor’s Office

By JIM ROSS
For The State Journal

Retail sales are leveling off or falling off in some West Virginia cities, leaving construction activity to pick up the difference for municipalities collecting business and occupation taxes.

Officials of several cities in West Virginia — both larger communities and smaller ones — say the construction business is doing well while retail sales are struggling, based on the business and occupation taxes they collect.

Charleston

Charleston collects, by far, more money in business and occupation taxes than any other city in the state. Its budgeted collections this year of about $43 million are nearly three times those estimated for Huntington, whose population is only about 2,000 fewer.

But Charleston has a downtown mall and part of the retail development on Corridor G in its limits, while retailers west of the Capital City have tended to locate or relocate outside the city of Huntington in recent decades.

"Actually our business activity is lower than in the past," said Charleston City Manager David Molgaard. "We're not going to hit projections for this year. We're going to have to lower our expectations for next year."

Joe Estep, finance director for the city, said B&O collections are running about 4 percent below the budgeted amounts. In recent years, B&O collections had risen about 2.75 to 3.5 percent per year, but this year they've been down.

Estep said the city has 14 tax classifications for B&O taxes, and all are stagnant except for contractors. He added that does not surprise him considering the number of large projects going on in the city.

"Aside from that, everything else is just flat as can be," he said. "It's not just retail. It's not just services. It's across the board."

The city is self-insured for health care costs, so it's still not known whether it will finish the year in the black or in the red, Estep said.

South Charleston

South Charleston's B&O tax collections could come in $1 million or $2 million over projections this fiscal year, but that's because the city estimates its revenues conservatively, said City Manager Carlton Lee.

In South Charleston's case, business and occupation taxes include those collected from the regional retail shopping centers on Corridor G and from industrial companies such as Dow Chemical and Gestamp, Lee said.

"We've been doing a lot of construction," Lee said. "Contractors pay B&O taxes as well."

The city collected its 2 percent share of the $98 million Interstate 64 bridge over the Kanawha River a few years ago, and it has benefited from an addition at Thomas Memorial Hospital, he said.

Strong B&O collections combined with conservative projections have allowed South Charleston to undertake projects and pay cash rather than borrowing, Lee said. Those projects have included an overpass and a fire station and another fire station project that is underway, he said.

"I am an anti-credit guy," Lee said.

Bridgeport

Construction and relocation are keeping Bridgeport's B&O taxes on an upward trend, said City Clerk Andrea Kerr.

"We are definitely growing. We have not leveled out in I don't know how many years," she said.

The city expects to collect about $5.9 million in B&O taxes this year, with about $1.1 million of that coming from construction work, Kerr said.

Retail sales and tax revenue for the hospital remain strong, and the city is benefitting from the number of physician offices that are relocating into the city to be closer to the new United Health Center hospital, Kerr said. Also, contractors who work with the FBI fingerprint center are putting offices in town now, she said.

Dominion is relocating its Clarksburg office to a 100,000-square foot building being constructed at White Oaks business park in Bridgeport. The city is benefiting from B&O taxes on that project, and it will collect B&O taxes from the company when it begins operations in town, Kerr said.

Logan

Annexing the Fountain Place shopping center, which includes a Walmart and a Lowe's, several years ago has helped the city of Logan with its business and occupation taxes, said Mayor Serafino Nolletti.

The shopping center will provide about one-third of the city's estimated $1.3 million in B&O tax collections this year, Nolletti said.

B&O revenue from the shopping center allows Logan, a city of about 2,000 people, to be one of the top cities in the state in B&O taxes collected per capita.

Although the shopping center was built several miles from what most people consider to be the city of Logan, the city was able to annex it in 1997 through a boundary adjustment that included annexing state roads that led there, Nolletti said.

In Logan, as in other cities, construction activity is helping with B&O taxes, the mayor said.

"In our downtown, we've probably got more retail than some towns," he said. "We've had a lot of construction going on the past couple of years. 

"That new state office building has been completed, and a new bridge is being built. We receive B&O from that."