Business license hike a surprise

Published 1:03 pm Wednesday, June 22, 2016

By Diana McFarland

Managing editor

Some Isle of Wight County business owners got a shock recently when they received their business license renewal notice and calculated their rates.

One business in the Carrsville District had its rate double, from $2,700 to $5,400, said Isle of Wight County Board of Supervisors Chairman Rex Alphin.

“It sends somewhat of an unfriendly business image there,” said Alphin at the June 8 Board meeting.  {mprestriction ids=”1,2,3,4,5,6″}

Subscribe to our free email newsletter

Get the latest news sent to your inbox

Last year, the Board of Supervisors raised the business license rate for the first time in 27 years, and the increase was expected to generate an additional $281,645 in revenue, according to a staff report.

Yet, the prior Board was seemingly unaware that it increased the rate, said Isle of Wight County Commissioner of Revenue Gerald Gwaltney, who added that he was left out of the discussions leading up to the decision and, as a result, caused some errors in updating the software.

Specifically, Gwaltney missed that the Board agreed to eliminate the discounted rate for gross receipts over $1.5 million. That part of the change, which was initiated by prior County Administrator Anne Seward during the 2015 budget season, was adopted May 1 after a public hearing on the fiscal 2015 budget and related ordinances (which included the change to the business license rate) on April 16.

There is no video or minutes from the May 1 meeting available on the county’s website. However, a power point presentation on the fiscal 2016 budget said the business license increase was a revenue “adjustment,” as in “adjusts business licenses to mainstream rates with other localities.”

Interestingly, the same vague use of words was employed when describing a proposed five-cent tax increase as “anticipated increased revenue growth.” The prior Board was caught off-guard with that use of terminology too. That particular tax hike was not made.

The current Board of Supervisors had asked for a report in May of this year about the business license rate change and Gwaltney provided a memo to the Board at the June 8 meeting.

The minimum fee went from $30 to $50 and the categorical rates were increased to the maximum allowed by state law, Gwaltney said. There is no license if gross receipts fall under $4,000. Previously, the rates were at about 60 percent of the maximum rate allowed.

The state allows for four categories: contractor, retail, financial and other services, each with a percentage of gross receipts.

Gwaltney said that of the nearly 1,500 licenses issued annually, about 1,100 are minimum licenses that pay a fee of $50.

Twenty-six businesses in Isle of Wight County logged gross receipts more than $1.5 million. Gwaltney said that after the error was discovered, he sent out a letter of apology

He said his office received less than a dozen complaints from business owners about the increase and only one complaint from a business with gross receipts more than $1.5 million.

Alphin said the increase created a pubic relations problem because many business owners were not aware of the change until he or she opened the envelope from the county. 

It boils down to communication, said Newport District Supervisor William McCarty.

Interim County Administrator Sanford “Sandy” Wanner said the change was not properly picked up and staff needed to do a better job on communicating the change and why it was made.

However, the commissioner of revenue did send out letters and payment plans were offered, Wanner said.

“We have to do a better job when there is a change,” he added, and suggested using every device possible to make that happen.

Alphin wants to revisit the issue after the end of the fiscal year, which is June 30.

Until the change was made last year, Isle of Wight County had the lowest rate in the Hampton Roads region, and is now on par with other localities, Gwaltney said.

In fiscal 2016, contractors fee totaled $195,672, retail sales totaled $187,204, financial services was $62,556 and other services was $213,518.  {/mprestriction}