Tuesday, February 09, 2010
Roanoke City councilman calls for increase in meals tax
Court Rosen said the revenue would help Roanoke's school system.
Roanoke City Councilman Court Rosen did something Monday that you don't see every day from a politician: He sent out a news release calling for a tax increase.
Rosen avoided what can be the most politically charged of city taxes, the real estate levy. Instead he wants a "two-year emergency meals tax increase" that would raise that rate by 2 cents, with the revenue going to a Roanoke school system hit hard by a slow economy and state funding cuts.
Rosen said increasing the meals tax from 5 to 7 cents per dollar would raise about $4.6 million, buffering both city services and school funding from suffering potentially deep spending cuts. He proposed raising the tax on July 1 and allowing it to sunset after two years.
"I never want to propose higher taxes," said Rosen, who is not up for re-election this year. But "I see very few alternatives to this at this point."
The increase would raise the cost of a $10 meal by 20 cents. In addition, the state also charges a 5 percent tax, so restaurants would see the rate of collection increase from 10 percent to 12 percent.
Three of four Roanoke restaurant owners reached Monday said they opposed the proposed tax increase, citing difficult economic times that have already cut into their bottom lines.
"I'm struggling to get customers in the door as it is," said Jason Martin, who owns Martin's Downtown Bar & Grill.
Restaurant owner Doug Robison of Wildflour Market and Bakery in Old Southwest said he generally opposes tax increases but understands the need to fund schools. He said he could even find a way to market it to his customers: "I'd like to turn it around and say, 'Hey, here's your chance to make a direct contribution to the school system.' "
During the budget-writing process for the current fiscal year, the school board closed two schools, privatized the bus system and laid off 58 employees, including 15 teachers. Despite those measures, the school system still faces a $6 million shortfall.
Next year looks even worse, with school officials estimating that shortfall will increase to $10 million.
"In the next eight weeks, the schools are going to have to decide whether they lay off 150, 200 teachers," Rosen said.
Dedicating any revenue from the tax increase, he said, would help preserve progress made by schools over the past few years while also helping to buffer city programs.
Council members discussed the possibility of raising the meals tax or lodging tax last year, but found ways to balance the budget by service and program cuts instead. The idea has been broached again this year, but Rosen's news release marks the first expression of outright support for the idea.
Council members were receptive to the idea, but added that the proposal needs more discussion in coming weeks.
"I think it puts something on the table for us to discuss," said Vice Mayor Sherman Lea. "We've made tremendous gains in our educational system. Because the state has fallen short and continues to do so, we have to make sure some of the initiatives started by Roanoke city schools can keep going. I'm giving it [a meals tax increase] serious consideration because I want to maintain the gains we've made."
Councilman David Trinkle, who owns two restaurants in the city, said he's willing to entertain the idea as well, even as he acknowledged that the economic downturn has hit the food service industry hard.
"My restaurants were off 30 percent, as much as 40 percent compared to a year ago," Trinkle said. "I employ 55 people currently. One of the most important things in this economy is job creation, and we've seen a couple of restaurants close their doors in the past couple of months. It's a balancing act."
Trinkle, the only council member seeking re-election this year, said he's not yet sure whether he'll support a 2 percent increase in the meals tax, or maybe a smaller increase paired with an increase in the lodging tax. He said the council needs to discuss the issue at its Feb. 19 budget work session.
Three Roanoke restaurant owners -- Martin; Matt Lancaster, who owns Awful Arthur's Seafood Co.; and Matt Bullington, who owns the Texas Tavern -- suggested the city look at other options before raising the meals tax.
Bullington said that the food service industry shouldn't be expected to shoulder the city and school's budget shortfalls by itself. Lancaster and Martin both suggested the city take a closer look at reducing its spending before raising taxes in a bad economy.
Rosen said he had looked at a variety of taxing options but decided the meals tax offered the most bang for the buck, generating a lot of money while affecting only those who chose to eat out -- including restaurant patrons who live outside the city limits.
Increasing the general sales tax, Rosen said, would drive up the cost on big-ticket items such as cars to the point where consumers will look outside the city limits. He said that raising the real estate tax was a no-go as well, as it would affect more people, many of whom are on fixed incomes.
The last time the city council changed the real estate tax rate was in 2006, when it approved a 2 cent reduction in the rate.




