2013-01-30 / Front Page

Meals tax faces uphill struggle for approval

By Greg Pearson

Even if the General Assembly approves legislation that would allow Chesterfield’s Board of Supervisors to impose up to a 4 percent meals tax, most members of the board would want a citizen referendum first.

The proposed state bill, which was passed by the Senate this week, would allow both Chesterfield and Henrico supervisors to tax restaurant meals in their counties without getting approval from the public.

But imposing a meals tax without asking for voters’ input would require unanimous approval by supervisors, and in Chesterfield, that’s not going to happen.

Three supervisors – Chairwoman Dorothy Jaeckle, Vice Chairman Steve Elswick and Clover Hill Supervisor Art Warren – say they are against imposing a meal tax without public input.

“The voters should decide,” Warren said in an interview after the finance committee move last week. “I’m opposed to any meals tax unless there is a public vote.”

Elswick also said he wanted a referendum but noted that the income “could be used for our school revitalization plan. The meals tax would raise more [revenue] than a 2 cent increase on the property tax rate.”

The proposed state legislation, which at press deadline must still be approved by the House of Delegates, would allow the county’s board to impose less than a 4 percent tax.

According to Budget and Management Director Allan Carmody, a 1 percent tax on meals would generate $3.8 million annually. Two percent would raise twice that much, and the maximum 4 percent would raise $15.2 million.

In comparison, each penny increase on the property tax rate raises $3 million.

In an interview for the February issue of Chesterfield Monthly, Jaeckle said, “I don’t think a meals tax is the Paid answer for Chesterfield.”

The magazine will be out next week in its print version and online at on Feb. 1.

One advantage of a meals tax – which some supervisors acknowledge – is that people who don’t live in the county but eat in its restaurants would generate part of the revenue.

Matt Harris, an analyst with the budget office, said “the county doesn’t have any hard numbers,” but using national data, he estimated that about 25 percent of meals tax revenue would be generated by people from outside of the county.

Chesterfield residents who don’t want to pay the meals tax can avoid it by eating at home. The surrounding localities of Richmond, Colonial Heights and Petersburg already have a meals tax, and Henrico appears likely to implement one.

In a narrow 7-6 vote, the Senate Finance Committee last week approved the amendment, which originally was intended to give taxing authority only to Henrico’s supervisors. Chesterfield was added to the amendment at the last minute.

Although approved by the Senate, the amendment faces an uncertain fate in the House of Delegates. County Administrator Jay Stegmaier said he supports keeping Chesterfield on equal footing with Henrico, but he also indicated that the House is not likely to approve the amendment.

Dale Supervisor Jim Holland said he likes the option of considering a meals tax.

“It should be one of the tools in our toolbox, but I haven’t decided if we should use it,” Holland said. “If we have one, it should have specificity.”

When Chesterfield held a referendum on a meals tax in 1988, 55 percent of voters voted against the idea

But Warren said he believes a meals tax might be approved in a referendum now, if the revenue were to be dedicated to schools and public safety.

With stagnant revenues from property taxes – which generate half of Chesterfield’s general fund money – there is a growing call to increase pay for teachers and county employees, particularly police officers.

The county school system is also seeking $347 million to revitalize its aging school buildings. Discussions about a bond referendum, the traditional way of raising capital funds for schools, are also continuing.

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