TAX NEWS - JUNE 2010

West Virginia Tax: City Sales Tax Added to Monday Huntington City Council Finance Agenda

Huntington, WV (HNN) – Confirming the addition of a proposed 1% City of Huntington sales tax to the Finance Committee agenda, committee chairman Steve Williams told HNN Sunday evening by phone that his support would come with a qualifier: Since the city "probably would not see revenue until March 2011," Williams asked, "What's the sense of it?"
 
He continued, "If this is simply to raise money, I would not only vote against it, I will fight it."
 
"We are going to be looking at this as purely the first step in tax reform. Whether the sales tax or the occupation tax, the only way that I would consider [voting for ] any of those would be if I saw we had a path of getting rid of the user fee and Business & Occupation taxes," Williams said.
 
Do you sense less optimism in the Finance Committee chairman's position? Yes, he admitted that the decision making and deliberative foot dragging has him "frustrated." Specifically, the at-large councilman is reacting to Mayor Kim Wolfe's announcement that beginning July 5 Huntington City Hall will be closed on Fridays and putting employees on a four day/ten hour work schedule.
 
"I believe it is misguided," Williams said. "I understand the four day work week, but you need to stagger people's schedules [to keep City Hall open]. I question its appropriateness."
 
According to Mayor Wolfe's Friday statement, the one day closure , 10% salary cuts and four day work week will save approximately $425,000.
 
Wolfe's speech may have alluded to his thinking on not staggering the ten hour work days, as Williams proposes.
 
"…if 20 day furloughs were to be implemented as originally discussed , it is all but impossible to run offices/divisions that comprise five or fewer positions with reduced staffing levels in four-week increments," Wolfe said.
 
Referring to the efficiencies placed in the approved Fiscal 2010-2011 budget approved and sent to the auditor in late March, he stressed, "if this was in private enterprise, decisions would have been already made." He believes that many of the efficiency adjustments should have started in April. Noting that implementing change in a shorter period increases the pain, Williams analyzed, " We suggested cutting things out over three months. Guess what? That did not happen. I expected [some] things to occur as soon as the budget was passed. [They] didn't happen."
 
Asked for specific examples of what did not occur, Williams cited, "the motor pool" and "positions they will be eliminated effective July 1. They could have been eliminated April 1." He also referred to the administration stating during the latter stages of the budget session when they "did not identify specific line items [for] additional savings that they found in the budget. I understood [some] could be permanent."
 
At that time, council woman Frances Jackson asked for a public statement of the line item reductions, but Williams then responded "let the administration make the decisions. I was expecting that [the administration] would make the decisions, but they were never made."
 
Some efficiencies they found (such as overtime) could not occur until July 1, but others "could have been immediately implemented. I don't know if it would have been enough to stave off the four day work week, but it would have added money to the contingency. "
 
[Editor's Note: In his speech Friday, Wolfe stated, "I believe this action [ 4 days work week, 10 hour days, closing city hall Fridays] is more prudent than significant layoffs that would paralyze divisions and would in turn cost the city more in contracted services. We will see a loss in the number of jobs in the divisions of Motor Pool, Human Resources, Finance, and Inspections and Compliance. Several employees have sought early retirements or positions elsewhere within the city. We will NOT fill these vacant position and will consolidate several positions. Additionally, we anticipate with the reduction in salaries, we will lose employees to more competitive entities." ]
 
Williams looks back to warning signs delivered in November and December 2009. Council members warned of impending downturns. Admittedly a portion of the shortfall relates to the economy. However, as a business executive Williams added, "you cannot continue business as usual."
 
Speaking of the savings figures, "they have not laid out any numbers in front of us, certainly not to me, to show where the savings occurs. I can see savings in the ten percent reduction in pay. I want to see [how] closing City Hall for a day creates savings and where it comes from. Not being part of [these] discussions, I look at it with a jaundiced eye."
 
Williams does not recall prior discussions of a four day work week.
 
"Frankly, what I was expecting, was implementation of what the budget called for. These other things I was not expecting."
 
He opined that "I think they have learned a lesson from acting slowly. Would it have been more appropriate for [council ] to have been more adamant in November and December 2009? That's not necessarily our role, but we now find ourselves digging out of a deeper hole. "
 
Although the changes take effect July 5, 2010, Williams believes some efficiencies should have been immediately implemented by the administration following passage of the Fiscal 2010-2011 budget in March.
 
The changes could make their way to the Finance Committee agenda if during the Monday evening meeting a member moves to add the item to the agenda.
 
Numerous questions have surfaced following the Mayor's announcement, ranging from how the projected revenue saving was tallied to the building's availability for Friday afternoon work session council meetings or whether a ten hour work day qualifies for time and a half.