“ Financing Your City’s Path to Excellence ‐ ” Business and Occupation Taxes and Public Finance Government Finance Officers Association Of WV West Virginia Municipal Human Resources Association Charleston, WV Mark W. Matkovich October 5, 2017 Ryan White
OVERVIEW West Virginia Municipalities Municipal Finance Essentials 232 $567,008,129 B&O, Excise Tax on Utilities, Sales Tax, Property Tax, Licenses and Fees WHITE LAW OFFICES PLLC www.whitepllc.com
Municipal Finance Essentials: West Virginia Municipalities Nothing stays the same: The Town of Rhodell, Raleigh County, Pop. 232 231 173. On June 13, $567,008,129 voted 33-13 to dissolve the B&O, Excise Tax on Utilities, Sales Tax, Property town. Tax, Licenses and Fees WHITE LAW OFFICES PLLC www.whitepllc.com
Municipal Finance Essentials: West Virginia Municipalities Look where we started: 231 In 2003, total $ 567,008,129 municipal revenue was ~450M B&O, Excise Tax on Utilities, Sales Tax, Property Tax, Licenses and Fees WHITE LAW OFFICES PLLC www.whitepllc.com
Municipal Finance Essentials: West Virginia Municipalities Something New ‐ Finally! 231 $567,008,129 Early adopters B&O, Excise Tax on Utilities, Sales Tax , Huntington & Williamstown Property Tax, Licenses and Fees combined for <$900K in FY2012 WHITE LAW OFFICES PLLC www.whitepllc.com
Sales Tax: West Virginia Municipalities A Growing Trend in WV Tax Policy 36 Cities effective July 1, 2017 Rate 1% (except Moorefield 0.5%) FY 2017 $60,244,032.08 (predict >$80 million next year) WHITE LAW OFFICES PLLC www.whitepllc.com
B&O Tax: West Virginia Municipalities A workhorse: $204,684,195 36% of Total Municipal Revenue Key Classifications: Retail (.5%), Wholesale (.15%), Contracting (2%), Service (1%), Rents/Royalties (1%) Often subject to criticism* www.whitepllc.com Blog WHITE LAW OFFICES PLLC www.whitepllc.com
B&O Tax Still A Revenue Mainstay Composition of Budgeted General Revenue FY2018 Total Charges, Licenses and Fees 31% B&O 36% Other Tax (i.e. Sales) 11% Excise Tax on Utilities 4.5% Property Tax 18% WHITE LAW OFFICES PLLC www.whitepllc.com
Notable Cities BO 2018 BO 2007 Total Gen Rev % of Total Charleston 45,437,310 33,400,000 96,237,991 16.97 Huntington 13,961,759 15,076,554 50,786,466 8.96 Beckley 9,690,000 7,955,000 21,404,869 3.78 Bluefield 2,937,900 2,300,000 10,459,981 1.84 Clarksburg 9,102,000 6,117,000 18,566,634 3.27 Fairmont 5,305,268 3,923,196 15,856,082 2.80 Martinsburg 6,850,000 6,000,000 16,700,000 2.95 Morganton 14,700,000 10,120,000 33,202,474 5.86 Parkersburg 8,350,000 9,850,000 28,775,473 5.07 St Albans 3,100,000 2,800,000 11,280,620 1.99 So Charleston 11,500,000 8,500,000 27,650,089 4.88 Vienna 2,600,000 2,415,000 9,085,363 1.60 Weirton 4,700,000 2,300,000 20,037,323 3.53 Wheeling 11,325,000 8,970,000 34,014,256 6.00 Totals 149,559,237 110,756,750 394,057,621 69.50 WHITE LAW OFFICES PLLC www.whitepllc.com
Tax Notes Today City Administration Current Items of Interest AirBnB and the sharing economy Spec Building Nexus for sales tax, business license, and B&O are not necessarily the same – know the distinctions Information Exchange with State Tax Department* Publishing tax information about non‐payors Closing Businesses for failure to pay taxes or licenses WHITE LAW OFFICES PLLC www.whitepllc.com
Public Finance West Virginia Municipalities West Virginia municipalities can finance public projects including police stations, fire stations, city halls, convention centers, sewer upgrades, and water upgrades using a variety of different methods including: General Obligation Bonds Special Revenue Bonds Lease Revenue Bonds Tax Increment Financing and Sales Tax Increment Financing WHITE LAW OFFICES PLLC www.whitepllc.com
Public Finance: General Obligation Bonds Backed by Full Faith and Credit of the Municipality What can be financed? Any public project What Revenue is pledged? The taxing power of the municipality Are there special requirements for Issuing the Bonds? Yes. An election must be held and the municipality must receive 60% of the votes to proceed with the Bond. Also, a municipality may not issue bonds in an amount that exceeds 2.5% of the value of taxable property within the subdivision. WHITE LAW OFFICES PLLC www.whitepllc.com
Public Finance: Special Revenue Bonds Backed by Specific Revenue of the Municipality What can be financed? A project that will produce enterprise revenue. Also certain public projects can be financed by pledging lottery revenue, sales tax revenue and hotel/motel tax revenue What Revenue is pledged? The enterprise revenue and/or lottery revenue, sales tax revenue and hotel/motel tax revenue Are there special requirements for Issuing the Bonds? Yes. Bonds issued will require certain debt service covenants for the revenue sources that secure the bonds. Accordingly, covenants to raise rates will be required in order to pay the bonds if the revenue does not cover the debt service payment WHITE LAW OFFICES PLLC www.whitepllc.com
Public Finance: Lease Revenue Bonds Backed by the Lease Revenue from a Lease What can be financed? Essential public buildings that will be leased by the city from a local building commission What Revenue is pledged? Lease revenues derived from the leasing of the building from the local building commission Are there special requirements for Issuing the Bonds? Yes. The local building commission must own the property and issue the bonds and then lease the property to the municipality. The lease will often be for the entire term of the bonds and then the property will be purchased by the municipality at the end for $1. There must be a provision that states the municipality may cancel the lease in any year by giving 30 days notice. WHITE LAW OFFICES PLLC www.whitepllc.com
Public Finance: TIF and STIF Bonds Backed by tax increment revenues and sales tax increment revenues What can be financed? Public buildings and infrastructure. Usually used in conjunction with a particular development. What Revenue is pledged? This is a type of special revenue bond which is paid by the excess revenue generated in a certain district from property taxes or sales taxes which is over a certain baseline that is established at the time the district is created. Are there special requirements for Issuing the Bonds? Yes. A TIF or STIF district must be created. Only class I and II municipalities may create districts. TIF and STIF districts must be approved by the WV Development Office and STIF districts must be approved by the WV legislature. WHITE LAW OFFICES PLLC www.whitepllc.com
Public Finance Many different Purchasers of Bonds: The Public - An underwriter will initially purchase the bonds and then sell bonds to the public who can buy the bonds and receive tax exempt income from most bonds Banks and Financial Institutions - Banks will often buy bonds directly from governmental issuers. This is called a private placement. Banks receive the tax exempt rate and also can receive Bank Qualified incentives if the issue is under $10 million. Governmental Entities - State and Federal governmental entities such as the USDA, the Water Development Authority, the Clean Water SRF Program, the Infrastructure and Jobs Development Council, the Drinking Water Treatment Revolving Fund will buy bonds at extremely low interest rates. WHITE LAW OFFICES PLLC www.whitepllc.com
We will be glad to help you with determining how to finance your next project. For more information, contact us. Mark W. Matkovich Ryan White Steve White White Law Offices PLLC 600 Kanawha Blvd. East Charleston, West Virginia 304‐720‐1400 www.whitepllc.com
Recommend
More recommend
