Scottsville council to consider new taxes

Two more tax increases are on the table in the town of Scottsville, even as some residents continue to fume over a recent increase in the cigarette tax.

The Town Council will consider the taxes in a special session on the proposed fiscal 2010 budget at 7 this evening at Victory Hall. The proposed budget is $630,804, which would represent a 48 percent increase from the current budget of $426,080.

The proposed budget includes more than $155,000 for capital improvements.

If passed, the meals tax would rise from 4 percent to 5 percent and the cost of car decals would climb from $25 to $30. The tax hikes come a week after the council enacted a 10-cent-per-pack cigarette tax, which hasn’t gone over well with some local businesses.

“If taxes are good why not raise it to $5?” said Tom England, owner of the new Exxon in Scottsville. “[Then] you’ll get all the money you need.”

R. Stephen Phipps, Scottsville’s mayor, said the $11,000 the cigarette tax is estimated to bring in during its first year will go to the police department’s general fund.

One way the money could be spent is for a third police officer in town. Scottsville applied for a grant from the Department of Justice in April. The grant would pay for the additional police officer for three years.

Phipps said the town will find out in September if it will receive the grant. If it does, Scottsville will be responsible for the officer’s salary and benefits for the fourth year – a price tag up to $60,000. If the town doesn’t get the grant, money from the cigarette tax would likely go to provide extra protection at events such as the town’s Fourth of July celebration.

“We’re looking at the public-safety aspect, that’s what’s really driving the train here,” Phipps said.

But some local business owners disagree with the town government on that tax and on the proposed increase in the meals tax, which, along with the budget and the proposed $5 increase in the decal fee, will be the subject of public hearings tonight.

“I think they probably overestimated the amount of revenue they’ll get from the [cigarette] tax,” said Hollis Lumpkin, manager of Lumpkin’s Restaurant and Motel.

There are only four places in town that sell cigarettes, Lumpkin said. As for the proposed meals tax increase, it doesn’t sound like much, Lumpkin said. But on a $10 meal it adds up, he said.

If the proposed meals tax is enacted, it would be on top of the existing 5 percent state meals tax, for a total of 10 percent. That translates into a dollar in taxes on a $10 meal.

The way Lumpkin sees it, if he started selling cigarettes and somebody ate in his restaurant and spent the night in his motel, that person would pay no less than four different taxes, three of which go to the town. If the meals tax is approved, it will drive that much more money into neighboring counties, Lumpkin said.

“Its just another tax,” Lumpkin said. “Easy to pass, hard to take back.”

One council member, Bebe Williams, doesn’t think the taxes are necessary. Williams said the town could raise more money for the police department with a yearly fundraiser rather than with the cigarette tax.

Phipps agrees, but he doesn’t think it’s worth the number of volunteer hours. “It’s almost a year-round thing,” he said. “If someone wanted to do it, they’re welcome to.”

Scottsville is on the lookout for ways to increase revenue. Clark Draper, the town administrator, said Scottsville will end the year $12,000 in debt.

“We’re pretty dependent on our meals tax because we’re one of the only towns that doesn’t have its own property tax levy,” Draper said.

In a copy of the proposed budget, the meals tax accounts for the largest portion of the town’s revenue, a little more than 22 percent.

Scottsville hasn’t had real-estate taxes since 1992, when it expanded and annexed part of Albemarle County. The deal with the county was that if Scottsville annexed county land, the town couldn’t have real-estate taxes for five years, Draper said. Since then, the town has been able to maintain its budget without real-estate taxes, he said.