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Bath will get piece of the pie
RICHMOND - It appears Bath County might receive part of the communication sales and use tax collected by the state on landlines, wireless, E-911 and cable TV. Bath had not been eligible for part of the fund even though county residents pay the tax.
Senate bill, SB 262, sponsored by Sen. Creigh Deeds passed the Senate, and an identical bill, HB 487, sponsored by Del. James M. Shuler passed the house. The bills add a line to the act creating the tax giving Bath the same percentage of the fund as received by Craig County.
Prior to Jan. 1, 2006, localities could enact local taxes on telecommunications. The state created a new statewide tax going into a non-reverting fund distributed to localities having a local tax on or before that date. Most cities and counties without an existing tax scrambled to create one before the deadline. Not so Bath.
"Bath County resisted," said Deeds from Richmond on Wednesday. Deeds feels the change to the law makes sense because it creates a uniform statewide distribution of the tax. However, he was surprised the change passed.
The Bath County supervisors asked Deeds and Shuler late last year to pursue the legislative relief necessary for Bath to receive part of the tax. At the time of the request, it appeared Bath was only asking for a return of taxes paid by local citizens.
The telecommunication tax collected by the state does not go into the state general fund. In the Fiscal Impact Statement prepared by the Department of Taxation for SB 262, the tax department notes the tax goes into a stand-alone fund distributed proportionately.
The tax department suggested an amendment, which was adopted as part of the senate and house versions of the bill. "This bill, with the amendment suggested by TAX, would have no impact on state revenues," said the impact statement.
Instead, the change to give Bath part of the fund will reduce the amount paid to other localities. Deeds said it is like "squeezing a tube of toothpaste." There is only so much money in the fund, already 100 percent allocated. The change to the law raises the allocation to 100.027631 percent.
To adjust the fund so enough money is available to pay Bath, each localities' share will be reduced so that total distribution is 100 percent. The reduction to each locality will be about 0.028 percent.
Based on the January to June 2007 estimates, Bath would receive $56,784 from the fund. This will cost the other counties an average of $348, each city an average of $578 less and each town $15 less.
However, the impact will be spread based on the actual proportion each locality will receive. For instance, Fairfax County will receive approximately $11,000 less out of approximately $38.9 million received.
Deeds was surprised both the house and senate voted unanimously to support the change since it takes a bite out of local pockets. Just the same, he feels the change is good. Every locality paying in should be getting something, he said.
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