The General Assembly voted to approve Gov. Ralph Northam’s amended sales tax bill, enacting it as law and clearing another hurdle for the sales tax hike to take effect.
The governor’s amendments to Senate Bill 942 exempts groceries from the tax and retains the $2 transient occupancy tax currently used to market the region’s tourist attractions. The version of the bill initially passed by the General Assembly would have made groceries subject to the tax and would have eliminated the $2 transient occupancy tax.
Williamsburg City Council must repeal tax increases to transient occupancy, food and beverage and admission taxes as part of the city’s Tourism Development Fund to put the sales tax increase into effect. The act expires if City Council doesn’t repeal the Tourism Development Fund ordinances by Jan. 1, 2019. The sales tax increase would take effect 30 days after repeal of the ordinances.
Both the Senate and House of Delegates agreed to the governor’s amendments Wednesday, according to the state’s online legislative information system.
Twenty-eight senators voted in favor of the governor’s amendments and 11 senators voted against them. Both Sens. Tommy Norment, R-James City, and Monty Mason, D-Williamsburg, voted yes. Norment introduced the bill.
“I think that was distasteful to a lot of people,” Mason said, referring to the proposal to tax groceries.
The amended legislation is a compromise, one that rearranges the tax burden to be borne less by local residents and more by tourists, Mason said.
“I was very pleased that the governor worked with us all,” he said. “I think this will be a good thing longterm.”
The House of Delegates voted 70-26 to adopt the amendments. Dels. Brenda Pogge, R-Norge, and Mike Mullin, D-Newport News, voted no.
“A no vote is really a no vote on the entire premise,” Pogge told the Gazette when asked on April 10 how she intended to vote.
Mullin and Norment didn’t respond to multiple requests for comment.
The sales tax bill would increase the sales tax by 1 percent in Williamsburg, James City and York counties to generate funds for tourism marketing. Half of the revenue would be allocated to the Greater Williamsburg Chamber & Tourism Alliance, which would use its share of funds to market the region to overnight tourists. The other half of the funds would be allocated to localities based on where the sales tax was collected.
The sales tax hike was estimated to generated $24.5 million in fiscal year 2019, according to the fiscal impact statement of the bill that originally passed the General Assembly in February.
James City’s proposed budget projected $5.5 million in revenue from the sales tax increase based on the bill as it was originally passed by the General Assembly. Exempting groceries from the tax would eliminate $1 million, while retaining the $2 transient occupancy tax would provide about $400,000.
Williamsburg expected $2.2 million due to the sales tax bill as originally passed by the General Assembly, according to its proposed fiscal year 2019 budget.
Exempting groceries would leave the city with $1.9 million in sales tax bill revenue. Retention of the $2 transient occupancy tax would provide $565,000, city spokeswoman Lee Ann Hartmann wrote in an email
The sales tax bill’s revenue wasn’t factored into York’s proposed budget, county spokeswoman Gail Whittaker said.
In 2017, Williamsburg, James City and York contributed $3.2 million through the $2 transient occupancy tax to the alliance’s Williamsburg Area Destination Marketing Committee.
Staff writer Rodrigo Arriaza contributed to this report.
Jacobs can be reached by phone at 757-298-6007.
3 p.m., April 20: This story was updated with additional information.
11 a.m., April 19: This story was updated with how Williamsburg area legislators voted.
This story as originally published 3:05 p.m., April 18.