New Kent supervisors and officials hope to attract new businesses to the county with lower taxes.
County commissioner of revenue Laura Ecimovic brought two tax proposals to the board at its Nov. 28 meeting.
Ecimovic said in preparation for the 2019-2020 budget season, she has looked at the county’s tax rates and wants to reduce the machinery and tools tax rates so the county can be competitive.
“We have one of the highest machinery and tools tax rates in the state,” Ecimovic said. “We want to attract more manufacturing-type businesses here.”
The county’s current machinery and tools tax rate is $1.50 per $100 in assessed value, Ecimovic said she recommends lowering it to 75 cents or $1.
“Henrico County, who is our next-door neighbor, has the lowest rate in the state at 30 cents per $100 in assessed value,” Ecimovic said.
With Ecimovic’s new depreciation schedule and rates, the 75 cent machinery and tools tax rate lets the county have lower rates than Henrico over an estimated 21-year depreciation schedule.
The county’s depreciation schedule and rates range from 20 to zero percent over more than 11 years calculated, with the current depreciation rates ranging from 35 to zero percent.
“The $1 rate gets us competitive and has less of a burden on our businesses,” Ecimovic said. “But with 75 cents we will have one of the lowest if not the lowest rate in the state.”
The county would collect $122,000 less in taxes with the 75 cent rate, but both Ecimovic and Economic Development Director Matthew Smolnik think the lower taxes will be incentive for businesses to choose New Kent.
All of the supervisors agreed that the 75 cents rate will hopefully attract new businesses and help current ones, supervisor W.R. “Ray” Davis Jr. said he would prefer the $1 rate to stay competitive, but it’s not too low.
The supervisors approved (4-1) a motion for staff to prepare for a tax rate reduction of 75 cents for machinery and tools effective Jan. 1, 2019, with Davis voting against the motion.
Business property tax
Ecimovic also discussed lowering business property taxes for 2019.
With the state’s tax limitations depending on population size, Ecimovic said the county should consider amending the code to reflecting its growing size.
“We are growing more and more every year, we are currently just under 22,000 residents,” Ecimovic said. “The state’s code of tax limitations requires that populations over 25,000 but under 50,000 require a minimum threshold of $50,000 for business tax rates.”
Ecimovic said she thinks the Weldon Cooper Statistics study will report that the county population is more than 25,000 people. The study comes out in the end of January.
Ecimovic also wants to lower business license taxes and the overall business property tax rate, but keep the $30 fee for businesses that make less than $50,000 and more than $10,000.
The proposed license tax rates include decreases for contractors from 12 cents to 10 cents, retail business from 15 cents to 14 cents, wholesale businesses kept at 4 cents, service and miscellaneous from 27 cents to 23 cents, professional and real estate businesses at 44 cents to 32 cents and utility businesses kept at 42 cents per $100 assessed value.
The business property tax rate being proposed at $3.25 or $3, it is lower than the current $3.75 rate, according to Ecimovic.
Ecimovic brought it to the board for general discussion and consensus for the upcoming 2019-2020 budget season. The supervisors agreed they want to do something about the business property and license taxes and will take it into consideration.
If the county lowers the business license taxes it would lose $102,014 in business license revenue. If the business property tax rate was lowered to $3.25 the county would lose $72,870 in revenue and $109,304 if the rate was lowered to $3, according to documents prepared by Ecimovic.
Ecimovic said she hopes that lowering the taxes for both machinery and tools and businesses will bring more businesses and keep businesses in the county, as well as give the county a competitive edge over others.
Luck can be reached at 757-291-2038, firstname.lastname@example.org or @ashleyrluck on Twitter