Meals Tax

Fairfax Education Association President Kimberly Adams, left, a member of the Fairfax County Council of PTAs, holds a sign along with others urging the Board of Supervisors to put a proposed meals tax on the ballot for voters.

Fairfax County voters will decide whether to authorize a meals tax when they head to the polls on Nov. 8. The Fairfax County Board of Supervisors approved a proposal to add the referendum to voter ballots during its June 7 meeting.

If voters pass the referendum, a 4 percent tax would be levied on prepared food and beverages, including alcohol, in Fairfax County starting with Fiscal Year 2018.

“This is going to be a heavy lift. There are several sides to the issue,” said Mason District Supervisor Penny Gross, who chaired the board’s discussion after Chairman Sharon Bulova started the motion. “Let’s ask the voters to decide, and I’m willing to live with what they decide.”

The motion to place a meals tax referendum on the election ballot passed the board by an 8-2 vote.

The possibility of a county meals tax has cropped up regularly during the Board of Supervisors’ budget discussions over the past several years as many have argued the need for an additional source of revenue to fully fund Fairfax County Public Schools (FCPS) and other county services.

While many cities and towns around or in Fairfax County already have meals taxes, including the towns of Vienna, Herndon and Clifton, Virginia law requires that counties in the state pass a referendum in order to establish a meals tax.

Fairfax County previously had a meals tax proposal on the ballot in 1992, when the referendum failed to pass.

This current attempt to levy a meals tax began on Apr. 22, 2014, when Bulova urged the Board of Supervisors to form a task force to explore the issue. The task force presented its final report to the board on June 17 of that year.

The issue of a meals tax has proved divisive among Fairfax County residents and even on the Board of Supervisors. Springfield District Supervisor Pat Herrity in particular came out in strong opposition to the tax during the board’s June 7 meeting.

Because in Virginia, only a court can officially order a voter referendum, the Board of Supervisors vote was technically to pass a drafted resolution that will be presented to the Fairfax County Circuit Court in order to request a referendum.

The Department of Management and Budget estimates that a meals tax would generate $99 million in its first year.

The resolution approved by the Board of Supervisors for the circuit court states that 70 percent of that revenue would be dedicated to FCPS. The county would use the remaining 30 percent for various other services, capital improvement projects and property tax relief.

However, several supervisors expressed skepticism Tuesday about whether that revenue split would be the best course of action, questioning the emphasis on funding for schools over other services.

Hunter Mill Supervisor Cathy Hudgins proposed that the board defer its vote on the referendum resolution until its June 21 meeting so that the supervisors can have a more detailed discussion with Fairfax County School Board members about how FCPS would use its additional funds.

The Board of Supervisors and School Board have a joint retreat scheduled for June 14.

“I believe [education] is important for everybody,” Hudgins said, noting that she will ultimately advocate for the meals tax. “I also believe in all of the services that families need to support the educational attainment of their children, and we do not support that as well as we can.”

Hudgins’s motion to defer failed by a 4-6 vote.

Supporters of a meals tax argue that the county needs to diversify its revenue streams with federal spending in the area decreasing and real estate taxes rising. Fairfax County’s real estate taxes currently stand at $1.130 per $100 of assessed value, an increase over $1.090 in 2015.

FCPS advocates in particular say that inadequate funding has made it difficult for the school system to address basic needs, such as paying teachers a salary that would keep the county competitive with nearby jurisdictions.

Finding new sources of revenue has become a challenge for Fairfax County, because the state limits or controls the county’s non-property tax revenues and prohibits the county from imposing taxes on products such as alcohol without General Assembly approval.

The General Assembly also frequently spends Fairfax County residents’ tax dollars in other parts of Virginia, argued Lee District Supervisor Lee McKay, who noted that the county is in the top 10 areas in the state when it comes to personal income but the bottom 10 for investment in education.

“We have to come up with revenue to help our own residents,” McKay said. “We have a moral obligation. We’re not going to stop funding schools, police, human services because the state won’t do their job.”

Opponents of a meals tax, however, say that the tax unfairly singles out the restaurant industry and adds to the financial burden that taxpayers already have to carry.

Herrity, the tax’s most vocal opponent on the Board of Supervisors, proposed an amendment that would change the phrasing of the board’s resolution to “an additional tax on prepared food and beverages.”

Northern Virginia has a 6 percent state and local sales tax rate, up 0.7 percent from the general rate applied to the rest of the state.

“It targets a specific industry, an industry that does so much for our schools and community and provides jobs and careers to so many of our residents,” Herrity said when explaining his opposition to the meals tax. “It’s a regressive tax that impacts those who can least afford it, and it’s not the answer to our standing problems.”

Those in the restaurant industry, many of whom were present in the audience during the board meeting, argue that, while a meals tax would apply to tourists and travelers, it would still have a significant effect on Fairfax County residents, particularly if they are low-income or working parents who rely on prepared food to save time.

They also say that the tax could affect the success of existing restaurants, especially small or new businesses, while creating a disincentive for ones considering a move to the region to locate in Fairfax County.

“A single-industry tax is unfair and not broad enough to really affect the county budget in any way,” Claude Anderson, a Fairfax resident and restaurant manager, said. “It’ll affect our businesses. It’ll affect our employees and also the jobs of some of our employees.”

Anderson suggested that the county look into a broader service industry tax instead of focusing just on meals.

Jon Norton, the CEO of Great American Restaurants, which operates several restaurants in Fairfax County, including multiple Costal Flats and Sweetwater Tavern branches, expressed disappointment with what he sees as a lack of transparency from the Board of Supervisors.

Norton says that he wishes the board passed Herrity’s amendment, which failed by a 3-7 vote, and he also thinks that the public needs more specifics about where the money from a meals tax would go in order to make a good decision when voting on the referendum.

“It seems like they’re trying to share that it’s going to go to a certain place, but who knows where the money’s going to actually end up?” Norton said.

In order for the meals tax referendum to officially end up on the Nov. 8 ballot, the circuit court will have order a referendum election by Aug. 19, and the clerk of the court would then publish notice of the election sometime in September or October.

If the referendum passes, the Board of Supervisors would hold public hearings on the meals tax in early 2017 and adopt an ordinance establishing the amount and terms of the tax in February 2017.

For now, though, the question of a countywide meals tax falls to voters.

Fairfax Education Association president Kimberly Adams attended the board meeting, because she thought it was important that the Board of Supervisors give voters the opportunity to express their opinions.

While the Fairfax Education Association focuses specifically on schools, Adams says that she was glad Hudgins and other board members emphasized that the need for more revenue for Fairfax County extends beyond the school system.

“Our entire county as a whole needs to support more of our human services and capital improvements to keep Fairfax County the world class place it is to live, work and play,” Adams said.

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