Meals Tax

Clyde’s Restaurant Group corporate operations manager Claude Andersen looks on as his fellow panelist, Fairfax County Council of PTAs President Kimberly Adams, lays out her argument in favor of a meals tax.

As storm clouds gathered across Northern Virginia, a different kind of charged atmosphere brewed in a meeting room on the second floor of the South County Center in Alexandria on Sept. 28.

The Mount Vernon Council of Citizens’ Associations (MVCCA) invited two panelists – Clyde’s Restaurant Group corporate operations manager Claude Andersen and Fairfax County Council of PTAs (FCCPTA) president Kimberly Adams – along with two Fairfax County supervisors to discuss a potential county-wide meals tax, which will be decided by voter referendum on Nov. 8.

Though MVCCA budget and finance committee chair and moderator Matt Bell kept the event under control, the polarizing nature of this particular issue and the passion felt by both proponents and opponents of a meals tax were evident.

Many attendees sported colored stickers on their shirts (green for “yes” to a meals tax, red for “no”), and spontaneous applause and laughter sometimes broke out during the debate.

Both sides claimed to represent the interests of all Fairfax County residents, with particular emphases on families and those in economic need, but they differed on how a potential meals tax would affect local businesses and how much it would help alleviate the county’s budget issues.

The Fairfax County Board of Supervisors approved the addition of a referendum on a 4 percent meals tax on prepared food and beverages to the Nov. 8 ballot by an 8-2 vote at its June 7 meeting.

According to a rundown of the upcoming ballot prepared by the League of Women Voters of the Fairfax Area that was distributed at the MVCCA meeting, 70 percent of the revenue generated by a meals tax would go to Fairfax County Public Schools (FCPS), while the remaining 30 percent would support other county services, capital improvements, and property tax relief.

Andersen, who owns and operates two restaurants in Fairfax County, argued that a meals tax would negatively impact the local restaurant industry as well as senior citizens and low- and middle-income families.

According to Andersen, a new tax would make it harder for many restaurants to stay in business by potentially warding off customers and cutting into already-narrow profit margins, since he says restauranteurs nationally make about 3 to 4 percent on their bottom line.

He also criticized the referendum as vague in defining how exactly FCPS and the county would use the money they get from a meals tax.

“Eventually, it will result in a loss of jobs due to restaurant closings and layoffs,” Andersen said of the proposed meals tax. “That is certain to happen, and we will lose our local, home-grown restaurants and end up with a lot of national chains that do not contribute to the community or care about any local issues.”

On the other side of the issue, Adams argued that the tax is necessary to address ongoing budget woes for the county’s schools and other essential services, such as public safety, health and human services, and parks and recreation.

Fairfax County officials estimate that a 4 percent tax would generate approximately $96 million in revenue per year.

Noting that Fairfax County is expected to face a $200 million budget shortfall, Adams says the meals tax revenue would help make up for that gap while providing an alternate revenue source to the real estate tax, which accounts for nearly 65 percent of the county’s revenue and increased from $1.090 to $1.130 per $100 of assessed value from 2015 to 2016.

Fairfax County’s “structural revenue problem,” as Adams calls it, has particularly raised concerns among advocates for FCPS, who argue that the school system needs more money to keep teacher salaries competitive, control class sizes and otherwise maintain the quality of the county’s public education.

“This is about us,” Adams said. “We choose to eat out. We choose where to eat out, and a meals tax rarely affects where we choose to eat.”

If Fairfax County adds a meals tax, it would join the towns of Vienna and Herndon, which have a 3 percent tax and a 2.5 percent tax, respectively, along with Arlington County and the cities of Alexandria, Fairfax, Falls Church and Manassas, which all have a 4 percent tax.

Loudoun and Prince William counties have no meals tax, though Loudoun County has a 2.5 percent sales tax on food items purchased for home consumption.

Opponents of a Fairfax County meals tax argue that it would essentially put a 10 percent tax on prepared foods and beverages, since the county is already subject to a 6 percent sales tax levied by the Commonwealth of Virginia.

“It would put us in a less competitive situation,” Andersen said. “I think that tourists, conventions, meeting planners would notice the difference and quite easily book just across our borders.”

Adams noted that, unlike the 6 percent sales tax, which goes to the state, the revenue from the proposed meals tax would go entirely to Fairfax County. A meals tax is also one of the few options for a new revenue source available to the county, which needs to get General Assembly approval in order to impose taxes on other products, such as alcohol.

Andersen and Springfield District Supervisor Pat Herrity, who spoke against the meals tax following the panel, suggested that improving Fairfax County’s commercial tax base and finding ways to be more efficient with the funds that are already available would be better solutions to the county’s financial issues.

“We have a spending problem, not a revenue problem,” Herrity said, noting that no jurisdiction in Northern Virginia has ever passed a meals tax by referendum.

Mount Vernon District Supervisor Dan Storck countered that, while Fairfax County needs to continue to petition the state for more money, it can’t ignore existing and immediate budget problems.

“Our state is in the bottom 10 in funding education, and we’re the 12th richest state in the country. There’s a huge disparity there,” Storck said. “We spend so much of our county budget on school and education, not because we have a choice, but because we don’t.”

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