Unless language is altered in a law passed by the General Assembly last year that restricts localities from taxing certain foods, Manassas stands to lose about 14 percent of its $1.7 million meal tax revenue, city officials said Monday at a meeting in which they outlined their proposals for the next legislative session in Richmond.
Dubbed the "7-Eleven Bill," the law essentially redefines what can and cannot be taxed, as well as what constitutes a meal, said John P. Grzejka, the city's commissioner of revenue. As the law is written now, a hot dog and soda purchased at a convenience store or supermarket could not be taxed locally. The state's meal tax is either 4 percent or 4.5 percent, depending on the items bought. In Manassas, the local meal tax is 4 percent, bringing the total to 8 percent or 8.5 percent.
City staff have proposed changes to the law, which took effect July 1, to lessen the revenue loss to local governments--estimated at $240,000 annually for Manassas. If the changes are approved, packaged and unpackaged sandwiches, salad bar items and non-factory sealed beverages, such as fountain drinks, would continue to be taxed. That would include salad bar items at supermarkets and hot dogs from stores such as 7-Eleven.
"Should a hot dog and a Coke at 7-Eleven be considered a meal?" asked City Attorney Robert W. Bendall. "It's been prepared. Maybe you walk out and put ketchup and mustard on it, but it's heated. The ice is prepared, and the cups are there."
City Council members will meet Friday with state Sen. Charles J. Colgan (D-District 29) and Del. Harry J. Parrish (R-District 50) to review the city's legislative goals. The General Assembly convenes Jan. 12.
City staff also discussed on Monday a plan to encourage lawmakers to reject a proposal from the state tax commissioner that would redistribute tax revenue generated by companies that do business in Manassas but whose operations aren't based in the city.
Specifically, council members said, some out-of-state companies use various codes when selling catalogue or Internet-based products so that the merchandise is virtually untraceable, leaving officials unsure of its delivery location. When that happens, revenue that would have have otherwise been distributed to the area where the goods were delivered is instead deposited into a general fund. The fund is then distributed around the state.
Grzejka said the state is proposing to change the formula, which would result in a nearly $600,000 loss for Manassas in 2004. The state's recommendation would redistribute the majority of the money to southern Virginia.
The city also applauded efforts by Gov. James S. Gilmore III (R) and the 1999 General Assembly to return lottery proceeds to localities for school construction and other educational purposes. City schools received about $1 million this year and expect a significant amount for the next fiscal year.
Other items on the city's legislative agenda include the pro-rating of personal property taxes for residents who move during the year, implementing more cameras at intersections to catch motorists who run red lights and supporting legislation that would allocate state and federal funding to fee-based day-care services for low-income working families.