Windle's Winchester Wrap-up

April 24th, 2024

• April 23, 2024 - City Manager presents FY 2025 Proposed Budget; City Council Public Hearing, Second Reading and Adoption of Real Estate Tax Rate Ordinance

• May 14, 2024 - City Council First Reading of the FY 2025 Budget Ordinance Public Hearing,
• May 28th, 2024 - Second Reading and City Council Vote on FY 2025 Budget Ordinance

City Council meets the second and fourth Tuesday of every month at Rouss City Hall at 6pm.

At the April 23rd meeting, City Council voted 6-3 to raise the meals tax a half of a percent. The tax was currently on pace with the state average of 6%, although this figure is significantly higher than localities within an hour of the city, outpacing not just Frederick County, but also localities in NOVA like Leesburg and Alexandria.

A basic principle of economics is incentives: if you want more of something, incentivize people to do it. If you want less of something, tax it.

Tax policy impacts the behavior of people and businesses alike. Just as the bag tax is used to change people’s habit of relying on plastic bags, businesses respond to tax policies in a myriad of ways. Some are creative, like White Claw and Truly circumventing the distilled spirits excise tax by fermenting sugar instead. Others are not so inspiring, like choosing to pass down a tax in the form of price increases or moving their business into more tax-friendly areas altogether.

Prices are incentives. A rise in the price of goods results in a disincentive for consumers to purchase that good or service.

I did not vote to raise the meals tax because raising a tax does not solve a problem, it creates one. Raising the meals tax puts a burden on businesses and limitations on consumers. Localities have to find the sweet spot where rates generate needed revenue without tipping the scales. With the approval of raising the rate of the meals tax, we now move above the state average.

According to the Tax Foundation, meals taxes “place local restaurants at a competitive disadvantage, and fail the ‘benefit test’ of public finance, where the cost of a tax is incurred by those receiving the services funded by that tax” (2017).

I also opposed this item because at this time, we still have not been provided an itemized budget. I cannot confidently say if there is or is not room in the budget to satisfy the needs of the city.

There was a time when I was in favor of raising the meals tax. Since then, I have learned more about tax policy and the impacts on the business sector. I also have seen the compounding effect of our legislation on the businesses in the city. I also have learned how the restaurants, in addition to paying state and local taxes, have to pay the credit card fee to collect the tax to remit to the city.

As a former teacher, I am keenly aware of the need to fully fund schools. However, I would like to see that done without continuing to place the burden on the business sector.

References:

https://www.econlib.org/library/Topics/College/incentives.html

https://taxfoundation.org/research/all/state/punching-meal-ticket-local-option-meals-taxes-states/

A new in-house City Attorney is forthcoming (pending budget approval). The budget for this department would change from $250,000 to $354,300.

On April 23rd, a motion to remove this item from the budget and maintain our current structure failed 5-4. I voted in favor of continuing the search that is already in motion for an in-house city attorney because with a growing city, we need full-time legal support.

The April 9th meeting saw record attendance and public comment from supporters of The Laurel Center. For over an hour, residents and members of the surrounding community, including our Sheriff, spoke about the invaluable service that they provide. They came to City Council to utilize public comment because, despite requests, they were not offered a seat at the table to formally present their budget request.

In March, I toured the center and was amazed that I did not know the extent of the operations that take place there. I was inclined to support their request, but not without doing my homework.

One common lip service that the city spouts is that they "do not fund non-profits." I am not inclined to call out the list of non-profits that receive direct and or indirect financial support from the city because I do not want to pit these organizations against each other, but I will plainly say: this is not true. We fund them. We support them. We used American Rescue Plan (ARPA) funding and general funding to do so. I love our non-profits and I believe that they deserve support in return for the value that they provide to our citizens. As city councilors, we have the difficult decision as to what that looks like.

I made a comment in our discussion of the budget at that meeting that I would like to see us move funding from the new, city created non-profit, The Main Street Foundation, redirected to The Laurel Center. While I love our downtown community, it seems disingenuous to say "we don't fund non-profits," and "we're on a hiring freeze" when we are creating, funding and hiring for a new non-profit. My suggestion was not supported, and as I am just one of the nine members of the body, it did not move forward.

Councilor and Candidate for Mayor, Les Veach and I working at Kiwanis Pancake Day

In early April, City Council held a training on Robert's Rules of Order with author of "Jurassic Parliament," Ann Macfarlane. Macfarlane affirmed that under Robert's Rules, items should not be tabled to a later date and that items that were tabled were essentially dead. We continue to "table" despite this recommendation. I voted not to renew the motion of People Inc. because I find it to be procedurally inconsistent with Roberts Rules and setting poor precedent for the future.

A resolution approving People Inc. as a community action agency passed 7-2 on April 23rd. Community action agencies have power to leverage state and federal grants that are typically greater than those of local nonprofits. One of their main funding sources is Community Block Grant (CDBG) funding, which the city has the staff and capacity to apply for as well.

I was hesitant about this item, but I wanted to move to support it. However, I found that the majority of my questions went unanswered. For example, it is still unclear what percentage of each dollar goes to the mission of fighting poverty as compared to funding the salaries of the executives of the organization. What other community action agencies should we have considered before jumping into partnership with one? Why had members of my community expressed that they had no success in securing small business loans from People Inc?

I commented at the meeting about the inappropriate nature of the "Meet & Greet" that People Inc. hosted between its original introduction in February and now. Let me elaborate: If a developer has an item on the agenda, we would think it inappropriate if he or she hosted a meet and greet for city councilors to come learn more about his or her proposal. The same concept carries over here. While it was a nice gesture of outreach, the timing and nature of this was, in my opinion, not germane with how business should be handled.

The final nail in the coffin for me was the continually revolving MOU which renews yearly without a review process. Don't you wish your boss never had to review your performance before issuing you a contract? Government can learn a lot from business, but unfortunately we chose not to do so.

I voted against this item, but if the partnership turns out to be a resounding success, I will gladly admit that I was wrong. Only time will tell.

Sincerely,

Emily Windle