Henrico County VA

Budget will propose meals tax, service cuts

UPDATED: 11:12 P.M. – Henrico County Manager John Vithoulkas will propose a two-year budget plan to the county's Board of Supervisors Tuesday that calls for a 4 percent meals tax and includes some service cuts.

Speaking Monday night at Varina District Supervisor Tyrone Nelson's community meeting at John Rolfe Middle School, Vithoulkas said that the meals tax proposal was necessary in order to close an $18.5-million budget shortfall in the coming fiscal year.

"We are going to have to diversify our revenue streams," Vithoulkas said. The meals tax, estimated to generate about $18 million annually, is "not a sexy conversation, but what it is is the truth," he said.

Despite the economic downturn in recent years, Henrico has avoided raising taxes, laying off any employees or reducing services. But, Vithoulkas said, "the budget I present. . . will not abide by all three of those premises. We are looking at a number of service level reductions."

Vithoulkas, who replaced the retiring Virgil Hazelett less than two months ago as county manager, did not elaborate Monday about what cuts he was proposing.

Should the board decide to proceed with a meals tax, it would need to schedule a public referendum on the issue and win a simple majority of votes in order to enact the tax. The county's first attempt at a meals tax failed by 153 votes in 2005.

Henrico officials had hoped that the General Assembly this year would grant them permission to implement a meals tax without voter approval – a right enjoyed by cities and towns in Virginia – but a proposal that would have granted that right died during the session. In total, 203 localities in the state – including 45 of 95 counties – have a meals tax. The City of Richmond has a 6 percent meals tax but its restaurant sales still outpace those in Henrico, Vithoulkas said.

County officials believe that about 40 percent of the revenue raised by a meals tax would come from residents of other jurisdictions. They prefer that option to a 6-cent real estate tax increase – which, Vithoulkas said, would impact all Henrico residents.
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