WILLIAMSBURG – City financial reports presented June 11 to City Council show a decline in meals tax revenue that could contribute to a potential budget shortfall in 2026.
Meals tax revenue for fiscal 2026 is up 6.7%, but the city’s financial report shows a 22.1% drop in April collections compared with the same month last year and a 1.5% year-to-date decline after adjusting for the tax increase. That puts collections at about 75% of the budgeted target, down from 82% at this point in 2025.
Last year, the City Council had voted to raise the meals tax 1.5%, bringing it to a total of 6.5%, as well as a 2% increase to the lodging tax and a 10% admissions tax. Taxes began collection on Feb. 1 after their adoption in January. In spite of this, only the meals tax is showing a lag in meeting the projected budget.
Chief Financial Officer Barbara Dameron said the city’s meals tax revenue could fall short of projections by roughly $300,000 to $350,000, though she noted the estimate could change as May and June activity is finalized and delinquent tax collections come in.
The graph in the presentation showed a steady decrease in how close meals tax was to meeting the budget since 2023, when it was at 91% at this time that year.
“It’s always interesting to see the variations in increases and decreases between room and meals, and there’s some obvious reasons not to make direct correlations to that, but I’ll certainly start eating out a little bit more,” said Mayor Douglas Pons after the report.
Old City BBQ owner Vernon Geddy IV said about 60% of his business comes from local customers.
“The city really didn’t consider the true effect it would have on a lot of places here in the city,” Geddy said in May when asked about the meals tax. “My locals, my customer base, they’re the ones getting affected here.”
“Operators like myself are beyond frustrated because I’m seeing the customers; I’m seeing customer counts go down, specifically places like lunch,” he said.
The next city council meeting is July 9 at 2 p.m. in the Stryker Center at 412 N Boundary St.
