Saturday, August 13, 2022

City Council approves $3.2 million tourism tax hike

City Councilor's voted 3-1 to approve a tax hike to pay for a tourism development fund. (Steve Roberts, Jr./WYDaily)
City Councilor’s voted 3-1 to approve a tax hike to pay for a tourism development fund. (Steve Roberts, Jr./WYDaily)

Williamsburg city councilors have approved a tax increase to fund tourism projects within city limits. Taxes on meals, lodging, and admissions are going up.

Councilors voted 3-1 Thursday afternoon to approve the “historic” tax increase, which the city projects will add $3.2 million annually to its coffers. The increase creates a 3.5 percent tax on admissions and hikes taxes on meals from 5 to 6.5 percent and lodging from 5 to 7 percent.

The tax hike will raise nearly $4.5 million, but the total tax increase will only be about $3.2 million as net increases in the lodging tax increase will be offset by $1.3 million to pay the Williamsburg Area Destination Marketing Committee.

“Tourism is what keeps Williamsburg going, it’s our economic engine,” Councilwoman Barbara Ramsey said. “We looked at various cities…and so we looked at how they were doing things and came up with this model.”

Mayor Paul Freiling recused himself from the vote due to his work at the Colonial Williamsburg Foundation — one of the many institutions in city limits affected by the increase.

The tourism tax hike will increase taxes on dining at restaurants from 5 percent to 6.5 percent and create a tax on admission tickets to Colonial Williamsburg, Ripley’s Believe It Or Not!, and the Movie Tavern.

Mickey Chohany, owner of the Second Street Bistro, voiced concerns on behalf of the the Williamsburg Area Restaurant Association, calling the proposed tourism development fund the “too damned fast” tax. (Steve Roberts, Jr./WYDaily)
Mickey Chohany, owner of the Second Street Bistro, voiced concerns on behalf of the the Williamsburg Area Restaurant Association, on Aug. 3 calling the proposed tourism development fund the “too damned fast” tax. (Steve Roberts, Jr./WYDaily)

Councilor Benny Zhang, the lone dissenting voice, remained unconvinced the tax increase would benefit the city.

“I would like to see a long-term spending plan that we can move forward with that gives a highly specific direction for the tourism development fund,” Zhang said. “By doing this before adoption…it has a stakeholder buy-in that includes our taxpayers…if they can’t buy into this vision, it’s certainly a problem for me to consider approving this fund.”

The city has said it will use the revenue to make a “generational investment” in tourism infrastructure.

The goal of the fund would be to pay for things as varying as recreational facilities to business improvement grants and regional trails, City Manager Marvin Collins explained in a presentation to City Council April 10.

“People in different elements of the community were asking for increased resources and city participation on projects,” Collins said of the tax. “There was a general feeling of the need to expand the tourism base and increase the gain of that impact on our community.”

The fund was first discussed at a council retreat in January. In April, the city claimed the proposal was in an “ideas phase,” but two months later the fund appeared on City Council’s agenda.

City Councilors heard an earful from city residents, business owners, and nonprofit officials who spoke against the proposed tax hikes to pay for a tourism development fund. (Steve Roberts, Jr./WYDaily)
City Councilors heard an earful from city residents, business owners, and nonprofit officials who spoke against the proposed tax hikes on July 8. (Steve Roberts, Jr./WYDaily)

The tax hike vote was delayed several times as city council tried to pin down just how much they wanted to increase the tax.

Councilman Doug Pons, a proponent of the measure, indicated in June he preferred a higher tax increase, which would have brought in nearly $4.4 million.

Months of public outcry against the tax increase did not stop it from taking effect. Many business owners, the Greater Williamsburg Chamber and Tourism Alliance, Americans for Prosperity, Colonial Williamsburg officials, and even State Sen. Tommy Norment have taken issue with the measure.

Most recently, restaurateurs met on Aug. 3 to discuss their concerns with the speed and cost of the city’s proposed tourism development fund.

Mickey Chohany, owner of the Second Street Bistro, voiced concerns on behalf of the the Williamsburg Area Restaurant Association, calling the proposed tourism development fund the “too damned fast” tax.

“It’s not the right decision to move forward on this,” Chohany said. “It’s been moving way faster than anybody would like it to, and that’s a reoccurring thing we’ve all heard.”

While the vote Thursday finalized a tax increase on meals and admissions, a tax hike on lodging may still be forthcoming. City council asked city manager Collins to advertise a public hearing for next month on a lodging tax increase.

The tax increase for meals and admissions will come into effect July 2018.

City Attorney Christina Shelton said at the meeting the council could not legally increase the lodging tax by the three percent they wanted at Thursday’s meeting until they advertise the lodging tax increase.

Councilors are scheduled to discuss increasing the lodging tax by an additional one percent — from five to eight, versus seven — at their Sept. 14 meeting.

“There’s been lots of good points made on both sides of the conversation,” Pons said. “Taxes are not easy. Doing this tax helps us move this destination forward like we haven’t before.”

WYDaily archives were used in this story.

Correction: An equation used for a previous version of this story used the figure of a 2 percent increase in meals tax, which resulted in a total tax hike of $3.9 million or $700,000 higher than the measure city council passed. The article has been updated to reflect councilors amended the meals tax increase from 2 to 1.5 percent. 

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