House Bill 2285's Senate Finance Committee substitute passed both the Senate and House of Delegates today in Richmond. The bill would allow certain tourism projects to be rebated 1% of the state Sales Tax generated, as well as 1% local Sales and Use Tax or it's equivalent, as a means of financing up to 20% of the project.
The newspaper story on the bill drew a myriad of negative comments on Pilotonline (including, of course, the VBTA Vice Chairman). Given the ire in some quarters over the bill, I wanted to blog on it.
First of all, the bill states specifically that the rebated revenues are from tax collections from sales on the premises of the new facility. Obviously without the new facility being built, there would be no revenue to rebate. Therefore, it's not taking money away from anything.
The Senate substitute lays out a clear procedure for obtaining such funds. First, the local governing body (in our case, the Virginia Beach City Council) must create a tourism zone, in which tax abatements are possible. Second, the locality must file a Tourism Plan with the Virginia Tourism Authority. The Plan must meet state requirements and include the project seeking funds. Third, the state Comptroller must certify that it is a qualifying project.
Quarterly the Commissioner of Revenue certifies the amount of taxes from said facility. He then transmits such to Richmond, where the state Comptroller then rebates the state share to the business.
Yes, the process is somewhat convoluted, and I never would have wrote a bill looking like that. However, the multiple participants (City Council, state government, and Commissioner of Revenue) should help alleviate concerns by some of government running amuck. There are checks in this process.
What does it mean for Virginia Beach? For starters, the Dome site entertainment venue probably becomes a reality. The holdup has been over covering the funding difference with financial markets tightened. This bill should close the gap. Given that Dome site redevelopment has been the #1 priority of the Resort Area business community since late 2005, there will be plenty of happy campers at the Oceanfront.
Granted, tourism tends to produce lower-paying jobs. However, trying to get out of The Great Recession, tourism is an easier segment to stimulate. Given some work or no work, most people will take the tourism job.