Sales tax bill developed over the course of several months

Examples of the email discussions that led to the sales tax legislation. (Wayne Elfman)

There was plenty of discussion about a proposed sales tax bill in the months leading up to its appearance in the General Assembly. That discussion didn’t take place in public.

Instead, the sales tax bill materialized in private meetings and correspondence between government officials, according to emails obtained by The Virginia Gazette through the Freedom of Information Act.

The sales tax bill introduced by Sen. Thomas K. “Tommy” Norment (R-James City) and passed by the General Assembly would increase the sales tax by 1 percent to create revenue for tourism marketing in the Historic Triangle. Half of the revenue would be used to market the area as a tourism destination for overnight visitors. The other half would be distributed to Williamsburg, James City and York based on where the revenue was collected.

The tax increase would create an estimated $24.5 million in fiscal year 2019 and $27.4 million in fiscal year 2020, according to the bill’s updated fiscal impact statement.

Some local officials, particularly those of Williamsburg and the Greater Williamsburg Chamber & Tourism Alliance, which would manage the funds earmarked for tourism, provided input on the bill, ranging from edits regarding specific language to suggestions on the structure of the alliance’s new committee to marshal the funds.

The first steps

On Aug. 9, the day before Williamsburg City Council voted to approve the Tourism Development Fund taxes, Norment aide Kalia Sokos arranged for leaders from the city, James City and York to meet Norment on Aug. 16, 2017, to discuss “regional cooperation on several issues,” according to an email sent by Sokos to Williamsburg Vice Mayor Scott Foster, Williamsburg Mayor Paul Freiling and City Manager Marvin Collins.

About a month later, on Sept. 18, 2017, Collins emailed Norment a white paper, or official report, which explored how a 1 percent surcharge to the sales tax would be used by the city.

“The concept was shared with City Council and all members agreed to its content,” Collins wrote. “Please let us know how the City of Williamsburg may assist you in advancing this initiative.”

Collins wrote that the effective date of the Tourism Development Fund had been delayed until July 1 to allow time for the region to discuss alternative revenue options for tourism.

City Council voted to adopt ordinances to raise the meals tax, room tax and create an admissions tax to fund tourism projects Aug. 10. The increase in room tax would eliminate the $2 transient occupancy tax currently being collected. Norment’s sales tax bill would also eliminate the $2 transient occupancy tax.

Collins wrote in an email to Foster and Freiling that both James City and York had provided similar studies to the senator’s office Sept. 19.

“(Norment) also asked each locality to submit a brief white paper demonstrating how this idea might work within its particular jurisdiction. The last page of the attachment is the document I provided him at the time and that I shared with you confidentially,” York County Administrator Neil Morgan wrote in an email to York supervisors Jan. 19.

James City Supervisors discussed their county’s white paper in early September, and expressed interest in the idea in emails with then-County Administrator Bryan Hill.

“If and when this is approved by the (General Assembly), I would request that we have a dedicated work session to decide how to allocate these funds,” Supervisor Sue Sadler wrote in an email to Hill on Sept. 18. She added that she would be interested in a reduced real estate tax rate pitched as part of the county’s study.

Williamsburg and York included exploration of an alternative funding method for tourism marketing in their respective 2018 legislative agendas, which are public documents that outline the localities’ wish lists for General Assembly legislation.

On Nov. 28, the James City Board of Supervisors discussed its legislative agenda with the county’s representatives in the General Assembly. According to meeting minutes, no discussion of tourism funding took place.

Though an alternative revenue source was discussed as an addition to the county’s legislative agenda in emails prior to the meeting, there isn’t mention of an alternative revenue source for tourism in the adopted legislative agenda for 2018. However, state funding for tourism through the Virginia Tourism Corporation is included in the adopted legislative agenda.

The city included alternative revenue options in its 2018 legislative agenda for tourism funding. According to the minutes of the Dec. 21 “Legislative Priorities Briefing” meeting, City Council and the city’s state representatives discussed the agenda item.

“The mayor inquired about the status of parity for tourism funding with York and James City counties. Senator Norment offered that there was some potential for action,” the minutes state. A video of the meeting isn’t posted to the city’s website.

York’s legislative agenda for 2018 includes an alternative revenue source for tourism, outlining a proposal similar to the sales tax bill concept. The agenda is posted on the county’s website.

“This relates to a meeting Mr. Morgan and (York Board of Supervisors Chairwoman Sheila Noll) and their counterparts attended recently in Sen. Norment’s office to conduct some very preliminary exploratory discussions about whenever there are other options that could be made available … that would allow a greater focus to be placed on funding for the tourism industry,” York Deputy County Administrator Mark Carter told supervisors at their meeting Sept. 5.

By early November, Karen Riordan, president and CEO of the Greater Williamsburg Chamber & Tourism Alliance, was exchanging emails with Collins, Morgan and Hill regarding a plan to increase funding for tourism as well as meetings to discuss the effort as she created a working paper destined for Norment. During this time, one of the email chain conversations among the trio carried the subject line “fiduciary oversight/tourism confidential draft.”

The pitch

Riordan emailed draft recommendations for an alternative revenue option for tourism investment to Norment’s office Nov. 15, 2017.

“Here is the letter with recommendations for Senator Norment to consider, as part of the draft your team is working on,” Riordan wrote in an email to Norment aides Nov. 15.

Riordan proposed a 1 percent sales tax surcharge in Historic Triangle localities. Half of the funds were to be allocated to localities to do what they wished. The other half would go toward tourism, 75 percent of which would be used for tourism marketing by the alliance. The remaining 25 percent would be allocated to tourism development and infrastructure, according to the letter.

On Jan. 18, Norment aide Zach LeMaster sent an email to “undisclosed-recipients” with draft legislation that would have created a half-percent sales tax increase, with 50 percent of revenue given to localities and 50 percent earmarked for marketing tourism.

Williamsburg officials jumped on the change in the sales tax increase, calling it insufficient.

“The 0.5 percent increase does not meet the desired funding outcomes,” Collins wrote in an email to LeMaster on Jan. 18.

The next day, Norment introduced a sales tax bill with a 1 percent increase to the sales tax in the Senate.

Norment and Sen. Monty Mason (D-Williamsburg) voted in favor of the bill when it passed the Senate Feb. 13. Dels. Brenda Pogge (R-Norge) and Mike Mullin (D-Newport News) voted against the bill when it passed the House Feb. 28. As of Tuesday afternoon, Gov. Ralph Northam hasn’t acted on the bill.

Discussion of the bill continued among officials after it was introduced in the Senate, with Morgan writing to Noll that he was scheduled to meet with Norment, Collins, Porter, Riordan and Colonial Williamsburg CEO Mitchell Reiss in an email Jan. 31.

The response

Collins called the bill’s process par for the course and informed by public feedback given as City Council weighed the Tourism Development Fund.

In the course of gathering information and crunching numbers, it’s not guaranteed the process will yield legislation.

“Is it real or not real?” Collins said. “You don’t know if a bill will be drafted or not.”

James City Board of Supervisors Chairwoman Ruth Larson said she attended a single informational meeting regarding potential revenue sources for tourism with Hill on Nov. 1, 2017. No discussion of the process of creating legislation was discussed, she said.

And while meetings between officials seek to put the pieces together, something has to be developed fully before being put forth for public review.

“You can’t talk about what you don’t have,” Collins said, likening the process to the city’s budget process, where there’s a period of departments making requests and revenue projections being created to create a full proposal that can then be reviewed by the public.

Collins drew a connection between discussions about the Tourism Development Fund and the sales tax bill, saying public feedback on the former, specifically public input that officials consider a regional solution or partnerships to fund tourism development, informed the concept behind the latter.

“We were responding to the public,” Collins said. “From the city’s standpoint, we’ve had a very long and complete process.”

The process by which the sales tax bill was introduced and voted on was typical, Noll said, adding that many bills are introduced and passed in the General Assembly without public comment.

“This is not unusual,” Noll said. “Think of all the bills introduced in the General Assembly.”

She also noted that Norment’s interest in a state-level solution to tourism marketing was born of the city’s Tourism Development Fund, which she considered a springboard, which was debated publicly, into the sales tax proposal.

The creation of legislation in Richmond has few opportunities for public input given the length of the General Assembly session and distance from the Historic Triangle, James City Supervisor John McGlennon said.

“It would fall short of expectations of many people, including my own,” McGlennon said of public comment opportunities, added that a proposal such as the sales tax bill would have benefited from public discussion that was lacking during the process.

Jacobs can be reached by phone at 757-298-6007.

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