WOODSTOCK — The Shenandoah County Board of Supervisors could ask voters in November how they feel about a local meals tax.
Supervisors need to decide this summer whether or not to ask a Circuit Court judge to put the question on the Nov. 5 election ballot.
County Administrator Evan Vass explained in an email Tuesday that a court must issue an order no later than Aug. 16 to place the referendum on a meals tax on the ballot. Supervisors hold their next regular meeting Aug. 1. State code requires that a court must issue such an order at least 81 days prior to the election date.
If the referendum fails, the county would need to wait at least three years to put such a question on the ballot again.
Vass gave his first formal presentation on a food and beverage tax to the Board of Supervisors last week. Supervisors did not appear to change their positions on a meals tax since the last time the board talked about the topic at a previous meeting. Most supervisors voiced support for the tax as a potential way to generate revenue and take some of the burden off of property owners.
Data show that Frederick and Warren counties collect millions of dollars in meals tax revenue each year, according to Vass’ presentation. Towns collect hundreds of thousands of dollars annually from meals tax.
District 5 Supervisor Dennis Morris recalled that previous efforts by the county to pursue a meals tax failed. Meanwhile, each of the county’s six towns imposed a meals tax. Morris added that at one time the supporters of the tax agreed they would earmark the funds for capital projects in the school system.
“I think the bottom line on this is diversification,” Morris said.
District 3 Supervisor Richard Walker said he saw no reason to earmark tax revenue for a specific purpose if it meant the county took funds from other areas.
Walker also expressed concern about increasing taxes while household income remains flat. The supervisor went on to say he would rather see, in the case of a meals tax, a sunset clause that would halt the levy until which time the county holds another ballot referendum on the subject.
Chairman Conrad Helsley pointed out that about 30 years have passed since the county last tried to pass a meals tax through a voter referendum.
District 2 Supervisor Steven Baker said the county needs to educate the public about meals taxes.
In accordance with Vass’ presentation, Virginia state code defines restaurant as any place where food is prepared for service to the public on or off premises. Cafes, cafeterias, lunchrooms, short-order places and taverns fall under the definition of restaurants.
Meals tax does not apply to:
• Food sold in vending machines.
• Food provided to people staying in boarding houses.
• Alcoholic beverages sold in factory-sealed containers.
• Factory cafeterias.
• Food provided by a restaurant to employees as part of their compensation.
• Food provided by nursing homes, hospitals and similar facilities.
• Food provided by daycare centers.
• Food provided to the elderly through programs such as Meals On Wheels.
The state treats volunteer fire and rescue departments, churches and educational, charitable, fraternal or benevolent organizations as nonprofit entities. The nonprofit organization must prepare and sell meals as a fundraising activity to qualify for an exemption from the meals tax.
Entities must use the money for a stated charitable, benevolent or educational purpose. If the entity meets the criteria, food and beverages sold the first three times in each calendar year are exempt. The tax takes effect at the fourth event in the same calendar year and on the first $100,000 of gross receipts, excluding gross receipts from the previous three events.
Virginia code allows cities and towns to establish a meals tax by adopting an ordinance following a public hearing. The state requires counties to first decide whether or not to put the question of establishing the tax on an election ballot as a referendum. If a majority of voters support the proposal, the Board of Supervisors would need to adopt an ordinance to establish the tax.
A meals tax would affect only establishments meeting the state definition and located in the unincorporated areas of the county, not those within each towns’ limits.
Towns in Shenandoah County charge the following levies and budgeted the revenue generated for fiscal 2020:
• Strasburg 6% $778,973.
• Woodstock 6% $1,520,280.
• Edinburg 6% $85,000.
• Mount Jackson 5.5% $398,000.
• New Market 6% $475,000.
The following counties levy a 4% meals tax and budgeted revenue for fiscal 2020:
• Frederick County $6.1 million.
• Warren County $1 million.
• Rockingham County $1.3 million.
• Page County $280,000.
The amount of revenue Shenandoah County could collect would depend on the rate set and sales. The county would put the money in the budget’s general fund. The Board of Supervisors would consider how to spend the money and earmark the revenue for specific purposes.