The Elephant in the Room
Recently, I supported the one percent increase in Vienna’s meals tax because, quite simply, we need the money to maintain our capital assets. Even if we choose not to build a pool at the Center Street site, the town faces a significant shortfall in our capital improvement budget. Simply put, we need money to maintain and improve the town’s existing parks and recreation facilities, as well as our vital public works infrastructure. No one “likes” taxes, but this modest tax increase, in my opinion, was the least painful – and fairest – way to raise the funds needed to maintain the quality of governmental services that makes Vienna a great place to live. While this small increase may impose some pain on our restaurants, I believe that most of the costs will be passed on to the (largely out-of-town) public.
Vienna has largely bucked the national trend of dying commercial spaces. The town’s vacancy rate for commercial properties has hovered in the 2 to 4 percent range, compared to nearly 19 percent for commercial office space nationwide. Our ability to attract and keep businesses in town stems in large part, I believe, from ongoing investments in local government facilities and services that have made Vienna a great place to live. Local government officials across the state have asked me about why Vienna is so successful. I attribute a lot of that success to the foresight of my predecessors in Vienna town government, who supported public investments in facilities and government services, numerous public events, and safe streets. These investments in town events, infrastructure, and public services have added to Vienna’s desirability. That in turn makes people want to move here, which creates demand for local businesses.
Further, I believe that this modest increase in the tax burden is shared by residents, businesses, and non-residents. Based on traffic data, we know that a very large portion of our restaurant traffic comes from people who live outside the town. Regardless of where they come from, these customers pay the tax as an add-on to the bill. By my estimate, that tax increase equates to around 30 cents per household per day.
As an elected government official, I am constantly trying to assess our future financial condition, as well as our current condition. Recently, the town concluded the first ever Parks Master Plan. Among the most significant findings were: A) a high degree of satisfaction with the town’s offerings in parks and recreation; and B) the need for almost $25 million over the next 10 years to maintain our current park facilities.
As my former day job was in economics, I know that sales taxes are not always passed through completely to the final consumer; some or all of it, in some cases, will be borne by the seller (in this case, the Vienna restaurant owners). Given that, until now, our restaurants have been thriving (based on net restaurants operating) notwithstanding a significant tax disadvantage vis-a-vis their competitors just outside of town, as well as their demonstrated ability to pass along much greater cost increases in labor, food, and supplies in the past five years, I believe that our local eateries will be able to pass most, if not all, of the tax increases to the consumer.
To ease the burden on restaurants, we should look for ways to invest these additional funds in ways that will improve their businesses. That might include setting aside a certain portion for façade revitalization grants, making the W&OD visitor center a reality, and increasing economic development efforts.
Next up: The Affordable Housing Crisis
