Philippi City Manager Presents B&O Tax Impact Following University Closure

In a presentation to the City Council, Philippi City Manager Jeremy Drennen shed light on the concerning financial implications of the closure of Alderson Broaddus University last summer, particularly on the Business and Occupancy (B&O) taxes and its subsequent impact on the city's general fund.

Drennen opened his presentation by addressing the limitations in the data available for analysis, stating that they were only able to review the B&O tax data for the period between October and December. Despite the constrained timeframe, Drennen highlighted a noticeable 6% declining trend in B&O tax revenues during this period.

The City Manager expressed his reservations, emphasizing that the actual loss in B&O taxes might be greater than what the current data suggests. He also added that the budget is due to the state by the end of March 2024, leaving the city with only one quarter's worth of data to evaluate when making budget decisions.

Drennen explained that the city had anticipated a more significant loss in B&O taxes, but the observed 6% decline was attributed to rising inflation costs. Given that the B&O tax operates as a gross receipts tax, the more consumers pay, the higher the tax the city receives. In this context, the apparent anomaly raised concerns about the city's ability to accurately project future revenue and plan accordingly.

The total projected loss to the General Fund is expected to be around $50,000. Breaking down the projected losses, the B&O taxes are expected to take a hit of just under $30,000. In addition to this, utilities are projected to incur a loss of under $17,000, while the municipal fees are facing a shortfall of around $2,700.

The closure of Alderson Broaddus University has evidently created a ripple effect on Philippi's financial landscape, and the City Council now faces the challenging task of navigating these economic uncertainties. As the budget deadline approaches, decisions made in the coming weeks will undoubtedly shape the city's fiscal future.