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Supervisors weigh raising machinery-and-tools rate after large taxpayers' losses shrink revenue
Summary
Isle of Wight supervisors reviewed regional machinery-and-tools (M&T) tax rates and recent revenue losses after large taxpayers reduced assessed equipment. County staff presented effective-rate comparisons and cautioned that raising the M&T rate could deter manufacturers while generating limited revenue.
County staff presented a regional comparison of machinery-and-tools tax rates and told supervisors that a recent closure and equipment removals from large local taxpayers will reduce next year’s M&T revenue.
Randy Keaton, county staff member, summarized the school system and county budget context then introduced a table compiled by staff that showed Isle of Wight’s nominal M&T rate at $1.95 with an effective rate of about $0.78. "So if you look at the final column on the right, it shows the what the effective rate is based on the depreciation rate," Keaton said; he noted Isle of Wight uses a 40% depreciation ratio to calculate effective rates.
Staff and supervisors discussed the effect of the Green Mountain facility closing. A county staff member reported Green Mountain’s contribution was about $875,000 in taxes last year and that an additional falloff from other top taxpayers (including Smithfield Foods and International Paper) could produce an estimated $1.2 million reduction across those accounts in coming years.
Board members and staff framed the policy trade-offs: a modest M&T increase could raise revenue and help diversify the tax base, but supervisors said manufacturers consider both rates and stability when choosing locations. One staff member advised companies "look at past history to see where the rate what direction it's going. Is it flat? Is it moving up?" and suggested recipients consider regional competitiveness with Chesapeake and Suffolk, which have lower effective rates.
Economic-development incentives were discussed as a counterbalance to any rate increase: staff said existing incentive packages are commonly structured as rebates tied to capital investment and typically run a set number of years; those tools could offset rate adjustments for targeted projects.
No formal motion was made. Supervisors asked staff to refine scenarios and revenue estimates; staff returned later in the meeting with an updated budget scenario that accounted for an estimated $350,000 downward shift in M&T revenue based on preliminary filings from a large taxpayer.
Attribution: direct figures and quotations are from county staff presentations and supervisors' on-the-record comments during the budget workshop.
