Subject:
Title
Amendment to Town Code Chapter 6, Section 6-33 Levy, to Increase the Meals Tax Rate from 3% to 4%
Body
DATE(S) OF PRIOR COUNCIL CONSIDERATION OF THIS ISSUE:
Work sessions: Sept. 16, 2024; Oct. 21, 2024
Results of Operations and Annex Long-Term Use Study: Feb. 12, 2024; Feb. 26, 2024; June 10, 2024,; Sept. 30, 2024; Oct. 7, 2024
Set Public Hearing at Council meeting: Oct. 28, 2024
Public Hearing: Nov. 18, 2024, left open for written comment until close of business on November 27th, 2024.
EXPLANATION AND SUMMARY:
On Nov. 18, 2024, a public hearing was held to get public input on the proposal to increase the Town’s meals tax rate from 3% to 4%.
The meals tax is a local tax imposed on the purchase of prepared food and beverages sold by restaurants, cafes, grocery stores, and other food service establishments within the Town of Vienna. Currently, the Town assesses a 3% tax on these purchases. This tax is paid by consumers at the point of sale and collected by businesses on behalf of the Town.
The Town Council is considering increasing the meals tax rate from 3% to 4% in response to the growing demand for infrastructure investment and public facility upgrades. Over the years, the Town has experienced a substantial rise in community needs and expectations, particularly related to aging infrastructure, deteriorating streets, outdated public facilities, and other long-term capital needs. As the Town continues to maintain and improve its assets, additional funding sources are needed to ensure a reliable and sustainable infrastructure for current and future residents.
All revenue generated by the meals tax is dedicated solely to the payment of debt service related to capital projects as outlined in the Town’s adopted Capital Improvement Plan (CIP). The CIP identifies and prioritizes long-term investments in roads, stormwater systems, parks, public buildings, and other critical infrastructure. The additional revenue from the proposed 1% increase would:
• Help support the continued investment in Vienna’s infrastructure
• Allow the Town to responsibly manage debt obligations related to capital projects
• Provide financial capacity to consider future public facilities and amenities that enhance quality of life
The proposed increase in the meals tax from 3% to 4% reflects the Town’s commitment to maintaining and enhancing essential infrastructure while responding to the evolving needs of the Vienna community. This adjustment allows the Town to strengthen its financial position without placing additional burden on property taxes, while also ensuring that visitors and non-residents who dine in Town contribute to the cost of maintaining and improving local facilities.
Departmental Recommendation: Recommend adopting the ordinance to increase the meals tax rate from 3% to 4%.
Finance Recommendation: Recommend adopting the ordinance to increase the meals tax rate from 3% to 4%.
Purchasing Recommendation: N/A
Town Attorney Recommendation: The Town Council has held a public hearing on the proposed increase to the Town meals tax rate and the Council may adopt the proposed revisions in its discretion. Two draft options are attached to the Agenda and if further revisions are suggested the Town Attorney will need to review to ensure additional consideration and/or an additional public hearing is required.
Town Manager's Recommendation: I recommend the Town Council approve the proposed language to increase the tax rate on the Town meal taxes, as presented.
Cost and Financing: N/A
Account Number:
Prior Funding Approval: Annual General Budget (Year), Amendments, CIP Budget (Year), or ARPA. N/A
Decision Needed by this date: Aug. 25, 2025
PROPOSED/SUGGESTED MOTION
Recommended Action
"I move to approve the proposed language to increase the tax rate on Town meal taxes as defined in Chapter 6, Article 4, Section 6-33 of the Town of Vienna Town Code to a rate of four percent effective January 1, 2026, as identified on PROPOSED ORDINANCE DRAFT 1/PROPOSED ORDINANCE DRAFT 2 ."
And
“I further move to direct the Town Clerk to advertise a notice of intent to adopt for Sept. 15, 2025.”
Or
Other action deemed necessary by Council.