Our restaurant community is an extremely generous one. Almost every charitable cause in town has benefited from the benevolence of a Richmond restaurant. In particular, the organization that I work for has seen the restaurant industry go to great lengths to support our work. Some of the most caring people I know work in food and beverage, and most do it far from the spotlight and for modest pay. I believe in the power and people of our local restaurants. I’d consider myself “pro-restaurant.” But I’m also pro-RPS (Richmond Public Schools). I’ve seen how badly our schools need facility upgrades. And I know how few ways there are for Richmond to generate the additional revenue and debt capacity to fix these schools. I believe we should support great restaurants and still raise the meal tax an additional 1.5% for a few reasons:
1) The $ goes to something we all can agree on: This is a rare example of knowing where your tax dollars are going…and knowing the $ is needed. Every time you eat out and pay that extra .09 cent for your pint of craft beer, you can drink easy knowing it’s going directly to fixing schools that are literally falling apart. And for the first time in a long time, we have a School Board, City Council, Mayor, and Superintendent capable and committed to working together on this.
2)Bang-for-buck: The 1.5 cent increase should generate over $ 9 million annually. And that 9 million will allow Richmond to increase its debt capacity by $150 million…something that couldn’t easily be done with non-tax strategies and is needed ASAP.
3)Limited alternatives: Richmond has an extremely limited tax base and few other options for increasing revenue without General Assembly approval. Prime property in this city generates nothing because state buildings, VCU buildings, state museums, etc. don’t pay taxes. And thanks to the Dillon Rule, there are extreme restrictions on what Richmond can do without state approval to generate additional revenue in other ways. To those saying, “Tax the breweries!” the breweries pay the meals tax on all beer consumed on premise. Any additional tax on breweries would require GA approval. But by all means, lets band together to support any GA efforts to expand Richmond’s capacity to generate revenue in more creative and equitable ways.
4) Spreads tax burden out, including beyond city residents: This is one of the few taxes that wouldn’t fall primarily on Richmond residents. Estimates show that more than 50% of the tax would be paid by non-city residents…including more than 30% that would be paid by visitors from outside the region. The 50% of folks coming from outside town aren’t doing so because food in Richmond is cheaper…they come because the food is better and the restaurants are situated in more compelling and walkable settings, often close to other entertainment and recreation options. If a couple from Short Pump stops purchasing the $33 loin chops at L’Possum before the show at Altria because they can’t afford .49 cents to fix broken schools….then we have bigger fish to fry.
What if new restaurants stop opening up in the city and start opening up in the counties?
Regardless of this tax, I’m not sure how many more restaurants Richmond has room for. By almost every measure, the Richmond restaurant scene is over saturated. Depending on the data you use, Richmond is as high as 2nd in the country in restaurants per capita. We have at least 50% more restaurants per capita than the national average. I’m not opposed to more restaurants opening, but I don’t think we need to be making educational policy decisions based on what will incentivize more restaurants to move to town.
Are people going to stop eating out?
A few nights ago 4 of us needed dinner and no one had time or energy to cook. We ordered three pizzas from Dinamo for $43.29, stuffed our faces, and had leftovers. This meal tax would’ve cost us an additional .59…or .11 per meal…a little over two pennies per slice. The initial Meals Tax added .05 in 1991 and an additional .01 for CenterStage in 2003…yet the restaurant scene has thrived and grown over that period. Every consumer has a breaking point, and obviously, the tax shouldn’t increase without ultimate limits. But I have a hard time believing people will choose to go to Henrico or Chesterfield county for dinner to save an additional .15 cents on their $10 order of chicken wings. Americans spend more money than ever before at restaurants. 2016 was the first time in American history that we spent more on food away from home than at home. In 1950 we spent 75% of our food budget on food consumed at home and only 25% away from home. Today Americans spend more than 51% of their food budget away from home.
Given Richmond’s legacy of mismanagement, failed projects and missed priorities, I can understand why restaurateurs and others would be skeptical. All of us, especially those of us who support this tax, have a responsibility to continue to press the new regimes for accountability and transparency. And the restaurant industry is right…they should not be the only industry targeted. This Meals Tax is the lowest hanging fruit, and the funds and debt capacity are needed right away. But as we support this, let’s continue to press for and support additional measures to generate revenue elsewhere (so long as they don’t burden the poorest in our city) and let us look for continued progress on reducing waste in City Hall.
Dominic Barrett is a community and food advocate. He is the Director of Shalom Farms