The city of Richmond seems to be trying to plug all of the holes in its boat, also known as the U.S.S. Meals Tax Fiasco, that has been taking on water for months. It seems that the city is finally wiping out the erroneous meals tax payments and interest they had charged numerous restaurant accounts in recent years, often amounting to tens of thousands of dollars, without ever telling them the bills were so enormous.
Tyler Layne at CBS6 reported last week that Matt Mullett, the owner of Richbrau Brewing, recently got a call from the city’s Finance Director, who said the city would clear his $50,000 bill that accrued due to bad advice he received four years ago from the Finance Department when they told him he did not need to collect meals taxes on draft beer, even though the department had lost a case just a few years prior.
In addition, Mullet’s business was now finally eligible to receive Enterprise Zone grant money to improve his business. This money had already been approved several years ago, but was not released because the city said they owed all the back meals tax money. Which he didn’t. Nevertheless, Mullet took the high road and was thankful the unnecessary drama and delays were behind him so he can move forward with his business.
“It was just a long, drawn-out process that really didn’t need to take anywhere near this amount of time,” Mullett told CBS6. “We’re kind of still cautiously optimistic.”
When the first of many stories like Mullett’s appeared in the media in early January, the city’s Chief Administrative Officer (CAO) Lincoln Saunders said it was “only a handful” of restaurants that had huge bills that they had never known about. By February 1st, the CAO acknowledged the number of restaurants affected was about 500. And an audit released last month found that there were 673 accounts in total that had questionable bills with accrued penalties and interest that many restaurant owners never knew about. The city had been applying meals tax payments each month to accounts that were in arrears, but never notified the restaurant owners, so penalties and interest accrued rapidly into the thousands.
City Council corrected that practice in February with best-practice legislation that applied each month’s payment to only that month, and any other application of monies must be done after notifying the account owner. The city also said at the time they would manually review all outstanding accounts by July 1.
Another account that was resolved this week was that of Samuel Veney, co-owner of Philly Vegan in Manchester; he had been told by the city that his bill of about $37,000 was also being forgiven. Which was always a phantasmic bill because Veney was told in error by the Finance Department several years ago he did not need to collect meals tax because his operation is carry-out only, but later received a huge bill that almost ended up killing his business.
He was not able to share specific details, but he did tell Madison McNamee at NBC12 “…we can’t say everything in detail, but I can say we weren’t willing to pay something we never collected. That’s not fair and that’s all we were ever asking for, is fairness,” Veney said.
He had been talking with the Finance Department in 2023 for months without a resolution and almost shut down the business in December because of the toll it was taking on his business, staff, and family. But he decided against folding and instead helped rally the community and went to the media and allied with other restaurant owners to speak out in early January.
The key turning point was when we say you know enough, is enough. We’ve exhausted every effort we could have when it comes to doing this in a way that’s not going to cause controversy in a way that’s going to allow us to just continue to focus on our business,Veney said.
He also noted that through it all, he and other restaurants accrued legal bills, laid off staff, could not be hands-on at the restaurant as much, and those costs are ones they will never get back.
The City Auditor’s recent finding also revealed that 283 of the 673 restaurants never received a notice from the Finance Department indicating a delinquency. He also found the other 390 restaurants did receive a notice telling them there had been an insufficient payment, but it did not detail how much was owed or the reason.
A city spokeswoman this week said the city had reviewed and resolved 236 accounts so far and had 256 accounts left to review. But 236+256=492, which means either the City Auditor’s 673 account number is wrong, or the city’s press office is somehow overlooking 181 other accounts. Given the reputation and accuracy of the City Auditor compared to the leadership at City Hall, it’s a safe bet on who to believe is more accurate. And we know there are still a lot of other small restaurant owners who are just not comfortable speaking out and pushing back against an erroneous bill or penalties and interest, thinking the city might retaliate against them.
But one thing you can’t ignore is the sentiment expressed by Veney, which I know (for a fact) is shared by the other restaurant owners who stood with him in January and February and into March. They demanded action and fairness by the city to achieve the result that should have been obvious to the Mayor and CAO all along: be fair and treat businesses with respect and deference instead of with hostility and ire.
The only reason these accounts are recently finding resolution (my words, not Veney’s) isn’t because of the magnanimity of City Hall, which initially dismissed and fought settling these accounts, but because of the way the restaurants stood up and spoke out together to fight to change an absurd worst-practice of not notifying owners they were in arrears. It was a stupid policy to begin with, and one that seems to only have been practiced by the City of Richmond out of all the localities in the state with a meals tax. It wasn’t a lighting bolt of enlightenment that hit the office of the Mayor or CAO to change course, it was the determination of the restaurant owners to band together and fight (politely) for fairness that led to this resolution.
“The most important part of community is unity and we’re showing that when you unify and you let your voices be heard then it can be very powerful,” Veney told CBS6’s Joi Fultz.
He also offered a powerful message to NBC12, one that should be of special note to whomever wants to seriously be considered as the city’s next Mayor by committing to and demonstrating they will find and deliver the competent political and administrative leadership to run this city because it is what the people of this city deserve:
While [Veney] appreciates the city taking some accountability for its mistake with his business, he feels there’s much more that needs to be done, as it’s an issue that is still impacting lots of other businesses.
“We need to have the city start taking more accountability for the mistakes they’re making that way we can thrive as business, that way we can thrive as a community and as a city,” he said.
Get Mr. Veney some voter petitions and tell me where to sign.
Jon Baliles is a former Richmond city councilor. Republished with permission from RVA 5×5.