Heavy Hitters!

CHARLESTON, W.Va. -- If automobile dealerships in Nitro crumble in the next year as expected, the city could lose a significant chunk of tax revenue, said Mayor Rusty Casto.

It's just one example of the trickle-down effect that could occur across the country if Chrysler and General Motors follow through with massive dealership shutdowns.

The closing of about 2,000 dealerships nationwide is expected to eat away at the budgets of state and local governments.

Casto said Nitro is no different.

"There's so much that goes into our general fund - B&O taxes, sales taxes," he said. "It's really going to affect us. I estimate we'll lose up to six figures."

Crown Dodge in Nitro is on Chrysler's chopping block. The Auburn Hills, Mich.-based company announced earlier this month its plans to axe 789 dealerships, including 17 in West Virginia, by June 9.

Those closures put about 235 West Virginia jobs at risk.

GM's decision to discontinue Pontiac also does away with the brand at Crown Pontiac in Nitro.

"I hate to lose them," Casto said. "But I don't know what the city can do about it."

The loss of revenue means Nitro must keep close watch over its finances, the mayor added, and certain activities, like street paving, could be limited.

Nitro's only glimmer of hope may be Tri-State Racetrack, Casto said.

On the state level, tax revenues aren't expected to take a significant hit, said Kimberly Osborne, spokeswoman for the West Virginia Department of Revenue.

The revenue stream - a 5 percent tax rate - from the sales of new and used cars is dedicated to the State Road Fund, she said.

Those collections have remained in the $170 million range over the last few years.

"Fewer vehicle dealers should have little or no long-term impact on car sales, car repairs and related taxes," Osborne said. "The impact is fewer business entities, fewer employees and the loss of income taxes and property taxes associated with the extra locations.

"Some employees will be picked up by other dealers and auto service businesses who will benefit from increased business. The profits of the remaining dealers should also rise due to less competition. Any negative fiscal impact is likely greater on the local government that lost a dealership than the state as a whole."

Some states, like California, for instance, rely on new and used car sales for as much as one-fifth of their sales tax revenue.

Ruth Lemmon, president of the West Virginia Automobile & Truck Dealers Association, says everyone, from government agencies to local retailers to media, is bound to lose out.

"We're one of the largest taxpayers with the B&O tax," she said. "We pay so many different taxes and are governed by so many agencies. This has a snowballing effect."

Lemmon also noted that local television and radio stations and newspapers depend on dealerships for a big chunk of advertising revenue.

Lemmon said she and a contingent of car dealers will appear at a committee hearing Wednesday in Washington, D.C., regarding the closures.

U.S. Sen. Jay Rockefeller, D-W.Va., has scheduled a hearing of the U.S. Committee on Commerce, Science and Transportation, which he chairs.

"Jay Rockefeller and Shelley Moore Capito have done everything they could possibly do to bring the light and equity to all of this," Lemmon said.

"It's the companies' own mismanagement and misdirection. Look at all of these corporate bailouts and the takeover. Those people are walking away with golden parachutes. The dealers are going to walk away with debt and a broken spirit."