A proposed constitutional amendment on the ballot this November will give the West Virginia Legislature authority to remove or reduce a variety of county level property taxes.
West Virginia Public Broadcasting previewed the ballot measure, looking at concerns on how passage would affect the state economy, essential services and its taxpayers.
The proposed amendment provides the legislature with the authority to exempt tangible machinery, equipment and inventory used in business activity – and personal property taxes on motor vehicles from property taxation.
Del. Wayne Clark, R-Jefferson, was a sponsor of House Joint Resolution 3 that put the amendment proposal on the ballot. He said voters need to understand a yes vote does not make any property tax changes, but gives the legislature authority it did not have to consider and propose changes.
“What we do after that, that’s going to be Senate and House Finance Committee Chairman (Eric) Tarr and (Eric) Householder’s process of where we want to look, at what taxes to maybe move or reduce,” Clark said. “I think the county commissioners think, ‘Oh, well, we’re just going in there to take away your money,’ and that’s not true. They don’t understand that the amendment has to be passed, so that the legislature can look at making changes to the tax code.”
Sean O’Leary is the senior policy analyst with the West Virginia Center on Budget and Policy. He said these property tax cuts are something the legislative Republican leadership and caucus has been attempting for years.
“The plan the previous year was they were just going to go ahead and exempt it,” O’Leary said. “But when they couldn’t come up with a way to pay for it, the amendment was tweaked a little bit to say, well, we’ll be allowed to do it. And we’ll figure out something later.”
Both sides agree eliminating the business equipment and inventory tax and the motor vehicle tax could cost schools, local and county governments more than $500 million in lost revenue. Clark said the plan on how to replace those funds will be part of the legislative process.
“I’ve heard several different ideas. And that’s all they are – ideas,” Clark said. “What if we had to raise the food tax? Or what if we had a meal tax? Or what if we increased the hotel-motel tax or something, there’s all kinds of things. People are going to have to really trust in the abilities of Chairman Tarr and Householder and their understanding of what the budget is and trust that they’re going to come up with the best solution. How we’re going to make counties whole, I don’t know. But right now, the main goal is – let’s get this thing passed so we can at least start looking.”
O’Leary said the lost revenue would devastate local and county services and significantly shift decision making power from local to state government.
“These cuts account for 27 percent of total property taxes and that’s the bulk of funding for local governments that really rely heavily on property taxes,” O’Leary said. “In some counties, it’s even greater, up to more than 30 or 40 percent of their total revenue. A lot of this money goes to those excess levies that directly fund libraries, EMS services, fire protection, senior centers. That money is earmarked and if that base is taken away they have to redo all of those excess levees, all of those bond levees to make sure that the revenue is still there.”
Clark said maintaining a machinery and inventory tax puts West Virginia at a competitive disadvantage in recruiting and retaining businesses
“You take a company like Toyota or any auto manufacturer – once that car is made, it’s taxable, it’s inventory. You have an $80,000 car sitting on a lot,” Clark said. “The Green Power bus folks, I have no idea what an electric bus is going to cost to make. Let’s say they make 20 of them and they’re $100,000 each. Well, they’re paying taxes on something that’s not even sold, it’s just sitting there. So yes, it’s going to attract new businesses here. It is a deterrent right now for businesses to move into the area.”
O’Leary said neighboring Ohio got rid of its manufacturing personal property tax and it did nothing for manufacturing growth in that state. He said West Virginia property taxes are some of the lowest in the country, and the answer is to not make any cuts and use our tax revenues wisely.
“The solution is to take that tax revenue and invest it in ways that make West Virginia attractive and this is exactly what it does,” O’Leary said. “This money goes to schools, this money goes to public safety, this money goes to local infrastructure. We all want those things. Those things attract businesses. So why would we take that away? Why would we take away the resources that are funding the things that make West Virginia attractive?”
Voters will say yes or no to the officially titled “West Virginia Authorize Tax Exemptions for Vehicles and Personal Property Used for Business Amendment” on the election day, November 8, 2022.