Joint Committee on Tax Reform Story Archives - West Virginia Public Broadcasting

W.Va. Legislative Committee to Discuss Taxes

A discussion on personal and business income taxes will dominate a state legislative committee meeting in Charleston.

The Joint Select Committee on Tax Reform is set to meet Monday at the state Capitol.

Department of Revenue deputy secretary Mark Muchow and state tax division general counsel Mark Morton are scheduled to give an overview of personal and business income taxes and later discuss tax credits.

Afternoon sessions include a discussion by state Commerce Secretary Keith Burdette on the effective use of business tax credits.

West Virginia University Bureau of Business and Economic Research director John Deskins is expected to speak on earned income tax credits.

Tax Reform Committee Discusses More Problems, Few Solutions

The Joint Committee on Tax Reform held their final meeting before a July break Monday in Charleston, continuing their comprehensive review of the state’s tax code.

Panels of both county assessors and sheriffs discussed the state’s property tax system. A separate panel of attorneys and an accountant described the nuances of the state’s severance taxes for coal, natural gas and timber.

Still, three months into the process, lawmakers have discussed more problems with the tax code than solutions.

House Finance Chair Eric Neslon said the committee’s review process is deliberately slow so members have a real understanding of the tax code before they begin to suggest changes; however, he still expects at least some of those changes to be made during the 2016 session.

“I would hope that we would come with something before session begins. Will that be an all encompassing tax redo? I would probably say doubtful,” he said after the meeting.

The committee will take a break for the month of July and start meeting again in August. The two meetings that month will focus on sales and personal income taxes, and the state road fund.

Tax Reform: Cities Want More Flexibility

In the fifth meeting of the Joint Committee on Tax Reform, lawmakers took on a number of issues, but one included hearing from city and county governments on what they need in a reformed state tax code.

“Revenue and flexibility to address aging infrastructure, pensions, housing and all that will attract and retain citizens,” Lisa Dooley, Executive Director of the West Virginia Municipal League, told the committee.

Dooley was joined by Huntington Mayor Steve Williams and Wheeling Mayor Andy McKenzie for the panel discussion on municipal taxation issues. All three shared the same message: cities need revenue, but more than that, they need the flexibility to find the revenue for themselves.

Both Williams and McKenzie lead cities that were in the first group in the state to adopt Home Rule, a state program that allows cities more decision making power over things like taxation, blight and economic development. Both cities have faired well from the program and are seeing major success in some areas.

McKenzie said in Wheeling they were able to reduce the number of city business licenses from 77 to 3 under Home Rule, and now revenues from licensures are increasing. Huntington successfully implemented a one percent sales tax while reducing their business and occupation tax, but Williams told members they need more.

“Huntingtonians are in a better position to make decisions than 134 members of the two houses in Charleston. Give us the ability to be able to do this, but give us the ability without hamstringing, if you do this then you must do some of these other things,” he said.

“We have to balance a budget every year just as you do, but right now I have hillsides that I’m having to deal with, I have a drug problem and epidemic of addiction that I’m having to deal with and frankly, the choices that I have right now are bad and worse.”

One problem the panel pointed out, antiquated systems in the state’s Tax Office that have West Virginians paying property taxes on an 18 month delay.

“We’re trying to go back sometimes and figure out what people had 18 months ago or 24 months ago versus what I have.” McKenzie said, “and so I think that the system we’re using, I understand 150 years ago when the tax system was created why we did that. Today, with technology, I don’t understand why we do that.”

Modernization of the department was one of Dooley’s major recommendations for the committee as well, saying she believes if some gaps were closed within their system, more revenue could be collected.

Committee Co. Chair Del. Eric Nelson said administrative procedure updates are something in the realm of the committee and something they will consider.

Aside from the discussion with municipal leaders about necessary changes to the state tax structure, lawmakers also heard from county level officials. Both panels said county governments really have little taxing authority on their own, but commissioners warned if lawmakers made even slight reductions to the state’s property taxes, it could make many counties across the state unstable.

The committee will meet again on June 29 to continue discussing the state’s property tax structure. Upcoming study topics include personal income taxes, tax credits and excise taxes, like the state’s gasoline tax.

Tax Reform Committee Looks to National Groups for Guidance

Members of the Joint Committee on Tax Reform met in Charleston this week to carry on the new committee’s quest to improve the business climate in West Virginia.

The group looked to leaders from national policy and tax reform organizations to learn about the progress, or in some cases regress, other states are making as they take on changes in their tax codes.

Representatives of the Tax Foundation, a D.C. think tank, and the National Council of State Legislatures both presented lawmakers with reviews of the tax reform initiatives states across the country have taken in recent years.

Both warned not to take on changes too quickly, using Kansas as an example of a state that lacked balance in its reforms.

As Kansas took on system reformations, they made major cuts to taxes, but approved no revenue increases, nor cuts to services. The cuts led to a $4.5 billion reduction in revenues over 6 years there and now the state is working to reverse those mistakes.

“Obviously, it was a political situation and they got a huge tax cut they couldn’t afford,” Sen. Mike Hall said. He’s the co-chair of the Joint Committee on Tax Reform.

Hall said Monday lawmakers are trying to put the politics aside to create a simpler tax code for individual tax payers as well as businesses, but notes they are not “trying to drive the state to bankruptcy.”

During their next meeting, scheduled for June 9, the committee will hear from city and county governments on the taxation powers they have and whether those powers should be expanded. At a later meeting in June, lawmakers will focus solely on the state’s real estate, including property, taxes.

Economists, Administration Issue Words of Caution for Tax Reform Committee

Delegate Eric Nelson says there are three main goals for the Joint Committee on Tax Reform: to ensure West Virginia’s tax code is fair, simple and structured to promote economic growth. The House Finance Chair also serves as the co-chair of the special interim committee.

Members held their second meeting in Charleston Monday as they move forward with the first study of the state’s tax code in 9 years. The most recent study came in 2006 under Gov. Joe Manchin. Before that, the system hadn’t been reviewed since 1999 under Gov. Cecil Underwood.

Members were given an overview of the current structure, what taxes and tax credits are in place and what goods and services are exempt.

They also had a history lesson on West Virginia’s tax code, reaching as far back as the turn of the 20^th century to explain the policy and political decisions that resulted in the state’s personal income tax, broad sales tax and property tax system in place today.

Those three taxes make up the largest portion of the state’s income, aside from lottery funds, and they help provide almost all of the services the state offers.

So, with a committee full of first time leaders–after the Republican take over– and even some first time legislators, all of the presenters urged extreme caution as they move forward.

“I don’t think the end result of any study has to be a comprehensive 800-page bill which substantially or fundamentally changes the tax structure immediately,” Revenue Secretary Bob Kiss, former Speaker of the House and House Finance Committee Chair, warned.

He was joined by attorney Michael Caryl and economist Dr. Calvin Kent in issuing words of caution throughout the six hour session. Caryl was involved in the Manchin review while Kent worked on the studies under both administrations.

“Everything is interconnected,” Kent said, “and if you do change one tax, you’re going to wind up with ripples that are going to affect other taxes, which may be very negative.”

Nelson says he hears their words of warning and is taking them seriously.

After talk from both House and Senate leaders that this committee may have legislation ready for a special session this fall, or at least by the 2016 session, Nelson is backing away from those notions.

“I think that there’s always an interest in making positive moves in a timely fashion,” he said Monday. “As we started getting more involved with this and talking with different people a timeline is the last thing we want to put on the table.”

The Joint Committee has scheduled its next meeting for May 18 where they’ll hear about the changes other states have made to their tax codes in the recent past. Presenters will include the National Council on State Governments, the Tax Foundation and the Council on State Taxation.

Nelson said the committee also intends to hear from those affected by tax changes, but only mentioned industry as being on the agenda so far. He maintained, though, all interest groups will have a voice.