Tag: Tax Reform

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.

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 20th 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. 

Get Rid of W.Va.'s Income Tax? Lawmakers Take on Tax Reform

A select group of West Virginia lawmakers began an arduous process Monday, combing through the state’s current tax code and finding ways to bring it “into the 21st Century,” as one delegate put it. 

The Joint Select Committee on Tax Reform was one of only four committees to meet during April interims, the first held under the new Republican leadership. 

House Finance Chair Eric Nelson, who is co-chairing the committee with his Senate counterpart Mike Hall, told the group of 10 Republicans and four Democrats “everything is on the table,” and for Hall, everything includes the state’s personal income tax.

“Some state have no income tax,” he said during Monday’s meeting, “and we know that people gravitate toward those states. It would be wonderful it we could figure out a way to do that.” 

Doing that, according to Ted Boettner, executive director of the West Virginia Center on Budget and Policy, would result in a $2 billion loss in revenue for West Virginia, or about 40 percent of the state’s total budget. 

“To do something like that, eventually getting rid of the personal income take, you’re talking about a major tax shift, most likely on low and moderate income people in this state who can least afford it,” he said.

Boettner said Monday he worries too much of the committee’s focus will be placed on reducing business taxes and less on working families. 

Both House Speaker Tim Armstead and Senate President Bill Cole addressed the committee before their organizational meeting Monday. Both expressed the importance of the work the committee will take on in the coming months they say will move the state forward.

Hall announced the Joint Select Committee on Tax Reform will meet twice in May to begin delving into their work. At those first meetings, lawmakers will hear from those who crafted previous tax reform studies under the Underwood and Manchin administrations.

Cole has said in the previous weeks he would like to see a special session this fall for lawmakers to take up legislation to revise the state’s tax code.

Speaker Armstead said Monday that option is on the table, but he is waiting to see what the committee comes up with. He doesn’t want to push fellow lawmakers to vote on legislation that hasn’t  been fully vetted and he is open to waiting until the 2016 session.

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