Cities, counties worry tax changes will mean cuts
By Phil Kabler, The Charleston Gazette
Cities and counties are already struggling with low tax revenues, and mayors and county commissioners urged state legislators Tuesday not to make changes that could cut their already limited sources for those revenues.
“Most counties are struggling financially. It’s become very hard for us to fund anything but those things specially required in law,” Cabell County Commissioner Nancy Cartmill told members of the legislative Joint Committee on Tax Reform.
Cartmill said nine of 55 counties are behind in paying state regional jail charges “because they simply do not have money to pay the bill.”
Most counties are maxed out on property tax levy rates and have no ability to generate new revenue, she said.
“Any decrease in taxes, particularly business personal property taxes or inventory taxes, or an increase in Homestead exemptions, would put us under,” Cartmill said.
Likewise, Patti Hamilton, executive director of the state Association of Counties, noted that the inventory tax -- which has been described as a disincentive to business investment, and even called a “job killer” -- provides $68 million a year for counties and public school systems.
The personal property tax on business machinery and equipment, also seen as a detriment to attracting business by some, provides nearly $164 million for school systems and counties, she noted.
As a practical matter, Hamilton said, eliminating or reducing those taxes would require voters to approve an amendment to the state constitution – which she suggested could be a hard sell.
“Would a single mom or dad or a minimum-wage young adult have much interest in supporting a constitutional amendment that allows equipment owned by businesses to be exempt, but their own cars are not?” she asked.
Adding the elimination of personal property taxes on vehicles might be necessary in order to have a chance of passing the constitutional amendment, but that would mean the loss of another $75 million a year for public schools and counties, she said.Sen. Robert Karnes, R-Upshur, objected to Hamilton’s premise that the committee is targeting those sources of tax revenue.
“We’re a tax reform committee, not a tax cut committee,” he said. “I don’t think counties need to look at this as the case that we’re coming after your money.”Also Tuesday, both Hamilton and Cartmill said taxes are only one factor that businesses consider when determining where they locate.
Cartmill, a Republican, said she has talked to many business officials considering locating in her county.
“Never did I hear one of them refuse to locate here because of the taxes. In fact, many times, they talk about how low business taxes are in West Virginia compared to other states,” she said.
Hamilton noted that at the committee’s last meeting, panelists questioned why more than $300 million a year of cuts in corporate net and business franchise taxes have yet to produce significant business investment in the state.
“There are some great things you can provide for businesses with tax dollars: great roads, state-of-the-art infrastructure, an educated workforce. These are all things that attract business as well,” she said.
Also Tuesday, the mayors of Huntington and Wheeling said cities and towns need more autonomy from the state in order to be able to generate revenue.“What we’re asking for is simply the freedom to make our own decisions,” said Huntington Mayor Steve Williams, a Democrat. “It’s time we put our big-boy britches on, and know we have the ability to make these decisions at the local level.”
Wheeling Mayor Andy McKenzie, a former Republican state senator, concurred. “The state really handcuffs us in the ability to create and generate revenue,” he said.
Both Huntington and Wheeling are participating in the municipal Home Rule program, which provides additional revenue options, including a 1 percent municipal sales tax. However, McKenzie said most towns and cities rely on traditional revenue sources, including business and occupation taxes and municipal fees.
“You want to eliminate B&O, we’re talking about eliminating a police department or fire department,” he said.
He believes the state is losing hundreds of millions of dollars in uncollected property taxes through an archaic appraisal and assessment process that looks back 18 months or more in time.
“We tax what they had, not what they have,” he said.
McKenzie cited a 10-story office building in Wheeling that recently underwent a $3 million renovation, but its 2015 assessed value remains on the books at $700,860. He said that works out to about $20,000 a year in lost property taxes for up to three years, until the property comes up for reassessment.
The legislative interim committee will continue its study of the tax system, with its next meeting scheduled for June 29.