Officials say eliminating personal property tax would devastate education

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Officials say eliminating personal property tax would devastate education
By Ryan Quinn, Education Reporter, Charlston Gazette Mail

Education officials told lawmakers Monday that eliminating personal property taxes would cause a huge statewide revenue reduction for county school systems, though one legislator questioned why he was hearing a presentation on a proposal he said hasn’t been made.

Amy Willard, executive director of the West Virginia Department of Education’s Office of School Finance, said there would be $185.9 million lost in regular levy property tax collections and $181.4 million less in excess levy collections.

She said that would mean the state school aid formula funding — which helps equalize education funding between property rich and property poor counties by providing more state dollars to counties when their local property tax revenues drop — would require the state to pitch in an extra $153.6 million this fiscal year.

Joe Panetta, the education department’s chief operations officer, said that extra state funding would come from general revenue. He said personal property taxes are collected on everything from individuals’ vehicles to coal companies’ mining equipment.

Willard noted that even after that increased contribution from the state, there would still be a $213.6 million net funding reduction for the state’s 55 county school systems. That includes $17.6 million less for Kanawha County, and $5.7 million less for Putnam County.

But two legislators at the combined meeting of the committees on education, finance and tax reform wondered why education officials were giving them the information.

Delegate Paul Espinosa, R-Jefferson, said he wasn’t aware of a proposal to completely eliminate personal property taxes without replacing them with another revenue source.

“We have talked and heard information on personal property, inventory,” said Delegate Eric Nelson, R-Kanawha and co-chairman of the tax reform committee. “But by no means has anything come from the committee, one way or the other, as it relates to elimination, or a change in that particular tax at this time.”

Sarah Stewart, the education department’s director of policy and government relations, said the department wasn’t directed to calculate the figures on how eliminating personal property taxes would influence counties.

 “We were just showing how much personal property tax makes up of the local share, that’s all we were doing,” she told the Gazette-Mail.

Presenters to the tax reform committee have spoken about the state’s personal property taxes. The committee has heard from a Cabell County commissioner who said any decreases in taxes would be unbearable, and from a Tax Foundation policy analyst who advocated reducing personal property taxes.

Nelson said Monday’s presenters weren’t asked to present on the effects of eliminating taxes, but on questions contained in a House resolution passed earlier this year.

“As lawmakers who honestly would like to make positive reforms in this state, it’s disappointing that month after month these bureaucratic representatives come before the committees and draw up doomsday scenarios that are not entirely based on reality,” Nelson wrote in a statement to the Gazette-Mail after Monday’s meeting.

 “... If we truly want to move this state forward, we need to have meaningful, substantive discussions about the issues, instead of a constant stream of fear-mongering at the hands of unelected bureaucrats.”

After Nelson asked about officials’ response to the resolution, Willard provided answers indicating areas of the state school funding formula that lawmakers may want to address.

A report that education officials presented to lawmakers Monday suggested the formula has limited the number of school technology system specialists from increasing to handle a “rapid increase in the number of computer devices and the shift to digital curriculum.”

It also stated a line item for special education programs has not increased for the last 25 years despite an increase in students with autism and other “high cost special needs,” and that many county school boards consider the formula’s funding for nurses and counselors insufficient considering “the growing needs for students with diabetes and other chronic health conditions.”

The education department also requested school officials from three counties — Kanawha, Pendleton and Raleigh — speak to lawmakers at the meeting about how eliminating property taxes would impact their school systems.

Kanawha schools Superintendent Ron Duerring said eliminating personal property taxes would cost the state’s largest school system $2.9 million in regular levy collections.

It would cost a further $14.5 million if the county didn’t raise its excess levy rates in response, and raising the excess levy rates could limit voters’ wish to vote to continue approving the excess levy in the future.

Duerring said that, among other things, supplies and contracted services would have to be cut and construction and maintenance would have to be reduced.

He said raising taxes to make up for the personal property tax elimination would allow Kanawha to cut only 63 employees, but not doing so would force the school system to cut 368 people, about 10 percent of its workforce.

“The question becomes: ‘Will providing a tax break in personal property taxes be worth the increase in unemployment, and providing a less than adequate education for our children?’” Duerring asked.