CHARLESTON – With Gov. Jim Justice’s personal income tax cut plan remaining on ice as the special session is paused, and less than 60 days until voters decide whether to give lawmakers authority to eliminate tangible personal property tax rates, sides are being taken.
Voters will have an opportunity on Nov. 8 to vote for Amendment 2, a constitutional amendment that would give the West Virginia Legislature the authority to reduce or eliminate six categories of tangible personal property taxes, including taxes on motor vehicles, machinery and equipment, and inventory.
According to a poll released this week by the West Virginia Chamber of Commerce and conducted by North Star Opinion Research between Aug. 20-23 with 600 likely voters and a 4% margin of error, 53% of respondents said they would vote for Amendment 2 while 36% said they would not support the constitutional amendment.
“This is, in my opinion, a once-in-a-lifetime opportunity to change a 90-year-old provision of our (state) Constitution. We need to do this,” said Steve Roberts, President of the West Virginia Chamber of Commerce last week at the chamber’s Annual Meeting and Business Summit at the Greenbrier Resort in White Sulphur Springs. “We need more jobs in West Virginia. Amendment 2 will help us get there and we need to pass it.”
According to a report released in June by the West Virginia Association of Counties, the total dollar amount of assessments for tax year 2021 for six categories of tangible personal property taxes was more than $515.2 million for all 55 counties combined. The funding from these property taxes goes to county governments and county school systems.
The West Virginia Association of Counties and the County Commissioners’ Association of West Virginia released a joint statement Wednesday announcing their opposition to Amendment 2.
“… The two associations that represent elected county officials in West Virginia voted to oppose Amendment 2,” according to the statement. “We applaud the legislature for looking at new ways, as this constitutionally protected funding of local government has been around a long time. But it was put there for a reason, during the Great Depression. And the economy today renews those same fears of uncertainty.”
The majority of the 23-member Republican caucus in the state Senate supports a plan to eliminate tangible personal property taxes on machinery and equipment, furniture and fixtures, leasehold investments, computer equipment, inventory, and vehicles once voters approve Amendment 2. The Senate Republican plan would use $558 million from the general revenue budget to fund counties at their total tax assessment plus use a formula to provide counties with an additional minimum of $1 million over and above those assessments.
“We’ve set it up for the Senate plan right now to make it so every county gets at least a million dollars more than what they’re currently getting,” said Senate President Craig Blair, R-Berkeley, at the state Chamber’s business summit last week. “Forty of the 55 counties have had declining revenue. It’s insane as far as I’m concerned when you hear a local official standing up and saying vote against this because the Legislature’s going to hurt us. That’s nonsense.”
Justice is a vocal opponent of the Senate Republican tangible personal property tax plans, preferring to cut personal income taxes by a combined 10% across all six tax brackets, returning $250 million to taxpayers. This week, Justice also came out against Amendment 2, saying it puts at risk schools and centralizes power in Charleston.
“I truly believe that our counties always have it better than we probably have it in Charleston,” Justice said Friday on a virtual briefing from the State Capitol Building. “In all honesty, our counties right now have an income stream that is coming to them, and they manage their business and help with the schools, EMS, fire and police departments, and everything else. All of a sudden if that is gone and we say ‘no problem, we’re going to take care of you’ … what if doop happens?”
However, Justice has supported a similar constitutional amendment in the past. In 2018, Justice proposed a plan that included eliminating the machinery/equipment and inventory tangible personal property taxes. Justice also had introduced on his behalf Senate Joint Resolution 9, which would have allowed the Legislature to reduce or eliminate only the machinery/equipment and inventory taxes.
“I don’t very often get to name something … But I’m going to call something JCTAW. And it’s going to stand for Just Cut Taxes And Win,” Justice said during his 2018 State of the State address. “… What I want to start with is the elimination of the tax on manufacturing machinery and equipment and manufacturing inventory … One thing we’ve got to ensure is that education and our counties and our cities won’t get hurt. We can do that. We can absolutely do that with this.
“From the standpoint of then and now, we now know we are struggling still to really bring population growth to West Virginia,” Justice said Friday when asked about his 2018 support for eliminating machinery/equipment and inventory tangible personal property taxes. “The personal income tax has all the sex appeal to bring population growth. We need people in West Virginia. We need workers in West Virginia.”
Justice called a special session July 25 for lawmakers to consider his 10% personal income tax cut. The House passed House Bill 301 by a wide margin, but the state Senate refused to accept the bill from the House on July 29, with the special session being paused while lawmakers work out differences on an abortion bill.
Since then, there’s been talk of a compromise tax reform plan incorporating elements of the Justice and Senate Republican plans, such as his 10% personal income tax cut and elimination of motor vehicle tangible personal property taxes. But while Justice has said he is open to negotiation, he does not believe you can do both plans as presented.
“You can’t do them both at the same time. You can’t do them both right now for sure at the same time. There is no way,” Justice said.
Kent Leonhardt, the state’s Agriculture Commissioner, also came out this week in support of a personal income tax cut for West Virginians.
“With record surpluses, this is the optimal time to refund excess revenue to our citizens by reducing the income tax,” Leonhardt said. “As much as I support removing personal property and the business inventory tax, we must find ways to help stimulate our economy and give immediate relief to those experiencing hardships from rising inflation.”