MORGANTOWN — West Virginia’s business inventory tax was identified as one of the factors placing West Virginia at an economic disadvantage. Its elimination has been a talking point for Governor Jim Justice and is a priority for House Majority Leader Amy Summers, R-Taylor.
While the tax’s impact on the state’s business climate doesn’t appear to be in dispute — Monongalia County Commission President Tom Bloom, a Democrat, calls it a “disastrous, horrible tax” — the questions around its elimination seem to steer less into party politics and more into the local impact of state mandates.
The tax, which targets industrial equipment, machinery and inventory, brings millions into county and board of education budgets. Statewide, the number is thought to be about $140 million.
“It’s an absurd, ridiculous tax, and I’m all for getting rid of it if they give us other avenues to recoup that revenue,” Bloom said. “Unless they offer another resource to offset those losses, we’re adamantly opposed to it being eliminated.”
A proposal to end the tax in the last legislative session lost steam when lawmakers shifted their focus to the statewide teacher walkout and issues surrounding PEIA. That bill would have phased the tax out over a seven-year period.
The question then, as it is now, is how to replace that revenue.
Monongalia County Assessor Mark Musick serves as the president of the West Virginia Assessor’s Association. He said the group is watching the issue closely, but right now, there are still more questions than answers.
“When you start eliminating something, the question is always ‘what are you replacing it with?’ ” Musick said. “I think as far as the assessor’s association, and everyone else, really, we just want to see where the money is coming from. Nobody knows right now.”
While the financial impact on counties is speculative without actually seeing details spelled out in legislation, Musick said preliminary estimates show Monongalia County could be looking at numbers north of $15 million.
“It would be devastating to the board of education, and it would be difficult for us. I can say this, without that money being replaced, it would bankrupt numerous counties,” Bloom said.
Vivian Parsons, executive director of the County Commissioner’s Association of West Virginia, agreed.
“While county commissioners may or may not like the business inventory tax, it is a large part of county budgets. A majority of our counties are struggling with budgetary needs right now. To remove any county revenue will only further decrease the ability for counties to keep things like the county jail bill paid,” Parsons said, explaining the association opposes such a move unless legislators can demonstrate how counties will be made whole.
Parsons went on to say one of the problems with this conversation has always been the fluid nature of the numbers being discussed.
“Any static number put into place to backfill county budgets is only a particular snapshot in time and eliminates any allowance for growth in the tax base for the counties, yet our expenses, i.e. the regional jail expense, keep growing,” Parsons said. “An adequate mechanism for replacing county budget shortfalls needs to be fluid and allow counties growth in revenues to meet the service demands we are responsible for.”
If and when a bill eliminating the inventory tax is presented, the work will begin in earnest. As it is a property tax, eliminating it would require an amendment to the state Constitution, meaning it would need the support of a two-thirds majority in both houses before going on the ballot, where it would require the backing of a 60 percent majority.
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