Counties begin to react to how property tax cuts would affect their bottom line
West Virginia voters are months away from considering a constitutional amendment that could allow lawmakers to make changes to property tax rates, but the state’s county leaders are already calculating how local budgets could be affected.
Senate Finance Chairman Eric Tarr, R-Putnam, sent a letter last month to assessors and county sheriffs asking for specific numbers on the types of property subject to the tax, particularly motor vehicles and machinery, equipment and commercial stocks.
“The Legislature recognizes the importance of these revenues to local governments,” Tarr wrote. “The Legislature assesses the amount of revenue needed to replace the subsequent tax reduction if the Legislature chooses to eliminate these taxes.”
Property taxes have been defined in the state constitution since the early 1930s. Most personal property tax money goes to county school boards, county commissions, and municipalities.
Lawmakers have long talked about having more flexibility, especially with the property taxes companies pay on equipment and inventory. Last year, lawmakers passed a resolution that could allow changes to personal property tax rates.
Because it’s a constitutional issue, West Virginia voters have a say in the matter in next fall’s general election.
“As the referendum on the November ballot approaches, the legislature is preparing for the potential passage of Amendment No. 1,” Tarr wrote. “As I am sure you are well aware, if this amendment passes, the Legislative Assembly will have the ability to eliminate the tax on machinery and equipment used directly in the operation of a business and automobiles as well as a strong mandate from the citizens of the state to eliminate these taxes.
County government leaders are certainly aware, and many have warned that local utility budgets are so dependent on property taxes that they could be in deep stalemate unless state lawmakers provide other means. State lawmakers have yet to specify what that alternative might be.
Counties responded to Tarr’s request for information.
The West Virginia Counties Association has formed a task force that has met several times, said Jonathan Adler, the association’s executive director. The appraisers did the math, as did the sheriffs’ tax offices. Adler said he expects more back-and-forth with the state, starting in June.
Adler said the association “has taken a ‘neutral’ position on Amendment 1 because we want to shape a cooperative relationship with the legislature/leadership on how we close the expected gap in county revenue that the change will bring. But of course, we won’t know what it is until the legislature starts working with passing it,” he said. “It’s just ‘preparatory work’ .”
The Kanawha County commission had the issue of property tax reporting on the agenda this week. Commissioner Kent Carper expects to provide the necessary information. He worries about how property tax changes could affect both county budgets and local school systems.
“We are responding,” Carper said. “There is nothing more important in the November ballot than the constitutional removal of worker protections from essential local services, including basic education.”
The Wood County commission also discussed the request for property tax information at a meeting this week. Commissioner Blair Couch said the county collected $3.5 million in vehicle and business property taxes in 2019, $2.4 million in 2020 and $1.2 million so far this fiscal year. . Other surrounding counties reported significantly less, Couch said.
For Wood County, he said, those amounts could be up to 10% of the annual budget.
“We’re trying to give Senator Tarr a number without understanding what he’s going to do with it,” Couch said. “A few senators are trying to figure out what they’re going to do. And I don’t know.
Counties have requested permission to institute a 1% sales tax in areas not yet covered by municipalities, he said. That could offset lost property taxes in some areas, he said, but could provide very little cushion in counties that don’t have a lot of retail.
Couch said he’s glad legislative leaders are trying to figure out how much property tax to support county spending. “I’m glad they’re investigating it. I can’t wait to see his statewide numbers if he’ll share to see which counties would do well and which wouldn’t,” Couch said.
House Government Organization Chairman Brandon Steele, R-Raleigh, discussed the property tax issue this week on “Radio Roundtable” on WJLS-AM in Beckley. He suggested that more debate on property tax changes will take place in the coming months.
“I expect many groups in the state to provide information to the public on their various positions on this,” Steele said. “I know county officials are hesitant because a lot of their revenue comes from tax on equipment and inventory as well as personal property.
“At the same time, I think those of us in the Legislative Assembly who voted for this, I was one of them, we understand that it’s probably going to take some type of adjustment of the revenue, or at least with revenue sharing, between the state and the counties with respect to taxes to make up for that.