CHARLESTON, W.Va. — It would take the passage of a Constitutional amendment but supporters of a proposal to eliminate the personal property taxes businesses pay on machinery and equipment is well worth the look.
State Commerce Secretary Woody Thrasher, state Development Office Director Kris Hopkins and others spoke in favor of the elimination during a meeting of lawmakers at monthly interims taking place Monday at the state capitol.
Thrasher said it’s time to go right at the “core issues” that make West Virginia non-competitive.
“Without question we are an outlier in this situation,” Hopkins said.
There’s no personal property tax on machinery and equipment in Pennsylvania or Ohio and Virginia’s rate is low with an exemption on machinery and equipment, Hopkins told the committee.
“This really does move the needle when we’re in a regional competition (for jobs),” Hopkins said. “I think we’re losing out to projects on this issue.”
One of those areas is natural gas-fired power plants, Hopkins said.”In Ohio, they’re developing 18 natural gas-fired power plants right now. In Pennsylvania, 25. How many in West Virginia do we have? Zero,” Hopkins told lawmakers.
Here’s the problem, personal property taxes brought in $589 million in 2016 with about 27 percent of that total going to counties with county school boards picking up the majority of that percentage.
West Virginia Association of Counties Executive Director Jonathan Adler said the counties understand how important business recruitment is but they can’t afford to lose any more revenue.
“I think everybody recognizes that hurt to the counties and I think everybody wants to make sure that’s not done,” Adler said. “Listening to Secretary Thrasher (Monday), they want to help us find a way to fill that hole, that loss, and I think we can do that.”
Thrasher said the county hurdle isn’t a reason not to consider the repeal.
“We obviously can’t cut the counties and cut education–that’s important to maintain those, no question about it,” Thrasher said. “But I am going to suggest to you that if your response is that we’re not going to do that because of that then you’re not addressing the core problem.”
One of the options could be increasing the rate on property taxes. Hopkins told lawmakers property isn’t mobile like machinery. He said companies can move their machinery and products to other states to avoid the personal property tax and the inventory tax.
The state does have a pilot program that it can it use with businesses to reduce taxes called ‘payment in lieu of taxes’ but Hopkins said eyes “glaze over” when he explains it to business owners in recruitment discussions. Thrasher said that’s why it’s important to address the core issues rather than trying to invent ways around them.
“Without question if we make fundamental changes on how we go about doing business you will see an uplift in this economy, maybe way more than you ever expected,” Thrasher said.
Interim Committee Chair Charles Trump (R-Morgan) indicated Monday the discussion would be on the fast track, hoping to get a lot of work done on the issue before next year’s regular session. Thrasher agreed.
“We very much share that same perspective. These are complicated issues and when you are in the heat of the session it’s not the time to have an in-depth analysis and decide which direction you want to go,” Thrasher said.
The state Senate considered Senate Joint Resolution 8, which focused on similar issues, during the regular session earlier this year. It stalled in the Senate Judiciary Committee.