CHARLESTON, W.Va. — No budget battle is expected at the West Virginia Legislature this year, but lawmakers anticipate a long conversation about repealing the property tax on manufacturing equipment.
“The fight is probably going to be over this,” said Delegate Mick Bates, D-Raleigh.
The tax has long-been discussed as a target for phase-out, but it’s never been easy.
Because property taxes are designated in the state constitution, a repeal would first require a two-thirds supermajority in each chamber of the Legislature.
“For over 30 years, people have been talking about getting rid of this tax,” said Senate President Mitch Carmichael, R-Jackson. “We want to be the Legislature that gets rid of it.”
The tax is frequently cast as an inhibitor on manufacturing growth. Right now, the state has a workaround – a payment in lieu of taxes program where manufacturers may reach agreements with the state to avoid the tax.
Democrats don’t love the tax, but they’re signaling they might be a tough sell unless they can be persuaded there’s a ready solution for how the property tax supports local governments and school systems.
“I don’t know that it’s present now,” state Senator Corey Palumbo, D-Kanawha, said of supermajority support.
“Several Democrats have looked at that tax as a hindrance, but you can’t take the tax out of local government hands.”
But Palumbo acknowledged the removing the tax might remove a barrier to investment.
“Will that make a big impact?” he asked. “I think it might.”
If the supermajorities move ahead, there’s still another big hurdle. West Virginia residents would be asked to vote to change the constitution.
Lawmakers are only looking at a slice of property tax – just the one paid by manufacturers for equipment that might be in use or, in some cases, might be idle.
Officials speaking Friday at the annual Legislative Lookahead event sponsored by the West Virginia Press Association said the total amount is $100 million, which could be phased out over a period of years. The state’s General Revenue budget is $4.7 billion right now.
“We’ve nibbled around the edges,” said Senate Finance Chairman Craig Blair, R-Berkeley. “It would be the last stumbling block. We need that. This is the final big lift.”
He said lawmakers will not move ahead with the cut unless there’s a plan in place to make county funding whole.
“We must be able to try it,” Blair said.