CHARLESTON, W.Va. — Senators narrowly passed a bill that could lower property taxes for manufacturers and anyone who drives a vehicle while also raising sales taxes and tobacco taxes.
The bill passed 17-16 with one absence after Senate debate over the bill went almost two and a half hours Monday afternoon.
Still to be considered is a resolution allowing citizens to vote on a constitutional amendment allowing the property tax changes.
That resolution would require a two-thirds majority vote, so the narrow passage of its companion bill casts doubt.
The resolution was scheduled for a final vote on Monday, but it was held over until Tuesday instead.
“My biggest fear is, I believe this legislation is going to pass — and my biggest fear is it’s going to be denied the people of West Virginia by the rejection of SJR 9, which does nothing less than give the people the opportunity to see what we put in front of them,” Senate Finance Chairman Craig Blair said in a speech in favor of the bill.
The legislation would lower property taxes and raise sales taxes, and that complication led the political repercussions to be in the eye of the beholder. Debate among senators was divided about whether — bottom line — that would constitute a tax cut or a tax hike.
“If we had the money I’d be all for this,” said Senator Paul Hardesty, D-Logan.
“But what does it do for the average West Virginian? Little to nothing. We’re going to take money out of the right pocket and transfer it to the left pocket, but at the end of that process there’s not going to be as much money.”
The debate took place with Senate galleries filled with representatives of manufacturing companies who supported the legislation, as well as county government officials who were concerned about funding effects on local government.
“These are our state’s makers,” Senator Eric Tarr, R-Putnam, said while introducing the manufacturers. Senator Mike Romano, D-Harrison, in turn, introduced the county officials who had gathered.
Supporters were aiming to boost manufacturing investment in West Virginia by cutting inventory and machinery taxes for companies. Inventory taxes on retailers would also be cut under the proposal.
“Cutting taxes is going to help business growth in West Virginia,” said Senator Chandler Swope, R-Mercer.
And, perhaps as a sweetener for average citizens, the proposal would cut personal property taxes on vehicles.
That would have added up to a $300 million, six-year phase-out.
To make up for that, lawmakers had proposed increasing sales taxes by a half-penny and boosting taxes on tobacco products.
That would have returned about $200 million.
The rest was meant to be made up through growth — and by the tax increases being active and flowing into a fund prior to the full phase-out of the other taxes.
“I think it’s just a great tradeoff,” Senate President Mitch Carmichael, R-Jackson, said on MetroNews’ “Talkline” a few hours prior to the vote.
He emphasized the phase-out of the personal property tax for people’s vehicles.
“It tells the people of West Virginia that we’re on track for a phaseout on the personal property tax for their automobile,” Carmichael said. “We want to give some forgiveness for the working people of West Virginia.”
.@SenCarmichaelWV joins @HoppyKercheval to discuss the property tax votes that will be held in the Senate today. WATCH: https://t.co/wkudfIRZCB pic.twitter.com/sjOyWckvLT
— MetroNews (@WVMetroNews) February 24, 2020
The tax overhaul package is represented by two pieces of legislation.
One, Senate Joint Resolution 9, was to allow the constitutional flexibility to cut the property taxes.
Passing a resolution leading to a constitutional amendment requires a two-thirds majority vote. With 20 Republicans and 14 Democrats in the House, that would require 23 senators to vote for the resolution.
An amendment would be subject to a vote of West Virginia’s citizens.
The companion bill. Senate Bill 837, is meant to actually change the tax code if the amendment were to pass. That bill represented the sales tax increases.
The tax cut proposal has been under discussion for months, with skeptics asking how the money would be made up to county governments and school systems that depend on property taxes.
Also speaking on “Talkline,” Jonathan Adler of the West Virginia Association of Counties said the tax overhaul was in need of more careful consideration.
“Huge revolutionary change, and it’s just too big for us to understand yet,” Adler said. “It’s too big, too fast.”
Adler concluded, “Basically ending county government, which is what SJR 9 does, is a very revolutionary plan that just doesn’t make sense.”
SB837 cannot take effect without passage of Senate Joint Resolution 9.
The West Virginia Manufacturers Association put out a statement this afternoon applauding the passage of the bill and favoring passage of the resolution..
“West Virginia voters will have the right to decide if this is the best path forward for West Virginia,” President Rebecca McPhail said.
“We need great jobs in our state, and manufacturing can offer lifelong careers as well as the economic diversity our state needs. We hope the West Virginia Legislature will support this effort and that voters follow in suit.”