Manufacturing representatives and county leaders from across the state weighed in today on whether legislators should have more flexibility to change some property taxes paid by businesses.
HJR 3 could lead to a Constitutional amendment allowing exemptions to the property taxes that businesses pay on machinery and equipment.
The House Judiciary Committee had a virtual public hearing on HJR 3, Property Tax Modernization Amendment, this morning. It was streamed on the Legislature’s YouTube page.
Kim Menke, regional director of government affairs for Toyota said being subject to those property taxes “penalizes capital investment and is an obstacle to overcoming competition amongst our plants.”
He said that puts Toyota at a disadvantage when its makes pitches to expand its plant at Buffalo, Putnam County — even against other locations within the company.
“This particular tax is one of the hurdles we have to overcome in competing for new projects,” he said.
Most of the money from personal property tax goes to county school boards, county commissions and municipalities.
Randolph County Assessor Phyllis Yokum said she’d like to work with manufacturers and addressed Menke directly in her own remarks: “Mr. Menke, we’d take a Toyota plant in Randolph County any day,” said Yokum, a past president of the West Virginia Association of Counties.
But although Yokum said counties want to support their manufacturing base, she was worried about how the resolution could affect the tax base that supports local government.
“These are county monies, so we need a seat at the table, and that’s what we’re asking for,” she said.
More representatives of local governments objected to the resolution, saying it would affect those local budgets but also result in less local control.
“We feel like the local level is where we need to be able to make decisions on our budgets and our spending,” said Agnes Queen, a Lewis County Commissioner and president of the County Commissioners Association of West Virginia.
Scott Lemley, the Wetzel County assessor, agreed and said the end result could be lost local control.
“The main point I want to stick home is that I just think it does a major disservice to our citizens having a voice at the local level having their questions and being able to talk to someone,” he said.
The state Senate is considering a separate but similar resolution that could allow lawmakers to lower personal property taxes, including on vehicles.
The Senate Finance Committee approved the resolution Friday after about an hour of discussion, and it will now be considered by the full chamber.
The House version is more strictly focused on the property taxes that businesses pay.
If either resolution is passed by the Legislature that’s not the end of the decision-making. The citizens of West Virginia would decide on a constitutional amendment on ballots during an upcoming General Election.
Property taxes have been defined in the state Constitution since the early 1930s. Lawmakers have long talked about having more flexibility, particularly with the property taxes businesses pay on equipment and inventory.
“HJR3 simply gives West Virginia voters the opportunity to address future outcomes,” said Rebecca McPhail, president of the West Virginia Manufacturers Association.
West Virginia has a competitive tax structure overall, McPhail said, but the state is one of few with this kind of tax on equipment.
The state in recent years has gotten around property taxes for some companies’ equipment by buying it and leasing it back to the company. That’s a workaround often called, PILOT, or payment in lieu of taxes. Not every manufacturer is eligible for that workaround, though.
“The application of these taxes creates a competitive disadvantage for the Mountain State,” McPhail said.
Betty Rivard, a retired Charleston resident, said what citizens are being asked to consider may not be clear to everyone. She objected to the possible end result of the Legislature having so much say over the property taxes that affect local governments.
“It’s like you’re telling the voter you’re giving us the privilege to vote on a constitutional amendment. But what may not be clear is that a vote for the constitutional amendment means we’re giving the Legislature the power to make local decisions for us,” Rivard said.
“So we’re losing our vote on those decisions from now on.”