West Virginia voters are months away from considering a constitutional amendment that could allow legislators to make changes to property tax rates, but county leaders across the state are already calculating how local budgets could be affected.
Senate Finance Chairman Eric Tarr, R-Putnam, sent a letter last month to county assessors and sheriffs asking for specific numbers on the kinds of property subject to the tax, particularly motor vehicles and business machinery, equipment and inventory.
“The Legislature is aware of the importance of this revenue to local governments,” Tarr wrote. “The Legislature is evaluating the amount of revenue required to replace the subsequent tax cut should the Legislature choose to eliminate those taxes.”
Property taxes have been defined in the state Constitution since the early 1930s. Most of the money from personal property tax goes to county school boards, county commissions and municipalities.
Lawmakers have long talked about having more flexibility, particularly with the property taxes businesses pay on equipment and inventory. Last year, lawmakers passed a resolution that could allow changes on personal property tax rates.
Because it’s a constitutional issue, West Virginia voters have say-so on the matter through General Election ballots next fall.
“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 keenly aware, should that amendment pass, the Legislature will have the ability to eliminate the tax on machinery and equipment used directly in the operation of a business and personal automobiles, as well as a strong mandate from the citizens of the state to eliminate these taxes.”
County government leaders are definitely aware, and many have provided warnings that budgets for local services are so dependent on property taxes that they could be in a deep bind if state lawmakers don’t provide alternative means. State legislators have not yet specified what that alternative might be.
Counties have been responding to Tarr’s request for information.
The West Virginia Association of Counties have formed a task force that has met several times, said Jonathan Adler, executive director of the association. Assessors have been crunching numbers, along with 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’ stance on Amendment 1 as we want to fashion a cooperative relationship with the legislature/leadership on how we fill the expected gap to county revenues that change will bring. But of course we won’t know what that is until the legislature begins work with its passage,” he said. “This is all ‘prep work.'”
Kanawha County’s commission had the property tax reporting issue on an agenda this week. Commissioner Kent Carper expects to provide the necessary information. He is concerned about how property tax changes could affect both county budgets and local school systems.
“We are responding,” Carper said. “There’s nothing more important on the November ballot than the constitutional removal of protection for essential local service workers, including basic education.”
Wood County’s commission also discussed the request for property tax information during a meeting this week. Commissioner Blair Couch said the county brought in $3.5 million in property taxes from vehicles and businesses in 2019, $2.4 million in 2020 and $1.2 million so far this fiscal year. Other surrounding counties brought in much less, Couch said.
For Wood County, he said, those amounts could be as much as 10 percent of the annual budget.
“We’re trying to supply Senator Tarr a number without understanding what he’s going to do with that,” Couch said. “A few senators are trying to figure out what they’re going to do. And I don’t know.”
Counties have been asking for permission to institute a 1 percent sales tax in areas not already covered by municipalities, he said. That might make up for lost property taxes in some areas, he said, but might provide very little cushion in counties that don’t have much retail base.
Couch said he is glad legislative leaders are trying to determine how much property taxes go toward supporting county expenses. “I’m glad they’re investigating it. I can’t wait to see his statewide numbers if he’ll share to see what counties would do well and which ones won’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 more debate over property tax changes will occur over the next few months.
“I expect a lot of groups around the state to be feeding information to the public about their various stances on it,” Steele said. “I know county officials are hesitant because that’s a lot of their revenue, comes from equipment and inventory tax as well as personal property.
“At the same time, I think those of us in the Legislature who voted for that, I was one of them, we understand there’s probably going to have to be some type of adjustment to revenues, or at least with revenue sharing, between the state and the counties when it comes to taxes to backfill that.”