Gov. Jim Justice has hit the road to oppose an amendment that could lead to lower property taxes, and the executive director of the West Virginia Manufacturers Association is puzzled.
Her reason is the governor’s past support.
“Certainly we’re disappointed that the governor is taking this position and maybe a little surprised — maybe more than a little surprised given that this is a departure from the priority that he’s made in past State of the State addresses that this is an issue, the recognition on his part that this is an impediment,” Rebecca McPhail said. “I’d love to better understand what has changed and why this is not the right direction for West Virginia.”
In his 2018 State of the State address, Justice introduced a proposal he called “Just Cut Taxes and Win.” “What I want to start with is the elimination of the tax on manufacturing machinery and equipment and manufacturing inventory,” he told the crowd that night.
For the 2019 address, he followed up by declaring, “Today, I’m requesting the elimination of the business inventory machinery tax.”
Flash forward to this past Friday and the governor was outside a Wheeling fish sandwich shop, publicly arguing against the amendment proposal that could lead to the tax cut. His pet bulldog was along for the road trip, and there were signs to reflect that: “Babydog says vote no on Amendment 2.”
The governor has his reasons, and he’s gone over them many times recently. One is that he supports a personal income tax cut of about 10 percent and says West Virginia couldn’t afford to cut both income and property taxes at the same time in any meaningful way.
Another is that he’s worried about the ups and downs of West Virginia’s economy. In his words, “doop happens.” This concern is that property taxes, currently cemented into the state constitution, are the lifeblood of local services. State government might say it’s going to make up for that money, but that could be a risk during an economic downturn.
And the governor has suggested the local governments closer to the people are more to be trusted than the decision-makers in Charleston.
But there’s a final element of the governor’s argument, and that’s the businesses that could benefit from lower property taxes on their equipment, machinery and inventory.
“Overwhelmingly, the machinery and inventory tax (cut) benefits big, big companies, big corporations and many of them are out of state corporations. Absolutely, the people – the people – are what I’m interested in. The workers are the backbone of West Virginia, and I want to help the workers,” the governor said at a briefing last week, contrasting the property tax with the income tax cut that he prefers.
The governor continued to say that during a flurry of recent announcements, the out-of-state companies being welcomed to West Virginia have not specifically told him that they want the property tax cut.
“All those business announcements that I’ve come up with, I haven’t had anybody push back on me and say you know we’d really like you to get rid of that machinery and inventory tax. Nobody. Nobody,” he said.
However, companies setting up in West Virginia do regularly work out deals to get around the tax through an agreement called payment in lieu of taxes, often called by an acronym, P.I.L.O.T. It’s essentially the state owning the property, so it isn’t taxed, with the companies leasing it.
McPhail said companies with longstanding roots in West Virginia deserve the same kind of break that the freshly-located companies can get.
Groups representing businesses, like the Manufacturers Association and the West Virginia Chamber of Commerce, have publicly supported the amendment and the likely tax cuts to follow, saying the relief would give companies more latitude to make investments in capital and employees.
“We have had some great announcements over the past 12 months, maybe even going back a little farther, but there have been workarounds that have enabled those companies to come in and get us past this economic barrier that we have that sets West Virginia apart — and not in a good way — from the states with whom we compete for economic investment,” she said on MetroNews’ “Talkline.”
The @wvmanufacturers conducted a study about the different economic opportunities within West Virginia. @BexMcPhail discusses this study with @HoppyKercheval. WATCH: https://t.co/yCFQ3nDJuy pic.twitter.com/8jKw6WpeCv
— MetroNews (@WVMetroNews) September 23, 2022