Tax Reform: Cities Want More Flexibility

In the fifth meeting of the Joint Committee on Tax Reform, lawmakers took on a number of issues, but one included hearing from city and county governments on what they need in a reformed state tax code.

“Revenue and flexibility to address aging infrastructure, pensions, housing and all that will attract and retain citizens,” Lisa Dooley, Executive Director of the West Virginia Municipal League, told the committee.

Dooley was joined by Huntington Mayor Steve Williams and Wheeling Mayor Andy McKenzie for the panel discussion on municipal taxation issues. All three shared the same message: cities need revenue, but more than that, they need the flexibility to find the revenue for themselves.

Both Williams and McKenzie lead cities that were in the first group in the state to adopt Home Rule, a state program that allows cities more decision making power over things like taxation, blight and economic development. Both cities have faired well from the program and are seeing major success in some areas.

McKenzie said in Wheeling they were able to reduce the number of city business licenses from 77 to 3 under Home Rule, and now revenues from licensures are increasing. Huntington successfully implemented a one percent sales tax while reducing their business and occupation tax, but Williams told members they need more.

“Huntingtonians are in a better position to make decisions than 134 members of the two houses in Charleston. Give us the ability to be able to do this, but give us the ability without hamstringing, if you do this then you must do some of these other things,” he said.

“We have to balance a budget every year just as you do, but right now I have hillsides that I’m having to deal with, I have a drug problem and epidemic of addiction that I’m having to deal with and frankly, the choices that I have right now are bad and worse.”

One problem the panel pointed out, antiquated systems in the state’s Tax Office that have West Virginians paying property taxes on an 18 month delay.

“We’re trying to go back sometimes and figure out what people had 18 months ago or 24 months ago versus what I have.” McKenzie said, “and so I think that the system we’re using, I understand 150 years ago when the tax system was created why we did that. Today, with technology, I don’t understand why we do that.”

Modernization of the department was one of Dooley’s major recommendations for the committee as well, saying she believes if some gaps were closed within their system, more revenue could be collected.

Committee Co. Chair Del. Eric Nelson said administrative procedure updates are something in the realm of the committee and something they will consider.

Aside from the discussion with municipal leaders about necessary changes to the state tax structure, lawmakers also heard from county level officials. Both panels said county governments really have little taxing authority on their own, but commissioners warned if lawmakers made even slight reductions to the state’s property taxes, it could make many counties across the state unstable.

The committee will meet again on June 29 to continue discussing the state’s property tax structure. Upcoming study topics include personal income taxes, tax credits and excise taxes, like the state’s gasoline tax.