West Virginia GOP Senate’s Tax Overhaul Dead After Joint Resolution Fails To Get Two-Thirds Majority

Feb 25, 2020

Updated Tuesday, Feb. 25, 2020 at 6:05 p.m.

A controversial and sweeping tax reform overhaul met its demise Tuesday in the West Virginia Senate when the second — and most essential — part of a two-pronged plan to wipe out tangible personal property taxes was rejected. While the Republican-led chamber had already passed the details of the proposal, they failed to pull enough votes to allow it to have a chance at becoming constitutional.

At the heart of the proposal was a six-year phase out of taxes on manufacturers, motor vehicles and retail inventory. The overhaul would have also called for increases to tobacco and consumer sales taxes — a component created to backfill about $200 million of what would have been nearly $300 million in lost revenue. 

The rejection of a proposed constitutional amendment closed out more than four hours of debate held on the Senate floor over the course of two days. 

Senate Joint Resolution 9 would have allowed the Legislature to reduce or fully repeal any “species” of personal property tax. The specifics of those tax repeals — as well as tax increases needed to backfill most of the revenue that would have been lost — is found in a bill that passed the Senate Monday. 

“We have to amend the Constitution in order for the Legislature to lower [these personal property] taxes. We do,” Senate Judiciary Chair Charles Trump, R-Morgan, said. “And if we don't adopt and ratify this amendment, we will perpetuate the stranglehold that's been in place since 1933 on the Legislature’s authority.”

Lawmakers ultimately voted 18-16 to reject Senate Joint Resolution 9. As a proposed constitutional amendment, Senate Joint Resolution 9 needed two-thirds of the elected members — or 23 of 34 senators — to vote in favor for it to advance to the House of Delegates. 

Sen. Bill Hamilton, R-Upshur, and Sen. John Pitsenbarger, R-Nicholas, joined Democrats voting as a bloc to oppose the measure. 

In two-plus hours of debate Tuesday, Republicans framed Senate Joint Resolution 9 as allowing lawmakers to create a more business-friendly environment in the state and giving citizens the final say on whether they should pay taxes on their automobiles. 

“It's a Depression-era Constitution that has done a really good job of taking West Virginia from being one of the best states in the union to one of the poorest,” Senate Finance Chair Craig Blair, R-Berkeley, argued. “We are asking for the people of West Virginia to have the opportunity to maybe change our constitution to do something a little bit different in West Virginia – that may provide job opportunities. But, more than anything, [it would provide] the greater flexibility for the Legislature to do things different.”

Democrats, though, argued that the plan left too many unknowns for future budgets, would take the power away from counties and would put the burden on taxpayers who have the least. 

“It's difficult for the public to make an informed decision when we can't even agree on what type of tax benefit — if there is one — that the people would gain,” Sen. Richard Lindsay, D-Kanawha, said on the floor. “When we can't even agree, for example, that the projections that the Finance Committee shoots out every month are no longer important or valuable, how can they make an informed decision on that? How can they make an informed decision when there are threats against county officials just in the debate of the tax bill?”

Members of the minority also took aim at Republicans for rejecting last week an amendment to the proposal that would have limited the constitutional scope of what kinds of taxes could be lowered or repealed.

“We offered an amendment to [Senate Joint Resolution 9] that would have only cut the tax on motor vehicles, which would be most helpful to West Virginians,” Sen. Mike Romano, D-Harrison, said in a news release following the vote. “Our Republican colleagues overwhelmingly voted against our proposal, and that fact should concern everyone. It proves that their scheme was really to benefit their corporate backers, not to put West Virginians first.”

Lawmakers in the upper chamber voted Monday 17-16 to pass Senate Bill 837, the first piece of the effort to implement the tax reforms. 

Senate Bill 837 calls for a six-year phase out of ad valorem (based on value of assessed property) personal property taxes on manufacturing machinery, equipment and inventory; retail inventory and motor vehicles. The measure also calls for hikes on tobacco, e-cigarette and consumer sales taxes. 

But with those changes contingent on the adoption of Senate Joint Resolution 9 — and Wednesday marking the last day for bills and joint resolutions to clear their house of origin — the tax overhaul plan is effectively dead.