Legislative, business leaders promote tax-cut Amendment 2 during state chamber summit

Sep. 2—MORGANTOWN — While the House and Senate remain at loggerheads over tax-cut legislation, the speaker and president sat in cordial agreement Friday on the importance of passing Amendment 2 in November.

They were part of a panel supporting the measure held during the last day of the West Virginia Chamber of Commerce 2022 Summit at The Greenbrier.

House Speaker Roger Hanshaw, R-Clay, said it won't do what people fear — defund schools, police, fire and EMS services.

"Process matters and procedure matters, " he said. "It costs not one red dime. It costs not a penny to anyone " to pass it. Passage does nothing but give the Legislature options to consider tax reform.

Senate President Craig Blair, R-Berkeley, displayed a copy of the county revenue replacement plan he'd also had placed at everyone's place at the audience tables.

"We're not going to bankrupt anybody. The whole point of this is to make certain they succeed, " he said. "We've got counties that are dying on the vine."

Amendment 2 is one of four Constitutional amendments that will be before the voters in November.

Its official summary of purpose is: "To amend the State Constitution by providing the Legislature with authority to exempt tangible machinery and equipment personal property directly used in business activity and tangible inventory personal property directly used in business activity and personal property tax on motor vehicles from ad valorem property taxation by general law."

Currently, that taxation is under local control and the vast majority of the revenue goes to the county school boards, counties and municipalities.

The other panelists were state chamber President and CEO Steve Roberts ; West Virginia Manufacturers Association President Rebecca McPhail ; and tax attorney, former state tax commissioner and frequent legislative tax policy consultant Michael Caryl.

Roberts said Amendment 2 is a "once-in-a-lifetime opportunity " to help the state continue its progress in rebounding its economy. "West Virginia as no problems that more jobs won't solve. Amendment 2 will help us get there."

West Virginia in several respects is an outlier state, among them its tax on business inventory, equipment and machinery, he said. It's time to amend a 90-year-old tax system that doesn't work anymore.

McPhail talked about the state's shrunken manufacturing base — about one-third the size it was 40 years ago. The tax structure is one reason for that, she said. West Virginia has to compete not only globally, but with other states that don't have this tax.

"It is an impediment, " she said. "Amendment 2 is the only way to open the door to serious policy discussion."

Caryl said neighbors Pennsylvania and Ohio lack this tax ; the other neighbors do but to a lesser degree and without the same adverse impact.

We've worked around that tax with local PILOT agreements across the state, he said, but that workaround picks winners and losers. We need a system that supports investment.

There will be lots of options to replace lost local revenue, he said. The Senate tax plan sends a great signal to local government officials about the Legislature's commitment to replace what's lost.

His longstanding proposal, he said, is called Fair 55. It proposes, among other things, a consumption tax that would ultimately replace the personal income and personal property taxes, and not unfairly burden low-income residents who must purchase necessities the way the sales tax does.

The House and Senate stalemated over tax reform during the July special session. The House passed the governor's 10 % personal income tax cut bill, which closely aligned with House Finance chair Eric Householder's regular session bill. The Senate killed the bill, putting forth instead a resolution outling its plan based on passage of Amendment 2.

Blair and his team have repeatedly said the property tax cut should come first and he said it again on Friday.

The Senate has sweetened the deal by adding in the elimination of the personal property tax on vehicles. "You make that go away, people feel that it's real money in their pockets, " he said.

Hanshaw pointed out that he lives in the tiny hamlet of Wallback in Clay County. His kids go to public school, his wife is a schoolteacher, their home is served by two volunteer fire departments.

It's the same for all the legislators. "We live here, too, " he said. "To think that I'm going to defund local services of government is frankly ridiculous."

Anyone who follows the bills introduced during the regular sessions knows there are bad ones put in the can, he said. "There are plenty of irresponsible opportunities put before the Legislature every year."

But the Legislature has a moral commitment to be a good steward of state finances and a fiscal commitment to maintain its bond obligations in good standing.

Coincidentally, Gov. Jim Justice announced on Thursday that General Revenue collections for August of $507 million were $141.8 million above estimates and 32.2 % ahead of prior year receipts — and put in a plug for his plan.

"I once again plead with the state Senate to give our hard-working West Virginians an immediate and permanent 10 % cut of the personal income tax, " he said.

"These surpluses are the taxpayers' dollars, and should be returned to them in the most efficient and fastest way possible. ... The House of Delegates stands right with me, but I need you to contact your state senator and ask for their help in delivering my immediate tax break that will put money directly in the pockets of hard working West Virginians who are battling inflation, not in the pockets of large corporations, like other plans that have been proposed."

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