W.Va. considers tax flexibility for localities

AP News
Posted: Nov 20, 2009 2:56 PM

West Virginia's tax modernization project is back on, but that doesn't mean businesses and individuals should necessarily expect lower taxes in the near future.

"Tax modernization does not always mean tax cuts," said Tax Commissioner Christopher Morris, chairman of a work group appointed by Gov. Joe Manchin to propose ways of making the state's tax system more efficient.

A report by a similar group in 2006 led to the elimination or reduction of several business taxes and a new tax credit for low-income families, among other measures.

The group that met for the first time on Friday in Charleston, though, sees its role more as a way to bring old laws up to date and provide greater flexibility to counties and municipalities in collecting taxes.

The goal is to have a set of recommendations ready for the legislative session that begins early next year, Morris said, but little at Friday's meeting suggested the work group is ready to make concrete proposals.

"There's a lot of work still to be done that can't be achieved with this turnaround time," Morris said.

That's fine with some lawmakers, who say they'll have plenty of issues on their plate in the coming session.

"We have to be careful about any step we take," said Senate Finance Committee Chairman Walt Helmick, D-Pocahontas. "This is going to be the most contentious session in years and years."

Lawmakers are looking for recommendations, said Senate President Earl Ray Tomblin, but not necessarily plans as sweeping as those that came out of the 2006 work group.

"I would not anticipate any tax reductions," the Logan County Democrat said.

The closest thing to a solid proposal came in the form of a recommendation that the Legislature appoint a commission to study the state's telecommunications tax code, some of which hasn't changed since the 1930s.

In an era of broadband, cable television and wireless communication, West Virginia's laws may lag behind those of other states when it comes to telecommunications, Deputy Revenue Secretary Mark Muchow said.

Any changes to telecommunications tax code would likely affect local governments more than the state, Muchow said, because most taxes from that industry are paid locally in the form of 911 fees, utility excise taxes and other measures.

Giving counties and municipalities more authority to levy taxes was a policy broadly agreed on by members of the work group, although specifics are still hard to come by.

That flexibility, though, could take the form of countywide sales taxes, allowing county levies to pass with a greater than 50 percent majority of votes instead of better than 60 percent and requiring landlords to pay municipal fees if tenants don't.

"West Virginia gives less fiscal autonomy to its local governments than any other state in the nation," Marshall University economist Cal Kent said.

"A lot of the things we're talking about are administrative reforms that will enhance local governments' ability to collect taxes," he said. "It will not cost the state anything."

The work group has another meeting tentatively scheduled for next month.


Associated Press Writer Lawrence Messina contributed to this report from the statehouse.