Flowers bloom on the grounds of the State Capitol Building, with the golden dome looming in the background. (Photo by Steven Allen Adams)

CHARLESTON — Both the West Virginia Senate and the House of Delegates have joint resolutions moving to give them authority to either phase out or repeal business and inventory taxes if voters approve.

House Joint Resolution 3 and Senate Joint Resolution 7 are different pathways to doing the same thing.

SJR 7, set for passage Wednesday, would give the West Virginia Legislature the authority under the state Constitution to either exempt, reduce or set different tax rates for specific forms of tangible personal property.

HJR 3, also set for passage Wednesday in the House, would give the Legislature the authority to exempt tangible machinery and equipment personal property directly used in business activity, tangible inventory personal property directly used in business activity.

The House Judiciary Committee held a virtual public hearing Monday morning to hear from supporters and opponents of the resolution. Removal of the business and inventory tax has long been a goal of the state’s business and manufacturing community.

Kim Menke, regional director of government affairs for Toyota North America, said the taxation of equipment prevents Toyota from expanding further in West Virginia.

“The West Virginia personal property tax on inventory, machinery and equipment basically penalizes capital investment and is an obstacle to overcoming competition amongst our plants,” Menke said. “When we have the opportunity for new products or new lines, we have to compete amongst all of our Toyota companies not only within North America, but also globally. So, this particular tax is one of the things that is one of the hurdles that we have to overcome in competing for new projects.”

Mike Clowser, chairman of the West Virginia Business and Industry Council, agreed.

“Taxing capital is a disincentive to investing in growth,” Clowser said. “We believe throughout the State of West Virginia, HJR 3 puts the matter in the voters’ hands and if passed, it would allow legislative authority to determine how the tax is treated in the future for future growth in West Virginia.”

Opponents of HJR 3, including the County Commissioners Association of West Virginia, believe the resolution could put a funding source for county governments and school boards at risk once the Legislature gains the authority to reduce or remove the tax.

“We feel that the local level is where we need to be able to make the ruling on our budgets and our money that’s collected,” said Lewis County Commissioner Agnes Queen, president of the association. “We don’t want to have to cut services. A lot of our counties are having trouble now with their budgets dwindling each year. Taking that power out of our hands … makes it even harder.”

“We are voted by the citizens in our county and in our state, and I believe this does a disservice to them because it shifts all valuation assessment of property to the state Legislature,” said Wetzel County Assessor Scott Lemley. “I’m worried that there’s no more local control at the government level. And there’s going to be so much red tape that the average citizen has to cut through that they’re not going to be able to get adequate answers or an adequate amount of time as it relates to the assessment and appraisement of their properties.”

The business and inventory tax has been a target of lawmakers and special interest groups for over 20 years. A report to former governor Cecil Underwood in 1999 recommended the tax be eliminated, as did a task force created by former Gov. Joe Manchin in 2006.

Republican lawmakers have talked about removing the tax since taking the majority in the Legislature in 2015, with talk picking up again in August 2019 at the West Virginia Chamber of Commerce’s Annual Meeting. An attempt last year to phase out the business and inventory tax failed when a Senate joint resolution failed to get the required two-thirds vote.

Both HJR 3 and SJR 7 have to pass on Wednesday, when bills are required to pass to the other chamber. And both bills will require two-thirds in both chambers to be able to get on a special election ballot in 2022. Republicans in both the House and Senate have the supermajorities needed to pass the resolutions, though if Republicans in the Senate lose one caucus member, the resolution is doomed unless a Democratic lawmaker votes with the Republicans.