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Justice revives bill shifting tax burden for education

By RYAN QUINN

Charleston Gazette-Mail

CHARLESTON, W.Va. — Gov. Jim Justice this week revived a bill that would reduce annual West Virginia prekindergarten through 12th-grade public education funding by tens of millions but automatically raise counties’ regular-levy property tax rates to make up for the loss.

Gov. Jim Justice

But it might die again, at least for this year. Senate Finance Committee Chairman Mike Hall, R-Putnam, said after his committee met Wednesday afternoon that he doesn’t expect the Legislature to pass the bill during the ongoing special session.

Hall said he thinks lawmakers are going to adjourn for a few days, “and the indication is that the House of Delegates has no interest in the bill.”

He said some lawmakers learned that the bill wouldn’t just raise real estate property tax rates but personal property tax rates, as well. Personal property taxes impact things like vehicles and business inventory and equipment.

He said that seemed to drop enthusiasm for it.

“It’s probably on the shelf,” the senator said. “I don’t anticipate that this particular bill would be dealt with anytime soon.

“I know that, also, members of the business community were unaware that it affected their inventory and machinery and equipment, and so they were beginning to study it, too,” Hall said. “So we just haven’t really worked this thing through the affected parties enough yet.”

In March, during this year’s regular legislative session, the Senate passed Senate Bill 609 by one vote, but the House of Delegates never took up that bill.

Near the end of the regular session, the Senate also added language from SB 609 into a House bill, but that House bill only passed after the Senate agreed to remove the SB 609 provisions.

This week, Justice added Senate Bill 1008, which is similar to SB 609, to the agenda for the ongoing special session.

Lawmakers and the governor still haven’t been able to agree to revenue increases and/or spending cuts to pass a budget, which they must do to avoid a partial state government shutdown on July 1.

The Democratic governor and Senate Republicans have been backing, and the House has been bipartisanly opposing, a revenue plan that cuts income taxes and severance taxes on coal while imposing an increase in the state sales tax. Despite the sales tax increase, it would create budget shortfalls starting in the 2018-19 fiscal year and afterward.

Justice’s press office didn’t respond to Gazette-Mail requests for a call to explain how the newly introduced bill and SB 609 differ, or why Justice decided to add the bill to the special session.

Justice Press Secretary Grant Herring did write in an emailed response that there are two major ways the new bill differs from SB 609. He wrote that it wouldn’t take effect until the 2018-19 fiscal year and it wouldn’t allow county school boards to opt out of the tax rate increases — save for counties, like Doddridge, that don’t receive funding from the state school aid funding formula.

Recent data show that Doddridge is the only county in that situation. It has so much local property tax revenue already that the state school aid funding formula doesn’t give it any money.

SB 609 would reduce the state funding and raise counties’ property tax rates for the 2017-18 fiscal year, which starts about a month from now. The bill’s opt-out provision would enable school boards to nix the tax increase on residents if they were willing to take the significant financial hit to their state funding.

Amy Willard, executive director of the Office of School Finance, previously provided numbers on what each county school system would have lost if SB 609 had passed and the local school board completely opted out of the tax increase.

Kanawha, for example, would lose the most: $9.3 million. Monongalia would lose $5 million, Putnam would lose $2.7 million, Logan would lose $1.3 million, Wayne would lose $1.1 million and Boone would lose $900,000.

Willard said that if school boards allowed their regular-levy tax rates to be increased under SB 609, they effectively would have had no funding change for the 2017-18 fiscal year, meaning the state funding cut would have been canceled out.

She said the planned rate next fiscal year for a Class 2 property — owner-occupied residential property and farms — is 38.8 cents per $100 of assessed valuation, and the new rate under SB 609 would be 45.9 cents per $100 of assessed valuation.

She said the change would mean a person with a home appraised at $75,000 would pay $31.95 extra on his or her annual tax bill for that house, while someone would pay $42.60 extra on a $100,000 house.

Hall said Justice’s newly introduced bill would have essentially increased property tax revenue for public school systems by $80 million but not changed their funding level, thus freeing up $80 million in state general revenue money that’s currently provided through state revenue sources. That freed-up $80 million in general revenue could be eliminated through tax cuts or allocated elsewhere.

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