MORGANTOWN -- The city of Huntington on Wednesday took a major step toward gaining the ability to implement a 1 percent occupation tax.
The city also received permission to adopt ordinances that could help it tear down dilapidated housing quicker and improve collection of delinquent fees.
By unanimous votes, a state panel assembled to review cities' applications for a five-year, home rule pilot program approved all four components of Huntington's proposal during a meeting at West Virginia University in Morgantown.
Huntington had asked the panel in its application for the authority to create a land bank, change state law to allow cities to capture fire insurance claim proceeds under certain circumstances and strengthen ordinances to collect delinquent fees.
The largest proposed change -- and what could perhaps be the most controversial moving forward -- is a plan to overhaul the city's tax structure. City leaders want to implement a 1 percent occupation tax, repeal the $2-a-week user fee and reduce the business and occupation tax.
An occupation tax is a tax on earnings (wages, salaries and commissions) related to a job or profession. City officials have said the focus of the request is not to place additional tax burdens on citizens, but to create a fairer way for the city to raise revenue.
Mayor David Felinton said the tax change would most likely be revenue-neutral, meaning the city wouldn't collect more money than what it is collecting now with the user fee and business and occupation tax.
Even though the panel unanimously approved the tax proposal, a few members expressed concerns about the city making "wholesale changes" to its tax system under a five-year, pilot program.
Chris Fletcher, a panel member and Morgantown city planner, said Huntington does not have a detailed exit strategy. He asked what will happen if the city is forced to abandon an occupation tax at the end of the five-year program because the panel is not pleased with the results.
"We would just revert back to the current tax structure we have now," Felinton said. "Six months out (before the end of the pilot program), we would start preparing to switch people back to the current system. That would also give us the appropriate time to budget for the following year."
Fletcher also noted that even though the tax change is set up to be revenue-neutral, there will be a significant shift in who will shoulder the tax burden. While businesses might get a reduction in their business and occupation tax, their workers will be asked to pay significantly more than what they are paying now, he said.
Panel chairman and Wheeling Mayor Nick Sparachane said one of the panel's main duties is to determine whether cities' proposals are legal under state law if adopted. He said Huntington's tax proposal meets those criteria. The concerns voiced by the panel should be addressed by Huntington officials, he said.
"All eyes in West Virginia will be upon you," state Sen. Ed Bowman, a non-voting panel member who sponsored legislation creating the pilot program, told Felinton during the meeting. "Hopefully, you can do this right, because you could be setting the course for all other cities in West Virginia."
It's now up to Huntington City Council to adopt ordinances before any of the city's proposals under its home rule application can take effect.
Felinton said he hopes legislation regarding the land bank, fire insurance claim proceeds and delinquent tax collections are adopted and in effect by July 1, the beginning of the 2008-2009 fiscal year.
His target date for implementing the occupation tax is Jan. 1, 2009, he said. That will give the city more time to conduct further analyses on revenue projections, get input from businesses and residents and work with the city of Ashland, he said.
Ashland adopted an occupation tax about 10 years ago and has offered to help Huntington with the implementation of its tax, Felinton said.
"We're real excited about this opportunity," he said. "If we didn't try to change our tax structure now, we or any other city in the state may never have been able to do it. Sometimes, we have to take bold chances."
In addition to Huntington, Charleston, Wheeling and Bridgeport also submitted home-rule applications.
Charleston was granted the authority to adopt a municipal healthcare provider tax. Under the proposal, the city can levy a tax on hospital billings. The tax would be returned to hospitals to help defray costs incurred by the uninsured, said Cabell County Delegate Jim Morgan, a non-voting member of the panel.
Charleston also was given authority to impose taxes on credit unions and wireless and Internet service users and providers, Morgan said.
A proposal for an urban deer hunt in Charleston was tabled because of concerns from the Division of Natural Resources that the hunt would cause the state could lose $7.2 million in federal funds for wildlife management, Morgan said.
Wheeling received permission to establish a vacant property registration program, among other things.
Bridgeport was given authority to create tax increment financing districts and partner with its local school district on construction projects for public use.
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