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Auditors back expansion of home rule

Home rule
Nov. 27, 2012 @ 11:59 PM

CHARLESTON -- Legislative auditors have concluded that a program that gives a select few West Virginia cities, including Huntington, broader governmental powers has proved beneficial enough to expand statewide.

State lawmakers and city officials, however, say that limited expansion of the program is more likely.

The auditors presented their findings on the municipal home rule pilot program Tuesday to a pair of House-Senate oversight committees during legislative interim meetings in Charleston.

Adopted in 2007, the five-year pilot program allowed four cities -- Huntington, Charleston, Wheeling and Bridegport -- to experiment with increased authority as long as the changes did not violate the U.S. or state constitutions, federal law or state laws pertaining to criminal penalties and controlled substances.

The legislative audit conducted by the Performance Evaluation and Research Division says the program has helped the participating cities by increasing revenue, streamlining administrative matters and the business licensing process, and strengthening fee collections. As a result, the audit recommends that the Legislature give the same broad-based authority to all cities with more than 2,000 residents under the same limits as the home rule pilot program.

"The program has also proven beneficial to the entire state, as several proposals were either implemented into state law or resulted in the modification of state regulations," according to the report.

The four cities brought forth 25 proposals under the pilot program, 20 of which were either fully or partially implemented by city ordinance. Eight of those proposals have since been approved by the Legislature and enacted statewide.

Huntington submitted four home rule proposals, three of which have been fully or partially implemented on the local level. They include:

A provision that allows the city to capture fire insurance claim proceeds to cover the costs of demolishing fire-damaged structures. As a result of the provision, which was later implemented statewide, Huntington has saved $165,000 in demolition costs and retained almost $250,000 in property value.

The authority to issue liens for delinquent city fees. Charleston and Wheeling sought similar proposals. Huntington filed 422 statutory liens in 2011 and has sent out 2,290 lien notices this year, according to the audit. The statutory liens yielded more than $100,000 in fee collections, while collections at sale closings netted $305,000 and mailings sent between August 2010 and July 2011 generated $400,000.

Implementing a local 1 percent sales tax in exchange for eliminating the B&O tax on manufacturing and reducing it by half for service- and retail-based businesses. The sales tax generated $2.225 million during the first 10 months of this year, while the B&O tax reductions saved Huntington businesses $2.085 million between January and June, according to the audit.

Huntington also used the home rule pilot program to adopt an ordinance that authorized a 1 percent occupation tax and the repeal of its $3-a-week user fee. Several parties challenged the occupation tax in Kanawha Circuit Court, however, before it could take effect. The lawsuit, originally filed in June 2011, is still pending.

The joint Committee on Government Organization plans to discuss a bill for the coming 2013 legislative session that would act on the audit's recommendations. But Sen. Evan Jenkins urged caution during Tuesday's meeting. The Cabell County Democrat, whose district includes Huntington, said lawmakers should ensure that cities don't prompt more lawsuits or otherwise go overboard if granted new powers.

"We must at this point in time, address those issues and provide clarity to statute, if possible, so we don't create the potential of a municipality going beyond wherever that line is drawn," Jenkins said.

Despite the audit's recommendation that home rule should be expanded statewide, Delegate Jim Morgan, D-Cabell, predicts the Legislature will take a scaled-back approach.

"From conversations I have had with folks who are interested, I would expect that legislation would attempt to continue the home rule pilot program for the existing cities and open it up to four or five more cities," said Morgan, who is chairman of the House Government Organization Committee. "There also could be additional restrictions imposed on things such as taxation."

Huntington Mayor-Elect Steve Williams, who attended Tuesday's meeting, said he will advocate a similar proposal when the 2013 session begins in February.

"We're real encouraged by the auditor's recommendations, and if there's one message to take from all of this, it's that all of the cities have been able to reduce costs and operate more efficiently," Williams said. "I think the reality, though, is that expanding home rule statewide doesn't have an ounce of passing. It's a more realistic approach to let the existing cities continue to be part of the pilot program and allow four more cities to participate."

The Associated Press contributed to this report.

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