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Lawsuit could delay tax repeal

Tax
Jan. 14, 2013 @ 02:15 PM

HUNTINGTON — Rescinding Huntington’s occupation tax will not be one of Mayor Steve Williams’ first actions in office as he had hoped.

The newly elected mayor says he has been advised by attorneys to not seek a repeal until the city settles a lawsuit challenging the constitutionality of the tax and the home rule pilot program under which Huntington adopted the tax.

“With that being said, the occupation tax will never be implemented under my watch,” Williams told Huntington City Council members during a work session last week. “Even if a judgment came back today in the city’s favor, I would not be in favor of letting it take effect.”

The pilot program allows four cities — Huntington, Charleston, Wheeling and Bridgeport — to experiment with broader governmental powers as long as the changes do not violate the U.S. or state constitutions, federal law or state laws pertaining to criminal penalties and controlled substances.

Huntington used the program to adopt the occupation tax in May 2011, but several parties, including Steel of West Virginia and Cabell County Commissioner Bob Bailey, challenged the legality of the tax in Kanawha Circuit Court before it could take effect. Oral arguments were heard in the case in October 2011, but Circuit Judge Jennifer Bailey has not issued a ruling.

Williams said the city has begun negotiations with the plaintiffs to settle the court case, but they have hit a few snags.

“The opposing parties want the city to pay their attorney fees. The city has its own attorney fees to pay from this case,” he said. “This lawsuit is larger than the occupation tax, and until it’s settled, I’ve been advised to hold off on rescinding the occupation tax ordinance.”

Williams wanted to rescind the occupation tax quickly to ease concerns with the West Virginia Legislature, which will decide the fate of the home rule pilot program during its 60-day regular session that begins in February. The program will expire July 1, 2013, unless the Legislature decides to extend it.

Several lawmakers, including Cabell County’s delegation, opposed Huntington’s efforts to impose the occupation tax. Williams said his focus in the upcoming session will be convincing legislators that Huntington’s other tax component under the pilot program, a 1 percent sales tax which took effect in January 2012, has proven successful and should remain in place. The city coupled the sales tax with the elimination of or reductions in the business and occupation tax for manufacturers, retail- and service-based businesses.

A legislative interim committee has spent the past several months studying the merits of the pilot program and is expected to forward to the Legislature a bill which would extend the program for five more years and allow another four cities to join.

A draft of the bill last week included a provision which would force Huntington to repeal the sales tax and roll back its business tax reductions, but Williams said he has been assured by lawmakers from Cabell County that the provision will not be included in the bill that is sent to the full Legislature for consideration.

Follow H-D reporter Bryan Chambers on Facebook or Twitter@BryanChambersHD.

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