Legislators and state officials have been talking a lot lately about the condition of secondary roads and the future of the personal property tax on business equipment and inventory. They treat the personal property tax as something that must be taken care of immediately. They see the condition of secondary roads as a problem with no solution, and thus they try to ignore it. Legislators and state officials have it backwards.
First, the property tax on business. The Republican leadership in both houses of the Legislature has been talking about the need to eliminate the tax as a way of making West Virginia more competitive in growing or attracting businesses. They say no state bordering West Virginia imposes this tax on businesses, and that keeps jobs and growth out of the state.
They may have a point there. Individuals who move to West Virginia from other states wonder why they must pay a tax year after year on their vehicles. Businesses here wonder why they should bear this burden when they would not have to in other states. It’s a valid question, but also a complicated one.
The personal property tax is a revenue source for counties and school systems as well as for state government. Also, the tax is part of the state constitution, so voters would have to approve an amendment to eliminate it.
The larger problem is making it revenue neutral. What other taxes would be levied or increased to compensate for the loss of the personal property tax on business equipment and inventory? And would voters approve a tax break for business that they themselves would not be eligible for?
As for secondary roads, Gov. Jim Justice has directed that more be done to repair them, but many have suffered neglect for so many years that patching the worst potholes is only delaying the inevitable.
The state’s Blue Ribbon Commission on Highways issued a report in 2012 saying the state would need to double the $1.1 billion it annually spends on roads. There’s no question the primary roads get attention, but the secondary road system still suffers from neglect. Every year that passes without adequate spending on road repair and maintenance means taxpayers will be expected to pay more in the future to make up for deferred maintenance today.
In 2017, Justice said passage of his road bond levy to rebuild major highways would free up money to maintain secondary roads. The tens of thousands of West Virginians who use secondary roads are still waiting for that result.
So here we have a need for more spending on a basic infrastructure need while the Legislature considers cutting taxes with no stated plans to recover lost revenue. The soft energy industry in the state — coal exports are down, demand for coal for use in power plants is dropping and natural gas pipeline construction is slowing down — have already caused a drop in tax collections in the first two or three months of this fiscal year.
There are other pressing needs, such as the opioid epidemic and related health and social problems, that will require more state resources sooner or later. We can’t rely on a growing state economy to make up the difference. The revised federal numbers on the state’s growth, which showed that earlier estimates were way off the mark, demonstrate that.
If legislators insist on cutting any more taxes, they must make sure those cuts are revenue-neutral.