Analysis from committee staff presented the “Reallocation Fund” as it would grow over the next decade. The Consumer Sales and Use Tax collections are estimated to increase by $116.5 million annually, $88 million of which would come from the tax on tobacco products.
Sen. Bill Ihlenfeld, D-Ohio, questioned what the fund balance would be in 2032 because by his calculation it would show a deficit. The analyst agreed that by 2032 there would be a deficit of $70-$80 million in the fund. Link to counsel’s presentation on both bills here.
Commerce Secretary Gaunch spoke to the bill and stated, “I’m 100% in favor of getting rid of personal property taxes.” Asked if he agreed with the originating bill, he responded, “This is the first time I’ve seen the numbers.” Senator Facemire stated, “You tell us that businesses tell you every day that they don’t like this tax. What tax do they tell you they like?”
WV Association of Counties director Jonathan Adler spoke to the bill, stating that counties had a great deal of fear and concern. “SJR 9 is more broad than what we discussed at any stakeholders meetings,” Adler said
Asked about WV’s competitiveness, Revenue Director Mark Muchow said WV is very competitive for smaller businesses and in the middle for large manufacturing firms. “Real property is very reasonably taxed in WV, ” said Muchow. He cautioned that no change in sales taxes should be effective immediately due to administrative issues.
Ted Boettner of the WV Center for Budget & Policy noted that when a similar initiative was done in Ohio, they actually lost jobs because providing incentives for new capital investment in machinery actually replaced people. He also pointed out that the bill provides no procedure to allocate the funds to counties, schools, and municipalities, and has no growth factor, making the reallocation of funds tied to 2021 revenue in perpetuity.
Senator Eric Tarr, R-Putnam, stated that if the tax killed investments and jobs in the state, the counties would likely benefit from what the bill is trying to give.
Several members of the committee raised concerns regarding the bill. Senator Doug Facemire, D-Braxton, asked whether this bill would simply give relief to corporations but cause citizens to suffer because of increased taxes.
Two amendments were proposed by the committee’s two members who are physicians. Sen. Tom Takubo, R-Kanawha, amended the bill to change the tax on vaping to increase, from 7.5 cents per milliliter to $1 per milliliter. Sen. Ron Stollings, D-Boone, proposed an amendment that $2 million per year retrieved from the tobacco tax be dedicated to tobacco addiction prevention and recovery programs. Both amendments were adopted by the committee. The committee unanimously advanced the bill to be reported to the full Senate with recommendation for passage.