Proceed with cuts to inventory tax
Just a month ago, the path seemed clear for West Virginia legislators to take another step to improve the state’s economy. Now, there are obstacles — you guessed it, money — in the way.
Making the state more attractive for job creators has been one of the current Legislature’s top priorities. Phasing out the business inventory tax is the target for this year.
West Virginia is one of only 10 states with such a tax, and that puts us at a disadvantage in persuading business executives to locate new operations here. It also makes life more difficult for existing businesses.
But proceeds from the tax go to county governments, so lawmakers cannot simply write that revenue off the books. To their credit, they have been working on a plan to “hold harmless” local governments that rely heavily on the tax.
Early in the legislative session, the plan was to phase the tax out over a seven-year period, by reducing it $20 million annually.
That seemed achievable at a time when state revenue appeared to be on an upward track and demands for new funding were limited.
But last week, lawmakers learned the January revenue report was a bleak one. Income for the first seven months of the year has been below estimates on which the budget was based.
And new demands for spending have arisen. Among them is a need to find $29 million a year to avoid premium increases in the Public Employees Insurance Agency.
During the past two years, reform-minded legislators have found themselves frustrated on several initiatives. This one is worth continued effort, simply because it could bring much-needed new jobs to the Mountain State.
Lawmakers should stick with their plan on the inventory tax. Making it happen will be more difficult than it appeared a month ago, but as has been said, few good things in life are easy.