New Brief Highlights How Passage of Amendment Two Would Put Local Public Services at Risk

For Immediate Release: August 4, 2022

Contact: Renee Alves, 559-916-5939

Charleston, WV – Amendment Two, or the Property Tax Modernization Amendment, will be on the ballot this November for West Virginia voters to consider. If passed, it would amend the constitution to give the state legislature the authority to exempt business machinery and equipment, business inventory, and personal vehicles from property taxation. As such, passage of the amendment would give the legislature control over $515 million of property tax revenue, or 27 percent of total property tax revenue in the state, resulting in the fulfillment of a long-term goal of state legislators to take control of a significant portion of property tax revenue in order to pursue a property tax cut that largely benefits out-of-state businesses.

The proposed exemptions under Amendment Two would result in local governments losing an essential revenue stream. The $515 million in property tax revenue from personal vehicles and business machinery and equipment, business inventory, and other business personal property accounts for up to 37 percent of total property tax revenue in some counties. The loss of this critical revenue will adversely impact the ability of municipalities, county governments, and school districts to provide needed services that benefit all West Virginians, and will likely lead to cuts to services or increased taxes on other parties, like homeowners.

Our new issue brief further explains how property taxes function and benefit the state, the details of Amendment Two and the negative implications of its passage, and why the West Virginia Senate’s recently revealed plan to reimburse local governments for the potential lost revenue is not expected to be fiscally feasible. This brief was authored by WVCBP senior policy analyst, Sean O’Leary.

Key Findings:

• Property taxes are primarily a local tax in West Virginia, with over two-thirds of property tax revenue funding local school districts.
• 40 percent of property tax revenue comes from voter-approved bond and excess levies.
• West Virginia has some of the lowest property tax rates in the country.
• Amendment Two would give the state legislature control over 27 percent of total property tax revenue, a total of $515 million. The legislature’s anticipated goal is to eliminate this portion of property tax revenue entirely by exempting new items from property taxation.
• Businesses – not individuals – would receive two-thirds of the proposed tax cuts under Amendment Two.
• If Amendment Two is passed and the legislature moves forward with exempting new items from property taxation, county governments would lose an estimated $138 million in revenue, municipal governments would lose an estimated $35 million, and school districts would lose an estimated $209 million, after adjusting for anticipated impacts to the school aid formula.
• Very little evidence exists to support claims that West Virginia’s property taxes are a significant barrier to economic growth. Instead, studies have shown that factors such as educational attainment, infrastructure, and quality of public services – all factors that are funded by property taxes – are more important to economic growth and attracting businesses than taxes.

“While proponents of Amendment Two’s passage tend to focus on the potential exemption of the personal vehicle tax, over 70 percent of the potential tax cuts would go to businesses,” says O’Leary. “And while proponents of eliminating West Virginia’s property tax on business machinery, equipment, inventory, and other business personal property argue that the tax impedes economic growth, there is very little evidence to support this claim. In fact, during the past decade, states with property taxes on business machinery, equipment, and inventory saw more manufacturing job growth on average than the states without such taxes, strongly undermining the claim that the tax is a significant barrier to job growth.”

You can read the full brief here. Please note: an appendix with county by county impacts is included at the end of this publication.