Blog Posts > Proposed Property Tax Amendment Could Jeopardize Local Excess and Bond Levies
May 12, 2022

Proposed Property Tax Amendment Could Jeopardize Local Excess and Bond Levies

People across the state cast ballots this week in West Virginia’s Primary Election, choosing the candidates who will run in the General Election this fall. Beyond helping select our next federal, state, and local representatives, West Virginians also voted on renewing or enacting property tax levies. These levies provide critical revenue for local services in nearly every community in the state, but a proposed amendment to West Virginia’s constitution that will appear on the ballot in November threatens the revenue that funds these voter-approved services.

West Virginia’s constitution sets the maximum property tax rates for local governments and school districts. However, voters can temporarily exceed these maximum rates through an excess levy. Excess levies are an additional property tax used to provide supplemental funding for libraries, ambulance services, school building improvements, extracurricular activities, and other essential community services. Counties and municipalities may impose an excess levy for up to five years if it is approved by 60 percent of the voters in a special levy election; school districts can impose an excess levy for up to five years, and only need the approval of 50 percent of the voters.

Further, counties, school districts, and municipalities may levy a property tax based on any bonds they have issued. This tax rate is determined by the amount of money that must be raised to pay the principal and interest of the bond and – when combined with the regular county, school, or municipal rate – may not exceed the maximum rate for that taxing authority.

Currently, 44 of West Virginia’s 55 school districts, 30 of the state’s 55 county governments, and 57 municipalities have excess levies in place. In addition, 20 school districts have active bond levies. All of these community-supported levies are at risk of funding shortfalls if the proposed property tax amendment is approved this fall and property tax cuts are later enacted.

Voter-approved excess and bond levies account for nearly 40 percent of property tax revenue in the state, generating $857 million. This includes $78 million from county excess levies, $649 million from school excess and bond levies, and $26 million from municipal excess and bond levies.

If passed, the constitutional amendment that West Virginians will be voting on this fall would give the state legislature the authority to exempt most business personal property and personal vehicles from the property tax. With no replacement revenue yet proposed, up to an estimated $515 million in property tax revenue could be lost by local governments, including an estimated $205 million from excess and bond levies. Such funding is unlikely to be made up even if the state does eventually identify replacement revenue for regular property tax cuts.

This lost revenue would directly affect local government services, as most excess levies provide dedicated funding to direct services, including levies for fire protection, EMS services, senior services, libraries, health departments, transportation services, and law enforcement. In addition, the loss of revenue would impact local governments’ ability to make bond payments, as the bond levy rates are set at the rate necessary to pay the principal and interest on bond. If current sources of revenue like business machinery and equipment are exempted, the current bond levy rates would be insufficient to meet the required payments, putting localities at risk of failing to meet their bond repayments.

The property tax directly funds government services that West Virginians engage with and benefit from on a daily basis. As such, it is no surprise that such a significant share of property tax revenue comes from excess and bond levies, which must be approved by voters in each unique community. The proposed constitutional amendment would significantly weaken the ability of local communities to make their own investments, taking power away from local voters in favor of allowing the state legislature to pursue more ineffective tax cuts.

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