CHARLESTON — One of Gov. Joe Manchin’s goals in this legislative session — a break for the business community in the inventory tax — is raising concerns among counties over the potential loss of revenues.

This became evident the past week when the House Constitutional Revision Committee held a public hearing on Manchin’s proposal.

Actually, there are two such resolutions before the House, one of them advanced by some Republican lawmakers.

“The governor’s proposal would basically give the Legislature carte blanche authority to do whatever we wanted to do in the future,” says Delegate Kelli Sobonya, R-Cabell, who has joined the lead sponsor, Delegate Patrick Lane, R-Kanawha, in pushing a GOP alternative.

“There are lots of concerns from different counties. The county commissioners were concerned it would take money away from their county budgets, money that goes to fund schools and education.”

At one hearing, similar fears were raised by a teachers organization.

The Republican proposal would combine the homestead exemption, which hasn’t moved from its $20,000 level in some time.

While that amount would be set as a floor, the Republican proposal calls for some higher exemptions, depending on the appraised value of a home.

“We would make it where it’s a percentage of the house value,” Sobonya said.

“When you have a house in McDowell County, where the average value is maybe $20,000, and it costs a lot more in the Eastern Panhandle, it wouldn’t be fair when you look at the value of the home.”

Manchin’s proposal would provide counties some say in the inventory tax.

“He basically put in his second version to where counties will be able to decide this on a county-by-county basis,” Sobonya explained.

“They can wipe it out completely, can decrease it, phase it in, on a county-by-county basis. Ours basically would let people know what they’re getting into. Spell it out a little better. Ours doesn’t say specifically that it will go to counties for them to decide.”

Sobonya insists the plan won’t cause a financial loss for counties.

“Our proposal moves forward,” she said. “It will depreciate out.

“Say I have a manufacturing company and I basically produce computer parts. Whatever I have there doesn’t affect the tax. Anything new that I would purchase would be exempt from that point on. Your old equipment is going to depreciate out eventually. Then you would be able to enjoy that tax break. It’s only affecting the tax moving forward. So really, the counties aren’t going to lose any money. It’s not as painful as if you totally eliminate it.”

Sobonya maintains counties ultimately will reap tax dollars by attracting new businesses, thus enlarging the tax base.

The inventory tax is considered “one of the biggest job killers in our state,” she says, noting a number of states don’t impose such a tax on business properties and equipment.

“In West Virginia, unfortunately, you’re taxed on products and basically on your personal property before you even make a profit on it,” the delegate said.

Manchin’s position is saddled with three hurdles — voter ratification of the proposed constitutional amendment, legislative authority to empower the counties and the decision by individual county commissions.

“Businesses need predictability to make an investment,” Sobonya said.

“If I’m a manufacturer in Virginia or Pennsylvania and I want to come to West Virginia and make an investment of several hundred million dollars to create a manufacturing facility, I need to know that predictability is going to be there — that a future Legislature or county commission is not going to undo what the Legislature or county commission did.”

Most states don’t leverage an inventory tax, and this simply makes West Virginia less competitive, she said.

A business owner could be paying the tax for years, even though sales taxes were paid on it originally, and that is money that could have been invested for expansion and creation of more jobs, Sobonya said.

“I might want to hire somebody, but this prevents me because I’m on a budget,” she said.

“We’re just trying in this economy to do everything we can to get in line with other states. Insanity is making yourself stand apart from other states when you’re trying to create a positive job climate.”

— E-mail: mannix@register-herald.com