Buckhannon will have to wait before collecting sales tax
BUCKHANNON — The State Tax Commissioner has ruled the City of Buckhannon cannot begin collecting its municipal sales tax on Oct. 1, 2019, effectively ending the city’s quest to begin any collections in 2019.
In a letter to city attorney Tom O’Neill dated March 5, State Tax Commissioner Dale Steager said allowing the city to begin its collection effect Oct. 1, 2019 would violate the Legislative Rule that provides that municipal sales and use taxes shall become effective either on Jan. 1 or July 1 after 180 days notice to the tax commissioner of the imposition of the taxes.
“The state tax department is not willing to violate this legislative rule,” Steager wrote.
“Furthermore, to permit Buckhannon’s sales and use tax to become effective on Oct. 1, 2019 would be contrary to the language of the very ordinance that Buckhannon has passed,” he said. “Currently, Buckhannon’s municipal sales and use tax ordinance states that collection of the tax is to begin Jan. 1, 2020. The State Tax Commissioner cannot unilaterally override this language and let Buckhannon begin collecting municipal sales and use tax early.”
The city had put the Jan. 1, 2020 date in its ordinance with the expectation that it could amend that at a later date if successful in getting an earlier collection date. The tax is expected to generate roughly $1 million a year.
The State Tax Commissioner previously said that because the city’s home rule amendment was approved at the Jan. 16, 2019 Municipal Home Rule Board meeting which came after the beginning of the 2019 calendar year, that the City of Buckhannon could not begin collection of the tax until Jan. 1, 2020.
Senate Bill 535 which was sponsored by Sen. Bill Hamilton, R-Upshur, and would have allowed the City of Buckhannon to begin the tax collection on July 1, 2019, passed the State Senate unanimously but after first reading in the House was directed to the House Finance Committee and then the Rules Committee. The Rules Committee moved the bill to the inactive calendar on March 6.
O’Neill said at Thursday’s Buckhannon City Council meeting, “We were unable to persuade the House of Delegates to advance that piece of legislation and the state tax department, additionally seems at this point either unwilling or unable to make any further accommodations at all.”
Councilman David Thomas said, “It’s not unable. It’s unwilling It’s ridiculous sometimes what we have to deal with working with our state.”
O’Neill said he wanted to clarify one part in Steager’s letter.
“When the state tax department says in there that we failed to meet our Dec. 31 deadline, I just want to be clear about one thing,” he said. “The reason we didn’t have that ordinance passed by Dec. 31 was because the tax department told us not to.
“When the state tax department says in their letter that we are not granting your request because you didn’t meet this deadline without including the additional bit of information that we were prepared to meet the deadline but were told to stand down by their office, I just think that needs to be clarified for the record.”
O’Neill said there are a number of avenues that Buckhannon could take to still get the sales tax implemented in 2019 but that would involve jumping through multiple hoops.
“We were trying to do things the correct way, up front and above board,” he said.
O’Neill said he, Mayor David McCauley, director of finance and administration Amby Jenkins and Hamilton did everything they could and councilman Robbie Skinner came down to help lobby as well.
“We moved heaven and earth to try to get this in place July 1 and we just hit an immovable force in the House of Delegates,” he said.
Thomas said, “I think we are all aware of that, Tom. Thank you for what you did.”
McCauley said, “This bill passed unanimously in the State Senate and all indications were it would have overwhelmingly passed in the House of Delegates.”
O’Neill added the bill passed unanimously in the House Finance Committee as well.
McCauley said he inquired from Del. Amy Summers, House Majority Leader and vice chair of the House Rules Committee, and received a response after the session ended.
He shared the email Thursday in council which said, “Your local delegate was not in favor of the bill due to increased taxation.”
Skinner said, “As we worked through some members of different committees that not having local support was critical unfortunately.”
But on Friday, Del. Carl “Robbie” Martin, R-Upshur, called it speculation that the bill would have gone forward had he been a big supporter of it.
Martin said that O’Neill had asked him to sponsor a bill to have the City of Buckhannon be able to collect the 1 percent municipal sales tax in 2019 versus the Jan. 1, 2020 date.
“I told him I was not going to be sponsoring that,” he said.
In a prepared statement, Martin said as a Republican he is not in favor of raising taxes in general.
“I support lowering the tax burden on West Virginia families and opposing any new taxes or increased taxes,” he said. “Also, as a Republican, I support returning local control to all levels of government when constitutional.
“The reason that Buckhannon is able to implement the 1 percent sales tax is because of Home Rule which was approved by the West Virginia Legislature,” he said. “I believe that if we truly want to have Home Rule then the people should have their voices heard.”
Martin said he would support the sales tax in Buckhannon if the tax was to be put on the ballot in the next election and a majority of the people approved the tax.
“If they approve the tax then that is because the people wanted it,” he said. “If the tax is voted down then they clearly did not want to see higher taxes.”
Martin is general manager of the Bicentennial Inn and 88 Restaurant and Lounge in Buckhannon’s city limits.
“I believe that economic growth can best be achieved by unleashing free enterprise, reducing regulations and creating a free-market business environment,” he said. “This includes developing a climate that encourages business investment, economic diversification and job creation.”
As for Senate Bill 535, Martin said he heard other delegates were not happy that their cities weren’t included and were asking why Buckhannon was getting special treatment when they had the opportunity to apply for it at the same time.
“That’s basically what I heard from the House side,” he said.
Martin said that he didn’t object to the bill when it was brought up for immediate first reading without going through the committee process.
“I didn’t object to it going through the process,” he said. “It skipped the committee process completely on the House side. I also think that could have played a role in why that was stopped. It didn’t go through a typical way that a bill goes through the House.”
Martin also said it was late in the session when the bill made it to the House.
“It would have had more chance if it was submitted earlier in the year,” he said.
Martin said he never requested the bill be moved on or off any calendar in the House of Delegates and that as a freshmen delegate and not being a member of the Rules Committee, he had no say when it came to the Rules Committee.